Find Out How to Protect Your Assets
Recent advances in digital technology have made many aspects of our lives exponentially easier and more convenient. But at the same time, digital technology has also created some serious complications when it comes to estate planning. In fact, if you haven’t properly addressed your digital assets in your estate plan, there’s a good chance that most of those assets will be lost forever when you die. And even if your loved ones can access your digital assets, in some cases, doing so may violate privacy laws or the terms of service governing your accounts. Plus, you may also have certain digital assets that you don’t want your loved ones to inherit, so you’ll need to take steps to restrict or limit access to those assets.
Digital assets with financial value include cryptocurrency like Bitcoin or Ethereum, online payment accounts like PayPal or Venmo, loyalty program benefits like frequent flyer miles or credit card reward points, domain names, websites and blogs generating revenue, as well as other intellectual property like photos, videos, music, and writing that generate royalties. Such assets have real financial worth for your loved ones, not only in the immediate aftermath of your death or incapacity, but potentially for years to come.
Digital assets with sentimental value include email accounts, photos, video, music, publications, social media accounts, apps, and websites or blogs with no revenue potential. This type of property typically won’t be of any monetary value, but it can offer real sentimental value and comfort for your family following your death and inform future generations in ways you may not have considered.
Do You Own Or License The Asset?
Although you might not know it, you don’t own many of your digital assets at all. For example, you do own assets like cryptocurrency and PayPal accounts, so you can transfer ownership of these items in a will or trust. But when you purchase some digital property, such as Kindle e-books and iTunes music files, all you really own is a license to use it. And in many cases, that license is only for your personal use and is non-transferable. Whether or not you can transfer this licensed property depends almost entirely on the account’s Terms of Service Agreements (TOSA) to which you agreed (or more likely, simply clicked a box without reading) upon opening the account.
The Law of the Digital Land
Until very recently, there were no laws governing who could access your digital assets in the event of your incapacity or death. As a result, if you died without leaving your loved ones your usernames or passwords, the tech companies who controlled the platforms housing the assets would often delete the accounts or leave them sitting in a state of online limbo, inaccessible to your family and friends. The federal government finally stepped in to find a solution for this problem starting in 2012, and by 2014, the Uniform Law Commission passed the Uniform Fiduciary Access to Digital Access Act (UFADAA).
A revised version of this law, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) was passed in 2015, and as of March 2021, it has been adopted in all but four states. The law lays out specific guidelines under which fiduciaries, such as executors and trustees, can access your digital assets. The Act allows you to grant a fiduciary access to your digital accounts upon your death or incapacity, either by opting them in with an online tool furnished by the service provider or through your estate plan.
The Act offers three-tiers for prioritizing access. The first tier gives priority to the online provider’s access-authorization tool for handling accounts of a decedent. For example, Google’s “inactive account manager” tool lets you choose who can access and manage your account after you pass away. Facebook has a similar tool that allows you to designate someone as a “Legacy Contact” to manage your personal profile.
If an online tool is not available or if the decedent did not use it, the law’s second tier gives priority to directions given by the decedent in a will, trust, power of attorney, or other means. If no such instructions are provided, then the third tier stipulates the provider’s TOSA will govern access.
The bottom line: If you use the provider’s online tool—if one is available—and/or include instructions in your estate plan, your digital assets should be accessible per your wishes in most every state under this law. However, it’s important that you leave your fiduciary detailed instructions about how to access your accounts, including usernames and passwords, because without such information, your executor or trustee won’t be able to even access, much less manage, your digital assets if something happens to you.
Make a Plan for Your Digital Assets
Given that leaving detailed instructions is the best way to ensure your digital assets are managed in exactly the way you want when you die or if you become incapacitated, contact us, if you have any questions about your digital property or how to include it in your estate plan.
This article is a service of Fleurinord Law, PLLC.