Recent advances in digital technology have made many aspects of our lives much easier and more convenient. However, digital technology has also created some serious complications regarding estate planning. If you have not addressed your digital assets in your estate plan properly, there's a good chance that most of those assets will be lost forever when you die.
Without the proper estate planning, locating and accessing your digital assets can be a major headache—or even impossible—for your loved ones following your incapacity or death. Even if your loved ones can access your digital assets, in some cases, doing so may violate privacy laws or the terms of service governing your accounts. Additionally, you may have certain digital assets you don't want your loved ones to inherit, so you'll need to restrict or limit access to those assets.
It's important to consider several factors when including digital assets in your estate plan. In this discussion, we will cover the most common types of digital assets. These current laws apply to them and provide practical tips to ensure that your digital property is appropriately managed and passed on in the event of your incapacity or death.
TYPES OF DIGITAL ASSETS
Digital assets include a wide range of files and records stored in the cloud, on smartphones, or your computer. They can be categorized into those with financial value (e.g., cryptocurrency, online payment accounts, domain names) and those with sentimental value (e.g., email accounts, photos, social media accounts). The former holds actual financial worth, while the latter offers sentimental value and comfort for your family following your death.
DO YOU OWN OR LICENSE THE ASSET?
When it comes to digital assets, ownership varies. While you can transfer assets like cryptocurrency and PayPal accounts, items like Kindle e-books and iTunes music files are typically only licensed for personal use. The ability to transfer licensed digital property depends on the Terms of Service Agreements (TOSA) associated with each account. It's important to review these agreements to understand ownership and transferability. Sharing login information with loved ones to access digital assets may violate TOSA and privacy laws. However, many states have enacted laws clarifying how digital assets can be accessed and managed after death or incapacity.
THE LAW OF THE DIGITAL LAND
Until recently, there were no laws governing access to digital assets after incapacity or death. In 2014, the Uniform Fiduciary Access to Digital Access Act (UFADAA) was passed, addressing this issue. A revised version, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), was passed in 2015 and has been adopted in all but four states as of March 2021. The law allows fiduciaries to access digital accounts upon death or incapacity through an online tool or an estate plan.
It's important to provide your fiduciary with detailed instructions on accessing your accounts, including usernames and passwords. With this information, your executor or trustee will be able to access or manage your digital assets if something happens to you.
MAKE A PLAN FOR YOUR DIGITAL ASSETS
Leaving detailed instructions is the best way to ensure that your digital assets are managed according to your wishes after you die or become incapacitated. We will provide practical steps for appropriately including your digital assets in your estate plan. Feel free to contact us with any questions about your digital property or how to include it in your estate plan.