Protect Your Digital Assets In 5 Simple Steps
Dear Rich Lifer,
What do Facebook, iTunes, and AirMiles all have in common?
These virtual accounts are all “property” that you can own when you pass away.
Unfortunately, because these digital assets are usually unknown to anyone but the owner, they can easily get lost in cyberspace unless the owner takes the appropriate steps prior to their passing…
We’ve talked about the importance of estate planning in previous issues, but haven’t really covered virtual estates – mostly because they’re relatively new.
Even though many Americans keep a lot of information in electronic form, both state and federal governments have been slow to adopt regulations to guide planning your digital assets.
Most legal experts believe it will be several years before national action is taken. Right now, only five states have passed legislation granting executors powers over digital assets.
Laws passed in Connecticut and Rhode Island cover email while legislation in Indiana, Idaho, and Oklahoma include social networking and blogging accounts too.
If you think about all the digital media, social networking accounts, and communications you have saved online, these laws are very limited in scope.
That’s why it’s more important than ever to begin end-of-life planning for your virtual estate.
Here’s a mini crash course in digital estate planning to get you started.
Step 1: Make a list of all your digital assets and how to access each one
Think of all the digital assets you own. Now make a list, including everything from social media accounts to points programs to online banking accounts to home utilities you manage online.
If you’re having trouble thinking about what’s a digital asset or not, do a quick Google search on digital property. You can find lists of different types of digital assets and this might jog your memory.
A few digital assets you likely own and should include are:
- Computer hardware, like external hard drives or flash drives, tablets, smartphones, digital music players, e-readers, digital cameras, and other digital devices
- Data or information stored electronically, whether online, in the cloud, or on a physical device
- Online accounts, like email and communications accounts, social media accounts, shopping accounts, photo and video sharing accounts, video game accounts, and websites and blogs that you may own
- Domain names
- Intellectual property, including copyrighted materials, e-books you’ve written and trademarks
The next question you should ask is how can your Executor access these assets?
You’ll need to share your logins and passwords so your Executor can properly manage your virtual estate. If you use a password manager, you can share your “master password” with your Executor so they can access all your logins.
If not, then you’ll need to record the login and password information for all these accounts. For computer hardware, like external hard drives or flash drives, tablets, smartphones, digital music players, e-readers, digital cameras, etc., write down where those items can be found, as well as any passwords required to access those devices.
Step 2: Decide how you want these assets to be handled
Depending on what you own, the way you want different types of digital property managed may vary. Some assets you may want archived and saved, others should be deleted or erased, and some will be passed down to family members, friends, or business colleagues.
For each digital asset you own, write down how you’d like your Executor to handle that asset. While your wishes may conflict with some companies’ terms of service, it’s still important to let your Executor know what you want.
Also, find out if any of the digital assets you own have monetary value? A 2013 survey by McAfee showed that the average person worldwide had over $35,000 of digital assets and Americans had a value of over $55,000.
If any of your digital assets are worth money, you may want to instruct your Executor to handle those assets differently.
For example, should credits or points or cash values be redeemed? Should revenue-generating assets, like online stores be immediately shut down, or transferred to someone who can continue to manage the store?
Go through each digital asset on your list and write down next to it how you’d like it to be handled.
Step 3: Decide who will handle your assets
Who do you trust to carry out your wishes for your digital assets?
You’ll want to designate a Digital Executor or someone to help settle your digital estate, however you specified in steps 1 and 2.
In most states, a Digital Executor is not a legally binding or enforceable designation. However, you can still name a Digital Executor, as this person can be designated by your Executor to follow the wishes laid out in your digital estate plan.
Step 4: Store your digital estate plan in a secure location
Once you’ve completed steps 1 and 2, find a secure location to store your list of assets and wishes. A safety deposit box or safe will work.
It’s best to store your list of assets and your list of passwords in separate locations. Tell your family or executor where they can find the information.
You can also store this information with an attorney. Just make sure that the people who need to know where the plan is actually know. Give the person you trust the name of your attorney, or the location of keys or the combination to your safe.
This way, when the time comes, the people who need to access the plan you’ve made can find it no problem.
Step 5: If you can, make it legal
Depending on where you live, you may be able to formalize your digital estate plan in a legally binding document, like your Will or a codicil to a Will.
The easiest way to do this is to name a Digital Executor in your Will, or specify who your traditional Executor should work with to settle your digital estate.
Then you should specify the location of your digital asset inventory, so that when the time comes your Digital Executor can find and access your plan.
Don’t include passwords or other digital asset access information in your Will. When you die, your Will becomes a public document, which means that anyone can read it — including any sensitive information it may contain.
A better solution is to refer in your Will to an outside document that contains all the necessary information needed to settle your digital estate.
This way, you can continue to revise and update the document without having to formally change your Will or put your digital assets at risk.
To a richer life,
The Rich Life Roadmap Team