Have You Included Your “Digital Assets” in Your Estate Plan? -- If You Die, What Happens to Your Computer and All the Information Stored on it Or That’s Accessible Through Internet Access to Third-Party Sites?

Have You Included Your “Digital Assets” in Your Estate Plan? -- If You Die, What Happens to Your Computer and All the Information Stored on it Or That’s Accessible Through Internet Access to Third-Party Sites?

Most all of us have “digital assets” of one type or another. A digital asset is a computing device (computer, smartphone or tablet); data storage device or medium, or all electronically stored information (data) like user accounts; or domain names and perhaps even intellectual property rights for someone engaged in a digital-type business, such as designing websites, applications or similar digital resources.

These digital assets cannot be forgotten when planning for one’s disability or death. Failure to include digital assets in your estate planning could lead to an expensive and time-consuming process for anyone trying to recover your digital assets or access data stored by you on your computer or through your computer on third-party destination-type sites. In some instances, failure to plan properly for digital assets may lead to those assets never being recovered by your legal representative.

Consider the following when planning for your digital assets:

Do Digital Assets Have Value?

You need to consider the value of devices as tangible property, but also the sentimental value and the value of the data itself. Included in this type of data could be photos, videos, music and documents. For example, a photographer’s estate may have a $1,000 computer that contains his original commercial photographs that are worth much, much more. Some media like music and movies may only be licensed to the deceased and not legally transferable at a decedent’s death. Conversely, there may be transferable licensed media such as professional creative software suites like Photoshop that are worth much more than the computer that contains it.

Most digital property has little or no financial value, but there can be significant value if you know what to look for. There also may be inherent value, separate from intellectual property rights, in relatively new types of digital properties such as domain names, advertising revenue from web pages, blogs and social media, as well as virtual items and currency within virtual world video games.

One recent example with respect to the value of digital assets is Bruce Willis’ iTunes music account. The actor has spent many thousands of dollars downloading thousands of songs, but like many iTunes users, he was surprised to discover that in Apple’s eyes, he doesn’t actually own the songs and, therefore, at the time of his death, these items may not be transferred to his heirs. However, there are other types of digital assets where the license or benefit is not personal to the individual signing up for the asset; therefore, those items may be transferable to heirs or, at the very least, information should be included in one’s estate plan to let legal representatives and heirs know the existence of such licenses, so that companies can be contacted and whatever information needs to be accessed for purposes of properly terminating the account or retrieving any data stored in an account can be accomplished by the legal representative.

Email

As most of us know, email serves as a portal to access things. Email frequently is the master key to accessing other online accounts for resetting passwords. Individuals need to provide information on how they store and access their email as part of their estate plan. Such information needs to include user names, passwords and service providers since not all email is web-based. Web-based email accounts can be free, but they are subject to particular terms of use and policies upon the death of the account holder, including immediate deletion of the account.

Online and Cloud-Based Services Are Growing in All Industries

Social media sites, such as Facebook, Twitter, LinkedIn, Flickr and YouTube, contain writings, photographs and videos, and most Terms of Service policies (“TOS”) may not address issues regarding account holders’ disability or death. Google Docs,Google Drive, Dropbox and online backup systems are like invisible remote hard drives with valuable information that needs to be protected and planned for in the event of one’s death.

The Girl with the Dragon Tattoo

Author Stieg Larsson died at age 50 of a heart attack before his three books were even published. His trilogy has sold 60 million books in more than 40 countries. The first Hollywoodmovie grossed $232M. His life partner, Eva Gabrielsson, while promoting her own book “There Are Things I Want You to Know” About Stieg Larsson and Me, told the TODAY Show there are 200 pages of a fourth novel kept on a laptop computer that only she has ever seen. She has been in a battle for years over Larsson’s estate with his father and brother who are legally the beneficiaries. One of the main items in dispute is the ownership and access to the aforementioned additional pages of the proposed fourth novel.

Financial Accounts

In April 2010, the U.S. Department of Treasury announced an electronic initiative to stop issuing paper savings bond and Social Security payments after March 2013. Now all these payments are electronic only. As a result, consider banks, utilities, credit cards and the like pushing clients for online payments and statements. Banks can have automatic payments running. Account statements used to come in by mail, but now they are sent electronically to email accounts no one may know about. Again, access to a main email account is critical to reset access to these other accounts so that information and access to one’s financial accounts and history are not lost.

Online Businesses

The line between business and personal assets continues to blur. Domain names, blogs, websites, online applications and source code accounts are all utilized by many of us on a day-to-day basis. Failure to know of and renew fees and leases associated with these types of accounts can lead to websites that stop working or loss of valuable digital assets. Loss of domain names, websites and codes stored on remote servers can also occur. PayPal and other online-only financial accounts can have tens of thousands of dollars that could be subject to a loss if not properly planned for in one’s estate. Personal representatives need to know about any online revenue streams to ensure that the accounts are continued or properly closed. A personal representative may even be responsible for preventing waste of these online revenue streams and may be liable for any decline in business after the owner’s death.

This Does Affect You!

Essentially, digital assets and what we do with them on a day-to-day basis affects all of us. Consider the fact that 98% of affluent people have computers and 94% of farmers have Internet access on computers. Even 6% of mothers give their babies email addresses.

The takeaway from all of this information is that we need to be diligent and plan for management and disposition of digital assets that we all encounter, use and benefit from on a day-to-day basis.

In my next article I will address additional topics with respect to planning for one’s digital assets. The future is here and we need to plan for it.