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Importance of digital asset planning in estate planning

In this post we will discuss why digital assets should be incorporated in the estate planning process just as you incorporate all of your physical assets. We will also explore what are some of the initial steps to take when formulating an estate plan with digital assets.

Step One: Understand what a digital asset is

A digital asset is an electronic record in which an individual has a right or an interest. The definition is broad and includes financial accounts, music files, electronic communications, cryptocurrencies, videos, and photographs, among many others. In order to dispose of these items, like the physical items in your home or that you have accumulated during your life you will need to know which of your assets are digital or electronic in nature.  

Step Two: Identify all of your digital assets and online accounts

Take a moment to think about all of your digital assets and online accounts. When you begin this exercise, you will quickly realize how much of your life has a digital component or solely exists electronically. You should start with your desktop or laptop computer, include your smartphone and tablet., and think of the communities you are a member of whether on Facebook or gaming.  Look to your online music and video collections, do you own any of these items or they just a license or available through a membership that once cancelled no longer entitles you or your heirs to any of those items. Think about your physical accounts whose records exist online and to access someone will need to know your username and password.

Step Three: Create an inventory list of your digital assets and online accounts

As you go through the exercise outlined at step two, write down what you discover. Your inventory list can contain categories such as account name, URL address, username, password, security information – if necessary, to access account content.

Step Four: Decide what to do with your digital assets

While you access these accounts to confirm the details and make sure you have the correct information, get rid of things you no longer want and delete files. Make sure you empty the trash. Organize your digital files so someone else can potentially understand them. Think about who you would give access to this information to ensure your digital life is managed as you wish after your incapacitation or death. Start thinking about the hard choices. For example, when you die, would you like someone to have access to your Facebook account and be able to add and delete items, keep the profile active, or just close it and delete the contents forever. If the digital asset is a photograph do you want to transfer the copyright to a beloved niece.

Step Five: Create specific instructions for your executor

Write down your wishes and provide them to the executor of your will by attaching it to your will for guidance on what the digital accounts are, their passwords, and given them permission to enter your online profiles and accounts to manage and dispose of them consistent with your wishes.

Step Six: Store your inventory list and passwords in a secure physical location

Keep it with your will, place it in a safety deposit box, or give it to a trusted person for safekeeping. Tell someone else to be sure these accounts and digital assets can be accessed.

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