By: Stephen R. Elville, J.D., LL.M.
I think we can all agree about the following: technology has become a dominant force in our lives; most of us use one or more email accounts; many people participate on social media sites; many people use internet banking or brokerage services, and pay bills or make other financial transactions online; it is common practice to store photographs, documents, and information, both personal and financial, electronically; and most of us grapple with a host of user identification numbers and passwords to important online services. Because of these realities, clients need to be concerned about planning for their digital assets. There are two major reasons why – the first is financial, and the second practical. The financial aspect is self-evident. At our most recent Client Event, David Kauffman, Certified Financial Planner and national expert on the subject of digital assets, outlined that the average person’s digital assets are valued at $55,000.00. For example, it is not uncommon for certain domain names to sell for astronomical prices. The inherent value of digital assets then spills over into the practical – the need for planning, not only for protection of these assets, but for the management and disposal of them.
At this point, some readers of this article may find themselves doubting the real necessity of planning for digital assets. If so, I ask that you do as fiction writers ask us to do – temporarily suspend disbelief and accept as fact what I assert here, or at least consider the importance of such planning, for the following reasons. Our need is to plan for seamless access to our digital assets during a time of incapacity, and the same seamless access at death. The problem is that in Maryland no body of law currently exists to adequately deal with digital assets. This presents a multitude of problems, a few of which include third-party access to computers, smartphones and other hand-held devices, personal accounts and information of all kinds, including music, photographs, financial accounts, social networking, media accounts, tax accounts, online shopping accounts, and much more, during life and after death, along with how digital assets are to be managed and disposed of at death. Although beyond the scope of this article, special problems exist in the management of online accounts such as Yahoo, Gmail, MSN, Facebook, Twitter, Linkedin, and Instagram, during the account holder’s lifetime, although a few of these companies have recently taken steps in the right direction.
Fortunately, the law of digital assets is currently under development and will eventually “clean the slate” and provide guidance. Until then, clients and their fiduciaries will remain in digital asset planning limbo. You can, however, be proactive
and create a working plan or strategy for your digital assets, as follows:
- Identify and catalog all of your digital assets, including account names and numbers, usernames and passwords, answers to security questions, what the account is used for, and any other pertinent information.
- Consider who should have authority to access and manage the digital asset accounts and whether this person will be the same person as your personal representative.
- Provide broad authority for the agent under your power of attorney document to take any actions necessary concerning the management of your digital assets.
- Include provisions in your Will or Revocable Trust authorizing your personal representative or trustee to access, manage, and dispose of your digital assets.
- Determine how you will secure and provide this sensitive information for your fiduciary. Will you use a “master” password” and secure the information in an online vault or other storage site, or will you utilize a safe deposit box or traditional safe? Several online sites specialize in the storage and security of digital assets.
In addition to the practical life and death management of digital assets, there are many unique and difficult problems associated with the transfer of digital assets at death and their treatment in the administration and settlement of estates that are also beyond the scope of this article. Hopefully, this brief foray into the new world of estate planning for digital assets has raised your awareness and cleared a mental pathway enough for you to take the first step or steps towards including digital assets in your thought process – a new mental picture of your estate plan that recognizes, comprehends, and includes digital assets as a normal part of your estate and elder law planning. The attorneys at Elville and Associates can assist you through further counseling, planning, and updating for digital assets, and can make recommendations for secure storage and other digital asset-related issues, as your needs require.
For more information, please call 443-393-7696 or complete the form below.
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