Nowadays, the internet has made banking, shopping, and other tasks faster and easier to complete. Also, the details of these online transactions are recorded for convenience. Since many types of assets are handled online, many people may wonder if digital assets should be incorporated in an estate plan. An elder law attorney will be able to determine if a person’s digital assets should be protected.
What are Digital Assets?
Digital assets are online accounts or services that are secured by logins, which usually consist of username and password combinations. Some common digital assets include the following:
- Computerized medical records
- Email accounts
- Message boards
- Online financial accounts
- Photos and videos
- Social media profiles
Since this sensitive online information does not disappear when a person dies, estate planning should include provisions for which fiduciaries will take over these accounts and how these assets will be handled.
Should I Make an Inventory of My Online Accounts?
To secure digital assets, a person should account for cyber accounts, services, and files, and store them in a cloud or hard drive.
While the following kinds of digital assets are just as essential to the process, they tend to be overlooked during estate planning:
- Digital liabilities: Accounts that have automatic billing. This is where payments are made directly through a bank account or credit card at the same time every month.
- Hybrid assets: Traditional accounts that can also be managed online, like a checking account or retirement account.
- Cryptocurrency: Bitcoin and other currency that does not exist in physical form and is transferred through decentralized control.
- Websites and domains: Ownership and management of online sites, especially those pertaining to a business that will continue to operate after the person’s passing.
The person making arrangements for their digital assets should write down the name, location, description, and the account number of each asset. It is important to clarify whose name the account is under. Sometimes, it is the owner. In other cases, an account may be listed under a spouse or business name. All of the information that is needed to access online accounts should be listed as well, including usernames and passwords.
Who Should be a Custodian of My Digital Assets?
Once these digital assets are accounted for, it is time to decide what happens to them in the future. This can be a very personal process. The idea of relinquishing control over private online data is not easy for many people. Like traditional assets, it is essential to make sure they are managed properly by trusted family members or business partners.
When it comes to digital assets and estate planning, owners should be as specific as possible. They should note if they want a blog or certain social media accounts saved or deleted, and where sentimental items, like family photos or videos, should go.
Certain companies have online tools to help users manage their accounts after their passing. This is something to think about whenever opening a new online account or service.
Instructions for Digital Custodians
Beyond making their final wishes known in a legally-binding will or power of attorney, anyone planning ahead can take an extra step and leave additional instructions for their attorney-in-fact or executor.
This can be as simple as a signed and dated handwritten note or a typed document that lists the digital assets and instructions. The letter should be stored in a safe place along with insurance information and health care directives to ensure it does not get overlooked.
How Should Cryptocurrency be Handled?
Anyone holding a significant amount of Bitcoin or other decentralized assets must make sure they provide someone with the “private key” to unlock and access them. Without this private key, these digital funds are essentially immovable and become worthless. Without access to cryptocurrency, fiduciaries can be stuck with paying income or estate taxes for assets that effectively have no value.
Is it Common to Secure Digital Assets?
Until recently, passing digital assets onto executors was nearly impossible. Service providers were hesitant about sharing passwords and other login information with anyone not listed on the accounts.
What is the Revised Uniform Fiduciary Access to Digital Assets Act?
The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) gives a fiduciary permission to manage digital assets on the behalf of an individual that has become incapacitated or that has passed away.
Created by the Uniform Law Commission, the RUFADAA was created to serve as a blueprint for individual states to draft similar laws, empowering beneficiaries to protect their loved one’s digital legacy.
After a few incarnations, the RUFADAA strikes a good balance between the account owner’s privacy concerns, rights of fiduciaries to access accounts, and the legal obligations of the companies who provide them.
Here are some key points of this important legislation:
- Unless the deceased person gives consent, the executor has no authority over electronic communications, including emails and texts.
- Custodians and companies that own and provide online assets are not required to give access to joint accounts or closed accounts.
- Custodians have the right to require a court order that proves why it is necessary to give access to online assets.
- Executors can request access to online assets not mentioned in the trust or living will, but only after proving it is essential for wrapping up the estate.
Currently, 40 states have adopted the RUFADAA, and it has been introduced into legislatures in another five.
How Will My Digital Assets be Protected?
When it comes to digital accounts, fiduciaries must tread a fine line between upholding the deceased person’s wishes in their estate plan, and navigating tough federal laws designed to protect one’s privacy.
For example, the Stored Communications Act and the Computer Fraud and Abuse Act prohibit anyone other than the primary account holder from accessing certain digital assets according to the terms-of-service agreements. Many terms-of-service agreements, which are often checked off without being read, have provisions barring fiduciaries from logging into an incapacitated or deceased person’s account.
Before attempting to access any type of digital asset, it is a good idea to check with a lawyer working for the estate. An elder law attorney can confirm if a client’s digital assets are subject to the RUFADAA or other state or federal laws based on their jurisdiction.
Should I Speak to a Lawyer About Estate Planning?
Estate planning can feel like an overwhelming endeavor, but it is important to take steps now to protect all of the assets one has worked hard to build over the course of a lifetime. A trusted estate planning attorney is the best resource to ensure that every asset is accounted for and how it will be managed.
Lawyers who specialize in elder law matters are familiar with state and federal guidelines that impact estate management and privacy concerns related to digital assets. An effective attorney takes the time to truly understand who their client is and the life they envision for their family and their business. They use every legal means necessary to achieve these goals with skilled estate planning.
Anyone with questions about the estate planning process should check out online reviews or ask friends and family members for law firm recommendations.
Brooklyn Estate Planning Lawyers at Korsinsky & Klein, LLP Help Clients Protect Their Private Digital Assets
Many people might be concerned about protecting their digital assets. It is important to secure these assets and prepare for the future. If you wish to protect your digital assets, speak to one of our Brooklyn estate planning lawyers at Korsinsky & Klein, LLP. Call us at 212-495-8133 or complete our online form for an initial consultation. Located in Brooklyn and Manhattan, New York, as well as Lakewood, New Jersey, we proudly serve clients throughout New York and New Jersey.