Estate planning with digital assets in mind


It’s Bosco!” Seinfeld fans will recall from “The Secret Code” episode that George Costanza created a good deal of chaos by being reluctant to share his secret code. By the same token, failing to share the secret codes to your digital assets could put a wrench in your best-laid estate plans. Luckily, there are various measures that you can implement to ensure that your digital assets will pass in accordance with your desires.

Whether we like it or not, the world is changing at warp speed. Paper statements for bank accounts and the like are going the way of the dodo bird. Those dusty old books that previously gobbled up shelf space can now be stored on a device that fits in the palm of your hand. The same goes for the vinyl records you bought with money from mowing lawns. And who would have ever thought that you’d be able to share pictures of your children or grandchildren with your friends and family by posting them on Facebook?

As the world becomes more and more digital, so do the assets that constitute your estate. Digital assets encompass a wide variety of items. The website www.digitalestateresourse.com defines digital assets to include the following: “(1) files stored on digital devices, including but not limited to, desktops, laptops, tablets, peripherals, storage devices, mobile telephones, smartphones and any similar digital device that currently exists or may exist as technology develops; and (2) emails received, email accounts, digital music, digital photographs, digital videos, digital books, software licenses, social network accounts, file sharing accounts, financial accounts, banking accounts, tax preparation service accounts, online stores, affiliate programs, other online accounts, and similar digital items that currently exist or may exist as technology develops, regardless of the ownership of the physical device upon which the digital item is stored.”

Failing to properly catalog your digital assets could have a variety of negative consequences. By way of example, that rainy-day savings account that you never told anyone about could go undetected by the executor of your estate; and those vacation photos that your family would so enjoy could be forever locked in a Shutterfly account.

So what needs to be done to ensure that your digital assets are properly accounted for and that they go to their intended beneficiaries? Taking the following steps will go a long way toward accomplishing your objectives: Keep a master list of your digital assets; keep the master list current; tell someone where you keep the master list; determine whether your digital assets are transferable; and consider making specific provisions for them in your will.

List-keeping

The most important step in properly handling your digital assets is to create a master list of such assets. I find Excel spreadsheets to be a helpful tool for creating and maintaining such lists. For each of your digital assets, consider including the following information: (i) a description of the asset (e.g., TD Ameritrade Brokerage Account); (ii) where the asset is located (e.g., www.tdameritrade.com); (iii) any account number or user name associated with the asset; and (iv) any password that is necessary to gain access to the asset.

Current information

Creating a list of digital assets without keeping the information current is about as useful as having an ashtray on a motorcycle. It doesn’t do your executor any good to know that the brokerage account you opened in 2004 was with TD Ameritrade. He really needs to know that you transferred the assets to Fidelity Investments in 2009 and that is where the assets are currently located. Ideally, you should update the master list every time you change the location of the assets, change a password or make a similar change. Short of that, you should review your master list at least once every three months, and after you have done so, make a notation to that effect on the master list; something such as “Current as of 12/1/12” would work nicely.

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