Published February 7, 2019 Investopedia
Congratulations! You have drafted a will and filled out answers to questions regarding who assists you if you are unable to make financial and medical decisions for yourself. You may have even completed a living will and the more advanced medical directives. Are you finished? I’m afraid not. Planning for digital assets has become an important addition to your estate plan, and this is why.
What Happens to Digital Assets When You Pass
In the world we live in today, our digital presence is arguably just as important, if not more, as our physical one. How many times today did you send an email? Go onto a social media account? Pay using your digital wallet? Take a picture with your phone? All of these things are assets of yours. You cannot see or touch them as you can a house or chair, but they are assets just the same.
So what happens when you pass away? What happens to your Facebook and Instagram accounts, photos, or even your Bitcoin?
Over the past few years, Colorado, like many other states, has passed legislation detailing the handling of intangible or cyber assets. For the most part, they have allowed them to be handled in the same manner any other asset would be at the owner’s death. According to the National Conference of State Legislatures (NCSL), “at least 46 states since 2013 have enacted laws addressing access to email, social media accounts, microblogging or other website accounts, or certain electronically stored information, upon a person’s incapacity or death”.
Many people have wills and instructions as to how to handle their property, money and other tangible assets after death. The same should be done with cyber assets. It is important to plan now what you would like to be done with your social media accounts and cryptocurrency after you pass. Would you like accounts deleted? Or would you like your family and loved ones to have the option to look at and add to past posts and pictures? This can be handled as part of the estate planning process.
Consider the Types and Terms of Cyber Assets
When dealing with this type of planning, it is helpful and important to look at the “terms and conditions” of the account. Facebook, for example, has made it easier to go about this process through their “Legacy Contact” feature. This feature allows you to appoint who you would like to be responsible for your account after your passing. With this access, the person can write on your wall, reminisce with past pictures, or simply delete the account. Policies like this vary for each media outlet so be sure to review agreements carefully when addressing this matter. You may also appoint a digital executor who would be separate from your personal representative and might know more about the digital world than your primary executor.
Cryptocurrency is also an important thing to consider in the planning process. Provide your trusted loved one with “keys” to allow access to your assets while making sure everything is secure and encrypted. To protect against hacking, a good practice is providing multiple keys to trusted individuals.
Finally, whatever you decide, make sure you make a plan and communicate your decision with your personal representatives. Whether that means including it in your will or informing them of your wishes and the terms you have set with each of your digital accounts, it is important to specifically include these types of assets in the conversation.
Getting Started on Your Plan
To get the process started, make a list of all of your digital assets and accounts. Review the various agreements with each to determine what your options are. Check with your state to see if legislation is in place to include these assets in your existing estate plan. If not, prepare instructions for your personal representative as to how you want this to be handled and consult with your attorney to ensure proper inclusion. Also check to see which takes precedence — your state legislation, your will or your individual account agreement.
Note all passwords, including the ones to access your other lists, and share this with your representative as well. Make a note to revisit and update passwords and your lists every few years.
Planning for your digital assets and including instructions for them in your estate planning documents will make managing your estate easier for your executor and your loved ones.
-Elyse Foster, CFP®