Sitting down with an attorney to develop an estate plan is an important first step. Taking this step means that you and your loved ones can have peace of mind about who will inherit your home, your bank accounts, even those knick-knacks scattered through-out your house.
You've executed important Estate Planning documents:
- Powers of attorney, for healthcare and financial matters so your family can easily step in to help you if needed.
- Medicaid planning, preserving your family's assets so they won't need to be spent on long term care.
But what about your digital assets?
"Digital assets" is a phrase used to encompass everything from items with personal value, such as your online photos, personal blog and your social media presence, to financial accounts you access online, professional blogs or websites that generate income, and digital currency such as Bitcoin. If you were to die, could the people you love access and claim these assets? Would they even know they exist?
In the event of your death, your heirs might have difficulty accessing your assets, and might need to take some kind of costly, time-consuming legal action in order to gain access. Even then, the court may not have any clear legal guidance about what to do. Because digital assets have evolved much more quickly than the law of inheritance that relates to them.
Now with a little pre-planing, you can plan for these assets to transfer almost seamlessly into the hands of the people you intend to have them.
Access to your Digital Assets
There are a number of practical and legal issues that may prevent your heirs from gaining access to your digital assets:
- Federal laws intended to preserve data privacy
- Risk of criminal prosecution for unauthorized access to assets
- Data encryption
- Passwords that are difficult or impossible to bypass
- Lack of awareness that a digital asset exists
There are measures you can take to address all of these. Some are simple and require no more than a notebook, a pen, and some time. Others have legal implications and are best addressed with the help of an estate planning attorney.
First, do an inventory of your digital assets: personal blogs, professional websites, photo sharing sites, domain names you own, online financial accounts, social media. List them in a form readily accessible to your loved ones, ideally something they won't have to search for even on your hard drive. A good old-fashioned loose-leaf binder or notebook works fine. List all your online accounts and assets such as Facebook, e-mail, online payment accounts, like PayPal, and so on. List the corresponding passwords (and remember to update the notebook when you update your passwords or add accounts). Obviously, you will want to retain this information in a secure place, but somewhere that your loved ones will be able to access when needed.
If the idea of committing all of this information to paper seems too old-fashioned or insecure to you, consider getting a password management app. These typically don't cost much, but can provide a level of security that might give you peace of mind.
Another thing you should do is back up files that are stored to the cloud. While it's convenient for you to have your family pictures in the cloud when you're alive, you don't want these irreplaceable treasures to be lost to your family after you're gone. Make the effort to back pictures and other important files to your own computer or local storage device.
From a legal standpoint, your heirs are most likely to encounter difficulty if they access or attempt to access files or accounts for which they do not have authorization. Talk to your estate planning attorney about how to explicitly grant your heirs authority to access your digital assets in your estate planning documents. The language used should specifically authorize the people you identify to recover, bypass, and reset any of your passwords. Doing so can save your heirs or estate thousands of dollars in legal fees and months of legal wrangling.