4 Ways to Help Clients With Digital Assets
What You Need to Know
Clients need to begin by taking inventory of their digital assets
Laws governing such assets vary by jurisdiction.
Having a plan in place can make life easier for those left behind.
Considering the deepening extent to which we live our lives online, we can no longer exclude digital assets from estate planning. To do so would risk clients losing priceless family photos and videos, financial and tax records, and even money.
Our digital footprint has become a significant part of our overall legacy.
As incorporating digital assets has become more common in estate planning, the U.S. Congress in 2014 passed the Uniform Fiduciary Access to Digital Assets Act, which was revised in 2015. The legislation ensures that the “management and disposition of their digital assets” is comparable to plans for tangible property through a will, trust or power of attorney document.
1. Create a Plan.
The first step in creating a digital estate plan is to guide clients to take inventory of their digital assets, defined as any material owned by an enterprise or individual including text, graphics, audio, video and animations.
Such an asset is any item that has been formatted into a binary source that includes the right to use it. Simply put, almost anything you keep a digital record of should be considered a digital asset.
It can be helpful to think of these assets as falling into one of four categories:
Personal digital assets: Photos, videos, emails, contact lists, music, medical records, blogs, e-books, gaming assets and avatars, as well as information on home security systems, loyalty programs and more.
Social digital assets: Accounts on LinkedIn, Facebook, Twitter (X), Instagram, Pinterest and other social media sites.
Financial digital assets: Bank, credit card, investment and retirement accounts, tax documents, PayPal, Apple Pay and other online data.
Business digital assets: Business-oriented social media, domain names, customer and vendor information, intellectual property and more.
Clients’ digital inventory should be included as part of their estate plan along with testamentary documents such as wills, trusts and transfer on death accounts and secured by their advisor, or a trusted family member or friend.
To avoid confusion, clients may wish to clarify their rights to various forms of digital assets.
Many companies sell indefinite licenses masquerading as purchases. Presumed owners may believe that they own the asset, only to discover that there was no ownership of said asset but rather a rental for an up-front price.
For example, the button on Amazon Prime marked “buy” disguises what is an indefinite license that the company can end at its discretion.
2. Appoint a Digital Executor.
Clients may want to consider appointing a digital executor entrusted with the task of implementing their wishes as it relates to their digital assets.
While the appointment of a digital executor, responsible for managing, distributing or destroying assets from an estate, is not legally binding in all 50 states, it is still recommended to make this specific designation in a client’s will or trust.
