With the rapid advances in technology, estate planning has evolved beyond managing one’s physical and financial assets. Nowadays, a substantial amount of a person’s personal and business data is being stored in digital formats. People tend to vastly underestimate the value of these digital records and don’t realize there is a serious risk of financial and sentimental loss if this information is not dispersed appropriately.
What is a Digital Asset?
With technology progressing in leaps and bounds, it is difficult to keep abreast of what constitutes a digital asset. Currently, a digital asset is defined as any property that comes with the right to use and exists in a binary format, meaning data that is stored in the form of ones and zeros. Digital assets include the following and more:
- Digital media
- Email and social media accounts
- Online financial and tax preparation accounts
- Software licenses
- Domain registrations and web-hosting accounts
- Online stores and business accounts
The list continues to grow, so it is important to hire an estate planner who is knowledgeable of technology trends and can update your estate plans with your digital assets.
Determining Access to Digital Assets
Not all digital assets are classified as a person’s property. Understanding the rights to access these assets requires knowledge of federal and state laws, as it usually comes down to the decedent’s privacy vs. the fiduciary’s right to access.
- Federal Laws: Even if a fiduciary is able to gain access to one of your online accounts, they may be inadvertently committing a crime. Federal laws limit a fiduciary’s right to access a decedent’s digital assets in order to protect a decedent’s privacy and deter hackers.
- State Laws: State legislation has been proposed to grant fiduciaries the right to access and manage digital assets. In Massachusetts, this legislation is pending approval. You can keep updated about this legislation at MALegislature.gov.
- Terms-of-Service Agreements: When signing up for a digital service, you are provided a terms-of-service agreement. If you don’t read the terms, you may be agreeing to prohibit third-party access to your digital assets. It’s recommended your estate planner investigate these terms.
It’s important to do an inventory and create a plan for distributing your digital assets with an estate planner. It’s easy to forget about that photo album tucked away in the corner of your hard drive or that long-forgotten 401(k) from decades past. That is why it’s so important to seek assistance when estate planning. If you want your assets fully accounted for or have concerns about estate planning, contact me at Paula Smith Law Office today.