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Deciding who gets what when we die is difficult enough when it comes to divvying jewelry, collectible baseball cards, family heirlooms, houses and cars.
It can be even trickier to arrange control of our digital assets.
People’s virtual legacies include email, photo-sharing and social-media accounts. However, because of laws and user-service agreements, our heirs may have trouble gaining access to them, even if they have the passwords.
Plus, most of us don’t include digital assets in our estate plans, experts say. This also can create problems for heirs.
Digital-asset planning is a fairly new concern for consumers as well as estate planners.
“A lot of people haven’t focused on it,” said Patricia Stalzer, Western regional trust services director for BMO Private Bank. When planning their estates, they tend to concentrate on tangible belongings.
However, digital belongings also have value, said attorney Donald Rolfe of Rolfe Law Firm in Phoenix.
In a 2011 survey conducted for McAfee, a security technology company, Americans on average valued their digital assets at nearly $55,000.
A digital asset can have emotional or sentimental value. It could be a photo-sharing site that contains photos of family and friends. It could be a blog that an heir wants to keep as a memorial to the deceased.
It can have monetary value. It could be a business website that family members or employees intend to keep as a going concern. It could be an online stock account.
Other types of digital assets are:
• Email accounts.
• Website domain names.
• Facebook, Twitter, LinkedIn or Pinterest accounts.
• Documents that are stored online.
• Online bank accounts or bill-payment services.
• Bitcoin accounts.
• PayPal accounts.
• iTunes accounts.
If your digital assets aren’t included in an estate plan, your heirs might not know about that online stock account you have. They might not know you do all your banking online. Your digital assets could be lost forever.
If you haven’t provided for management of your digital assets, your heirs could have trouble gaining access to them. They may not be able to keep up your profitable business website or satisfy customers who have already placed orders. They may not be able to retrieve the family photos or videos to show to their — or your — children or grandchildren. And, your estate could be subject to identity theft by criminals who use your information to apply for credit cards after you die.
The best way to protect your virtual assets is to include them in your will or trust and to designate a digital executor to handle them, said David B. Goldstein, an attorney with Hymson Goldstein and Pantiliat in Scottsdale.
Rolfe also says to specifically grant your heirs access to your virtual assets in your will or estate plan.
He and Goldstein advise keeping a master list of the accounts and the accompanying passwords in a safe place, such as a safe deposit box.
Don’t include the passwords in a will or estate plan, Goldstein said. Instead, the estate plan should include instructions on where the passwords are located.
Rolfe suggests creating an Excel file containing a master password to another document that lists the digital accounts and passwords. There also are websites, apps and services that offer an online version of a safe deposit box.
Having an estate plan and a master list, however, doesn’t mean that your heirs will gain automatic or easy access to your accounts. User-service agreements and laws may restrict their access.
“Every account you have online has a ‘terms of service’ agreement,” Rolfe said. “Most of them say they are non-transferable. No one else can use it except for you.”
And if someone else does, he or she may be committing a crime, he said.
The federal Stored Communications Act makes it an offense to gain unauthorized access of stored communications, such as e-mails, held by third-party Internet service providers. The federal Computer Fraud and Abuse Act prohibits unauthorized computer access.
Many of the laws were made to deal with hackers and not loved ones of the deceased, experts said.
“The laws are really far behind,” because they haven’t kept with all the advances in technology, Rolfe said.
The Uniform Law Commission, a Chicago-based non-profit whose goal is uniformity of state laws, has spent almost two years looking into this. The commission is in the process of drafting a law that would “vest fiduciaries with at least the authority to manage and distribute digital assets, copy or delete digital assets, and access digital assets,” the website says. The draft is expected to be approved at the panel’s annual meeting in July, spokeswoman Katie Robinson said.
But that doesn’t necessarily mean states will adopt it. The commission, whose members are lawyers from around the country, can only propose laws. However, if it is approved, “we will then encourage state legislators around the country to adopt it,” Robinson said.
Additionally, digital-asset sites are beginning to address access by heirs. Google, for example, has what it calls the Inactive Account Manager, which lets the account holder determine what happens once the account is inactive for a certain period of time. Account holders can add up to 10 friends or family members to be contacted once the account has become inactive.
“You can also share data with them if you like,” the site says. Account holders can ask Google to delete their accounts if they prefer.
Rolfe thinks that digital-access issues will become even more pressing in the future.
“The whole structure of how we use things is changing. People are becoming more and more digital.”