Estate Planning for Digital Assets
Do you maintain active online bank, brokerage, cryptocurrency, NFTs, e-mail, social media, and/or game accounts that require a username, password, key or other information for access? If something happens to you, who will know what these accounts are and how to access them?
Similarly, do you have a computer, smartphone, tablet or other personal electronic device requiring an access password? Who (besides you) has that information? If something happens to you, how will your information be retrieved?
While technology can simplify our lives while we’re living, it can complicate things significantly when we become ill, incapacitated, or die. The applicable laws are anything but settled. That is why it is essential to plan for access to, and disposition of, your digital assets. It is imperative that you identify your digital assets and document your choice of who will have access to and control of those assets in the event of your illness, disability, or death, as well as the “ultimate” disposition of your digital assets.
Identify Your Digital Assets
The first step is to identify your “digital assets,” which refers, generally, to all of your digital property and electronic communications. These assets include any kind of digital file: e.g., documents, images, audio, video and any online account (which may include e-mail, software licenses, social networking accounts; file sharing, domain registration, domain name service, financial management, online store, games, professional sites, frequent flyer accounts) or any file stored in the cloud or on a computer or other electronic device, (e.g., desktop, laptop computer, tablets, storage devices, smartphone, etc.).
Create a Digital Asset Inventory
When you have identified your digital assets, you can complete a digital asset inventory including all of your accounts, numbers, usernames, passwords; PINs, security questions and answers; information about whether the accounts have monetary value; and, any special instructions. If you have blockchain assets such as cryptocurrency and NFTs, ensure that there is a secure recording of the key that will allow access on your death. For security purposes, some inventory information should be kept or stored separately. For example, you might make a list of accounts and numbers, and a separate, related list of the access information for those accounts. As passwords and electronic accounts can change from time to time, keep your inventory current and review it annually, at the very least.
When your digital asset inventory is complete, safeguard the information. Perhaps you are comfortable entrusting the inventory to a family member or prospective fiduciary. If your information is more complex, or involves business assets or blockchain assets, you may want to explore a secure online storage service. Such services may also make frequent updating your digital asset inventory more convenient.
Access to Your Digital Assets
The rights of your agent designated under a power of attorney, conservator, executor or trustee to access, manage and dispose of digital assets are not entirely clear. A number of states (including Connecticut) have laws concerning access to digital assets, however, the types of digital assets and what might be needed to access, manage and dispose of them are changing faster than the law.
Many online accounts are contractual and have license arrangements that control who (other than you) may access your account and under what circumstances. There are as many different policies as there are online account providers. This can create problems when an account holder dies or is otherwise unable to manage her digital assets. Given the uncertainties under current law, your estate planning documents should ensure that only the people you choose have access to your digital information, and that your choice is documented in your power of attorney, Will and trust agreement, as appropriate.
Disposition of Your Digital Assets
It is essential to document your wishes concerning your digital assets. When you are no longer able to access or manage your digital assets should the file or account be accessible to family and friends, particularly if there is personal material (e.g., photos, writings) associated with the account? Should the account be cancelled?
Some forms of digital assets have monetary value, such as online bank accounts, brokerage accounts and blockchain (cryptocurrency and NFTs) assets which can be transferred when accessed. Others hold inherent financial value that can be exchanged or transferred, e.g., a domain name, a music storage account or PayPal credit balance. Other assets may exist only in digital form, for example, photographs, recipes and manuscripts, and have tremendous sentimental or family historical value. Regardless of the nature of your digital assets, it is important for you to consider and document how the assets should be distributed.
A traditional Will or revocable trust agreement are options for many digital assets, particularly those with monetary value. Another tool is a “digital asset trust” which can hold title to the electronic account and govern who may have access to what information, and when. As the rate of electronic growth significantly outpaces the related law, it is imperative that you make appropriate arrangements for your digital assets.