You may have planned for your heirs to inherit your life savings, real estate assets, artwork, or even the box of photographs under your bed, but have you considered how you will handle your digital assets? Today, bank records are often entirely electronic, most correspondence is done through email or text message, and photographs are shared through digital albums on Facebook and Instagram, among other social media sites. With life increasingly being lived online, digital asset preservation should be addressed as part of your overall estate planning.
Digital Estate Planning Basics
As technology continues to transform our lifestyles, the concept of an “estate” must adjust with it. Many estate plans, however, do not take digital assets into account. Failing to do so may create unintended obstacles for the executor of your estate – or your heirs might not be able to access your accounts. Here are seven important steps you should take now to help preserve your digital assets.
1. Catalog your digital accounts
As a first step, it is wise to create a detailed list of all your digital accounts. This list should include any bank, investment and life insurance accounts, as well as online payments systems (PayPal, Apple Pay, etc.) and cryptocurrency accounts. You should also include digital storage subscriptions (Dropbox, Google Drive, etc.), online entertainment accounts (Netflix, Amazon Prime, etc.) and social media and email accounts. Update the list regularly and provide copies to the executor of your estate and to a trusted relative or friend.
2. Provide easy access to log-ins and passwords
Unlike a jewelry or art collection, virtually all digital assets hide behind usernames and passwords. Without the log-in credentials, it may be difficult for your executor or family to gain access. To provide ease of access, you should record the log-in information for all digital accounts you have catalogued. For added security, you may opt to provide passwords only for low-risk accounts, such as social media. Your executor will still be able to work with the service providers of the high-value accounts, such as banks and investments, to gain access.
3. Know which digital assets are nontransferable
As part of your planning, it is important to know that certain digital assets are nontransferable, meaning the provider or platform has the right to prevent customers from passing such assets to their heirs. Examples of nontransferable digital assets are some frequent-flier program miles and rewards points balances, as well as digital books, movies and music. One workaround is to give your heirs the associated log-in credentials so they can continue to access the accounts after your death. It is advisable that they not inform the providers of your death and that you do not include the account access information in your will. One’s will becomes part of the public record when it is filed for probate, which means anyone could read your passwords.
4. Understand the latest laws
Until recently, the laws governing access to digital assets were a mix of federal and state law, privacy laws, and intellectual property law. One’s digital assets were largely at the mercy of a service provider’s terms of service or privacy policies, which determined what would be done with your account after you die. For example, Apple iCloud’s terms of service state that all content in your iCloud account will be deleted when you die.
In 2015, the Uniform Law Commission created the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which encourages standardization among state laws to reduce confusion, giving account holders more control. A state that has adopted RUFADAA allows executors, trustees, or the person appointed by court to gain complete access to your digital assets after you die. The law applies to your digital assets if you live in a RUFADAA state even when a digital-service provider is located in another state. Nearly all 50 states have passed versions of RUFADAA, except Kentucky, Massachusetts, New Hampshire and Pennsylvania.
5. Specify how you want your digital assets handled after death
Some service providers allow users to arrange posthumous access to their accounts. Google, for example, allows users to select digital heirs or “inactive account managers” for its cloud services. Similarly, Facebook allows you to designate a “legacy contact” to manage an account posthumously. Where applicable, you should review all of your online accounts to ensure you have specified how you want your data to be handled upon death. Under RUFADAA, the choices you make may take priority over all other instructions, including the service provider’s terms of service and your will.
6. Include written instructions on how to handle your digital assets
RUFADAA specifies that a user’s direction given via an online tool prevails over the terms of service contract if the direction can be modified or deleted at all times. A user’s direction in a will, trust, or power of attorney prevails over the boilerplate and, if the user provides no direction, the boilerplate provisions of a terms-of-service contract prevail. Accordingly, in order to avoid a service provider’s generic terms of service agreement, it is important to use that provider’s online tool, if one is provided, and to address these issues in estate planning documents.
7. Review service providers’ terms of service
You should review the terms of service policies for your online accounts, especially if you live in a state that has not adopted RUFADAA. If the terms are unacceptable, you may want to consider moving to a different service provider.
Include Digital Assets in Estate Planning Discussions Now
Given the prevalence of digital assets in everyday life, having a plan for those assets has become increasingly important. Your plan should also include directions on what information you wish to be deleted or destroyed, rather than preserved, after your death. By planning now for the secure transfer of your digital estate, you greatly increase the likelihood that your wishes for these assets will be met. As always, it’s a good idea to consult a trusts and estates attorney to get a better sense of your state’s laws, and the most effective way to create a digital estate plan.