The reality – digital assets are a part of everyday life. And the need to protect them has never been greater. Planning for both the protection and conveyance of digital assets is more important than ever. While I’ve written extensively about the importance of data protection and cybersecurity here on my blog (Archives on: Data Protection: What Every Business Needs to Know; Steps Consumers Can Take to Protect Their Data, related topics and articles published in the Hartford Business Journal, Hartford Courant, Connecticut Law Tribune and others), digital information also plays great importance (or can cause a lot of problems) for family members, executors, heirs, care-givers and others after the here-and-now. This blog post highlights – why typical estate planning documents may not be enough.
Estate planning attorneys have always used a variety of legal documents to help clients and their loved ones manage assets (during incapacity) or transfer assets (after death) through the use of Powers of Attorney, Wills and/or Trusts. Another “tool” estate planning attorneys use is an inventory (or questionnaire) where clients identify all of their assets – real estate, personal property, health information, bank accounts, retirement accounts, life policies, retirement accounts, veteran’s benefits, intended beneficiaries and other important information necessary to assess and accomplish important estate planning objectives.
All too often Powers of Attorney, Wills and Trusts don’t say anything about “digital assets” – things like online accounts, passwords, security questions, files stored on computers or in the cloud, email accounts, social media sites, domain names, online digital photo albums – the list goes on… While a few states have enacted legislation enabling executors to have access to digital accounts, it’s a much more cumbersome (and often uncertain) process than it needs to be. In some instances, it may be a client’s wish (during incapacity or after death) that this information remain private and accounts terminated. In other instances, digital assets may have value (financial or emotional) and be important to convey to beneficiaries or successors of business interests. What happens to the face book or twitter account? What’s the password for online bank accounts, business urls or websites?
Depending on the number and nature of digital assets (which can change as often as accounts are added, modified or terminated), it’s important to keep an up-to-date inventory of these assets whether printed, stored on computer, smart phone or other devise, CD, DVD, flash drive or cloud. (Keeping in mind, of course, the importance of updating this information and protecting access with sufficient passwords, reliable vendors…) The person(s) selected as caretakers during incapacity or after death – executors, conservators or others will need to know the location of Wills, Trusts and other important estate planning documents, including the inventory of assets identifying accounts and, of course, any digital assets – such as online accounts and passwords. Unfortunately, many of the traditional estate planning documents prepared by attorneys today don’t adequately address “digital assets”. Adding even more complexity to the issue is the fact that many online vendors, such as twitter, face book, EBay, Google have a wide variety of differing terms of service “TOS” that can prevent or hamper a non-owner’s access. If it has to go to a probate court to get resolved, the Computer Fraud and Abuse Act, internet law, probate law and numerous other laws are also likely to come into play.
Living in today’s “digital age” means keeping track of this information and making decisions on how you want it to be conveyed, used or terminated (and by whom) with the right legal instruments in place to accomplish these important goals. Powers of Attorney, Wills, Trusts and other conveyance documents should be reviewed (and updated) every few years by a qualified estate planning attorney. If estate planning documents haven’t been updated in a while, you might also run the risk of having banks or others reject them as outdated or not covering a particular subject – such as online accounts. Many banks now require Powers of Attorney to be updated every year (some require every 2 years). I’ve seen many instances where banks, insurance companies and others rejected documents (often because they’re outdated or were prepared by clients themselves or other firms), because they didn’t specifically provide for access to online accounts (the same problem often comes up with safe deposit boxes and other depositories, because they weren’t specifically mentioned). In the past, there was an assumption that checking the box on the Power of Attorney giving authority for “all other matters” would be enough. Clearly, this catch-all phrase of the past has little to no legal significance today. While probate courts can and often do accomplish important things – they’re not known for acting quickly and anything coming before them is a public proceeding. Without clear, legally sufficient documents stating clear intentions about digital assets (and other property) – the door will be open to delays, uncertainty and the possibility of lingering entanglements with online vendors, banks, business partners and family members.
To make sure your intentions are carried out in the here-in-now and after-life will require a little more planning and the right documents in place. Digital assets are here to stay and need to be included in your planning decisions for now and the future. (Preventing identity theft when it’s been more present than ever and privacy considerations must, of course, be considered to keep the information properly protected.) We welcome inquiries on our estate planning, data protection and businesses succession services, as well as requests for our articles and guidelines on these important topics available to the public on request.