Financial Literacy: Digital Asset Estate Plan

By: John C. Murphy, COL (Ret.)

Many individuals account for their real estate, bank accounts, securities and tangible property as part of their estate plan. However, much of people’s lives are now online, potentially leaving a person’s digital assets unclaimed or even susceptible to theft.  You should address the handling of your digital assets.

There are a wide variety of digital assets.  Ranging from computing hardware, such as computers, external hard drives or flash drives, tablets, smartphones, digital music players, e-readers, digital cameras, and other digital devices.  Any information or data that is stored electronically, whether online, in the cloud, or on a physical device.  Any online accounts, such as email and communications accounts, social media accounts, shopping accounts, photo and video sharing accounts, video gaming accounts, online storage accounts, and websites and blogs that you may manage.

INVENTORY

The process begins by making an inventory.  Make a list of your digital assets, including everything from hardware to social media accounts to online banking accounts to home utilities that you manage online.  Then, you should explain where various files are kept and what is on them, such as financial records or client files.

APPOINT

Second, appoint someone to handle the digital assets.  Who do you trust to carry out your wishes for your digital assets?  Your Digital Executor is someone you designate to handle and settle your digital estate.  This appointment is usually designated in your Will/Trust or if your incapacitated, your power of attorney/Trust.

INSTRUCTIONS

Third, there should be clear instructions regarding how a person wants to treat their digital assets after death.  Depending on the nature of the property, the way you want different types of digital property managed may vary.  While you may want some assets to be archived and saved, you may want others to be closed, deleted or erased, while others might be transferred to family or friends or redeemed for the points/rewards.  For each digital account or asset that you have, specify how you'd like your Digital Executor to handle that asset.

ACCESS

A central consideration regarding digital assets is how your digital executor can access them.  With other types of assets, a person may tell a trusted confidante or spouse where valuable assets are located.  This may not be the case with digital assets.  Additionally and for good reason, people have been told over and over again not to write down passwords and to use strong passwords that others may not be able to easily guess.

SAFETY, SAFETY & SAFETY
Your digital executor should be empowered on how to access these accounts.  This will require you to make a list of digital assets, account numbers, usernames and passwords (update upon changes) BUT the list MUST be kept in a safe place that can be accessed.  If this digital asset list fell into the wrong hands bad things will happen.  No matter how you decide to store your digital estate plan, access as well as safety are vital. This means giving the person you trust access to the Password Manager or the location of keys or the combination to your safe. This way, when the time comes, the Digital Executor can find the plan and access it.

Your Estate Plan for Digital Assets will inventory your assets, appoint a Digital Executor, give instructions and safely grant access so that you can ensure your desires will be carried out.