Most people do not realize the power of beneficiary designation: Your beneficiary designation may result…
If you are not a lawyer or financial planner and haven’t heard of the term “Digital Estate”, you’re not alone. This new buzz term has been causing a great deal of confusion lately, even for those in the industry because as a new estate planning concept, we are still figuring out how to handle it. A Digital Estate refers to electronic information assets that exist on the internet and on devices, and are appreciably less readily and tangibly transferable than your grandmother’s watch. Digital estate assets include digital music, social media accounts, online files, virtual currency (like bitcoin) and even the assets you have accumulated in video games! [Believe it or not, a man sold his virtual night club inside a video game for $635,000.] However, unlike the virtual club sale, the unfortunate and often unknown truth about Digital Estates is that much of what is purchased online constitutes a user license and not actual ownership. For example, such is the case with music purchased on Apple’s popular iTunes platform. In fact, many items included in a Digital Estate currently lack a legal and defined way of transferring ownership. To know which of your online assets can be conferred and how your best bet is to check with each provider and specifically review user agreements.
There are two primary options currently available to help your loved ones manage your digital assets after your passing. While I can’t comment on the legality of these suggestions based on the many and varied user agreements, it is intended that these suggestions are used without mal intent to violate any law.
Your first option is to translate digital assets back to tangible items that can be physically transferred. For example, in the case of music files, burn them to CDs. The records in email or online data bases that have value could be printed or saved to an physical storage device (like a USB drive) in a file type that can be opened by the person to whom you wish to transfer them. In addition, all sensitive data should be encrypted and stored in a mindfully secure way.
A second, and potentially less effective option is to create a record of usernames and passwords as well as necessary responses to security questions.Store this information in a highly secure location, with instructions for accessing within your secured estate documents. The problems for this method include the periodic and inconsistent credential updating required by many providers and the risk of centrally locating so much sensitive data and access.
So what’s the take away? Though new, it is important to be thinking about your Digital Estate and making your own plan for any highly valuable digital assets (whether that be monetarily or emotionally valuable). As an evolving, important part of estate planning, we anticipate greater clarity and legal definition in the near future to help us plan better for the Digital Estate.