The digital age has made many aspects of life much more convenient. We simply post a photo to update our family and friends about our status. Purchased movies and songs can be streamed to any device seamlessly. We can send and receive detailed conversations in an instant.
Our lives are getting increasingly digital and that’s a trend that’s only going to increase. In fact, every two days we create more digital information than we did from the dawn of civilization until 2003.
Yet, with all this data comes new complications. As the recent scandal with Facebook and Cambridge Analytica (where thousands of users’ information was accessed without their consent) illustrates, we’ve created these wonderful tools, but we haven’t even scratched the surface of how they can be used for us and against us.
As our digital footprints grow, what happens to all of that information after we die?
“This is such a new area that we know there will be issues, but we’re not quite sure how they will manifest,” said Jessica Showers, attorney at the Hammond Law Group, which practices only estate planning and elder law. “We’ve seen some, but they’ve been relatively benign, iTunes music and the like. But, when we’re talking about sensitive information – private conversations you’re having over email, things on your Facebook page, maybe you have an Ashley Madison account. You may not want your kids or a public administrator reading your emails or getting into specific accounts. These are areas where people need to think about how their digital footprint will be passed on or erased.”
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What is a Digital Asset?
A digital asset is basically anything that is managed virtually. This can include email and social media accounts, music and voice files, and digital currency. Laws have been passed by 39 states, and are pending in seven more, that allow people to specify in their will that an executor or fiduciary (someone appointed to manage the property of another person) can access their email and social media profiles.
“In 2016, Colorado adopted what they call the Revised Uniform Fiduciary Access to Digital Assets Act. If someone residing in Colorado passes away or becomes incapacitated, a fiduciary acting under either a will or power of attorney, a personal representative, conservator, or trustee, may access that person’s digital assets where appropriate,” said Showers.
These laws help protect your rights because, without them, the company holding the data controls who gets access to the accounts. In addition, some companies have tools that allow you to establish rules for accounts that are inactive for a certain period of time. For instance, Google has its “Inactive Account Manager” tool that will allow you to send info to trusted contacts or delete your accounts after a specified period of time.
But digital assets are more than email and social media accounts. They are increasingly becoming part of our everyday financial lives as well. And while bank accounts, even those that are primarily managed digitally, have other ways of accessing the funds, the same cannot be said about a relatively new form of money: cryptocurrency.
Cryptocurrency is … complicated, but basically it is digital currency that uses cryptography, or codes, to ensure security. The most famous cryptocurrency is Bitcoin, but there are hundreds of different types. This money only exists digitally, and there have been many stories where thousands (or millions) of dollars were lost due to a forgotten password or misplaced hard drive.
If you intend to have any cryptocurrency as part of your estate, it is essential that the information to access the funds is somewhere your loved ones can find it.
“There are some issues that we have to address with our clients when they have this type of asset. Is the cryptocurrency titled in your name? Is the title transferable? Could we transfer the title to your revocable living trust, so the trust could manage it if you’re no longer able to? If we can transfer title, is there anything else that we need to provide to the trustee, so they can get access to the currency, such as a key?” said Showers.
“My recommendation, when people have digital assets or sensitive digital information to which they want their successors or personal representatives to have access, is that they should always pass on that information in a manner that makes them feel most comfortable. Providing a list is one option, so is using one of those online services where you can store your passwords. Of course, you want to make sure that your successor has the authority to access this information, but it really depends on the individual and what they are comfortable with.”
Digital Assets and Your Estate Plan
Just like everything else in life, you need to prepare for what happens to your digital footprint. Have a plan for your email and social media accounts once you are gone and know who can manage your sensitive information when you are no longer able to.
“If your estate planning attorney is not asking about your digital or hasn’t clarified your plan to address the digital footprint that your leaving, then that’s something that you need to talk about. There may be some way to get into your Google or Facebook account after you have passed, but you want to make sure that those steps are in place. Otherwise that information may still be out there, and it leaves us open to people trying to take that information and use it dishonestly. So, you want to make sure that information is locked down or wiped away once you are no longer here to monitor it yourself.”
To discover more about managing your digital assets or for any estate planning questions, visit Hammond Law Group’s “Get Educated” page.