A Note From Paige
In 2011, a McAfee, Inc. survey found that the average perceived value of a U.S. resident's digital assets was $54,722, and that most of those assets remained unprotected. Learn more about the value of your online presence and why you should include your digital assets in your estate.
Don't Lose All the Bitcoins You Earned In Your SecondLife
The rise of the Internet and social media has necessitated changes in estate planning. In addition to making arrangements for traditional assets such as a personal residence, I recommend that people consider how they're going to pass on digital items such as photos, domain names, and social media accounts, to name a few.
In this month's newsletter, I'll provide a brief overview of Cyber Estate Planning, including the different types of digital assets, why you should take steps to include them in your estate, and the challenges you may encounter during the process.
What are digital assets?
Digital assets are are a relatively new type of property. These assets consist of text, images, videos, or other personal property that is stored in a digital format. The following are examples of digital assets:
- Social Media: Accounts such as Facebook, Twitter, or email accounts,
- Personal Items: Digital photos, emails, videos, and even digital medical records or tax documents,
- Financial Accounts: eBay, Amazon.com, Bitcoin, and online bill payment accounts,
- Domain Names and Blogs,
- Loyalty Program Benefits: Frequent-Flyer Points or Retail Rewards Program Points, and
- Virtual money, video game characters, or property.
Why should you take steps to plan for digital assets?
Including your digital assets in your estate is important for three primary reasons.
First, it serves the same purpose as including other types of property in your estate: it makes handling these assets easier for family members and for executors. It facilitates access to financial accounts and electronic bills, allowing family members to prevent interruptions or cancellations of services. Cyber Estate Planning can also help prevent against other losses, such as valuable domain names, encrypted files, or virtual property, such as characters, valuable weapons, or even money from games such as World of Warcraft or SecondLife. SecondLife, for example, uses a currency exchange system called Linden Dollars which is exchangeable for US dollars or other currencies.
Second, Cyber Estate Planning helps prevent identity theft. Leaving online accounts unattended makes them more vulnerable to hackers and spammers, and as several recent articles have shown, obtaining access to one account often means that other information--and even someone's identity--can be stolen. By giving heirs access to important accounts, the deceased can protect their accounts from hackers and identity thieves.
Third, including digital assets in your estate planning process helps your family gain access to photos, videos, blogs, and other memories they may not have been able to obtain otherwise. These personal assets preserve the deceased's personal and family history and preserve part of his or her personality for future generations.
Potential Obstacles to Effective Cyber Estate Planning
A service's Terms of Service or User Agreement will be one of the biggest challenges someone will face during the Cyber Estate Planning process. Some services may have terms that limit or prohibit the transfer of an account in the event of someone's death, requiring users to plan around those limitations by granting earlier access or backing up the information on their own hard drives.
For example, Google's terms of service include a provision stating that upon proof of a user's death, Google will close his or her account. However, its email service, Gmail, does provide a process by which heirs can request access to an email account and may, in some cases, receive it.
Facebook, however, takes a different approach to a user's death. It allows heirs to convert a profile into a Memorial page on which the deceased's Facebook friends can continue to view photos and post on the page's Facebook Wall.
Another challenge may arise if the user does not actually own the digital asset. Many types of software grant only a license to use the product while the licensee is still alive. iTunes and Kindle, for example, grant lifetime licenses that are non-transferable upon death. While backing up these files to a hard drive or CD may allow heirs to use these items, there is currently no definitive solution for solving this licensing issue.
Although several obstacles can make the cyber estate planning process more challenging, including your digital assets in your estate is still important. You may be able to overcome those challenges by taking steps such as backing up your assets to a CD, thumb drive, or hard drive; providing instant access to your digital assets; granting an agent access to your assets; or placing your digital assets in a trust. A good first step is to take inventory of your digital assets and to speak with an attorney about how you want to include your digital assets in your estate. I'd be happy to help you take inventory of your assets and find a solution that works for you. Contact me to schedule an appointment.