“It’s ‘Bosco’!!” Seinfeld fans will recall from “The Secret Code” episode that George Costanza created a good deal of chaos by being reluctant to share his secret code. By the same token, failing to share the secret codes to your digital assets could put a wrench in your best laid estate plans. This article will discuss various measures that you can implement to insure that your digital assets will pass in accordance with your desires.
Whether we like it or not, the world is changing at warp speed. Paper statements for bank accounts and the like are going to the way of the dodo bird. Those dusty old books that used to gobble up shelf space can now be stored on a device that fits in the palm of your hand. Same goes for the vinyl records you bought with money from mowing lawns. And who would have ever thought that you’d be able to share pictures of your children or grandchildren with your friends and family by posting them on Facebook?
As the world becomes more and more digital, so too do the assets which comprise your estate. Digital assets encompass a wide variety of items. The website www.digitalestateresourse.com defines digital assets to include the following:
- files stored on digital devices, including but not limited to, desktops, laptops, tablets, peripherals, storage devices, mobile telephones, smartphones, and any similar digital device which currently exist or may exist as technology develops; and
- e-mails received, e-mail accounts, digital music, digital photographs, digital videos, digital books, software licenses, social network accounts, file sharing accounts, financial accounts, banking accounts, tax preparation service accounts, online stores, affiliate programs, other online accounts, and similar digital items which currently exist or may exist as technology develops, regardless of the ownership of the physical device upon which the digital item is stored.”
Failing to properly catalogue your digital assets could have a variety of negative consequences. By way of example, that rainy day savings account that you never told anyone about could go undetected by the executor of your estate; and those vacation photos which your family would so enjoy could be forever locked in a Shutterfly account.
So what needs to be done to insure that your digital assets are properly accounted for and that they go to their intended beneficiaries? Taking the following steps will go a long way towards accomplishing your objectives: (1) keep a master list of your digital assets; (2) keep the master list current; (3) tell someone where you keep the master list; (4) determine whether your digital assets are transferable; and (5) consider making specific provisions for them in your Will.
(1) KEEPING A LIST. The most important step in properly handling your digital assets is to create a master list of such assets. I find Excel spreadsheets to be a helpful tool for creating and maintaining such lists. For each of your digital assets, consider including the following information: (i) a description of the asset (e.g., TD Ameritrade Brokerage Account); (ii) where the asset is located (e.g.,www.tdameritrade.com); (iii) any account number or user name associated with the asset; and (iv) any password that is necessary to gain access to the asset.
(2) CURRENT INFORMATION. Creating a list of digital assets without keeping the information current is about as useful as having an ashtray on a motorcycle. It doesn’t do your executor any good to know that the brokerage account you opened in 2004 was with TD Ameritrade. Rather, he really needs to know that you transferred the assets to Fidelity Investments in 2009 and that is where the assets are currently located. Ideally you should update the master list every time you change the location of the assets, change a password or make a similar change. Short of that, you should review your master list at least once every three months and after you have done so, make a notation to that effect on the master list. Something such as “Current as of 12/1/12” would work nicely.
(3) LOCATION OF THE LIST. Creating and maintaining the master list does your heirs no good unless you share its location with someone you trust. As a best practice, you should tell your executor where the master list is located and you should keep a copy of the master list with your other valuable papers and documents.
(4) NOT ALL DIGITAL ASSETS ARE TRANSFERABLE. Unless you are the one person in 10,000 who actually reads the user agreement when you establish an online account, you should revisit each user agreement for your online accounts to determine which of your digital assets are transferrable upon your death. By way of example, not all airlines permit the transfer of frequent flyer miles upon the death of the account holder. Upon making such a determination, you should update your master list accordingly.
(5) SPECIFIC BEQUESTS OF DIGITAL ASSETS. Now that your executor knows your digital assets exist, they should pass in accordance with your overall estate plan. Without making specific provisions for your digital assets, they will pass pursuant to the residuary clause of your Will. So, while it is not necessary to make specific bequests of your digital assets, as a practical matter it may be advisable to do so. For example, I know that my wife would love to have the family photos stored on my laptop, but I can promise you that she has no interest in the Alex Cross novels I’ve purchased for my Kindle Fire or the Johnny Cash albums I’ve purchased for my iPhone.
Digital assets are often an overlooked component of even the most complicated estate plans. However, with proper planning you can make sure that all of your digital assets are properly accounted for and that they pass according to your wishes. To assess the current health of your estate plan, including a determination of whether your digital assets are properly accounted for, consider scheduling an appointment with your estate planning attorney.
