First of all, have to define what digital assets are, because people use that term all the time but they’re not all necessarily referring to the same thing. We define digital assets as anything that is stored or transmitted electronically, as opposed to being on. The term digital assets also refers to the devices that are used to transmit digital assets and those include everything from your desktops, to your cell phones, to your tablets, to whatever new devices are coming out every day.
The biggest issue with digital assets as far as estate planning is concerned, is it’s kind of like the Wild West right now. There are hardly any laws to govern digital assets. If you have stocks, bonds, real estate, and your 401(k), those are hard tangible assets that you can put your arms around and for which there have been laws for hundreds of years as how to plan for those kinds of assets if you die or become incapacitated. And to a large degree those rules have not only been in place for a long time, but also, they haven’t changed.
The issue with estate planning for digital assets is that nobody knows what the rules are. For the most part, the rules are whatever is in that those terms of agreement for which you check the box but never read, every time you want access to electronically stored or transmitted material.
And this issue is magnified because people do almost everything digitally today. It’s all of the social stuff like Facebook and Google and Twitter and Instagram and your personal websites, but it goes far beyond that. People manage their bank and other financial accounts online. All of their photos are stored online, etc., etc.
Also, many people who are in business offer and sell products or services online and they’re taking credit cards online for those products and service.
And the biggest issue that we see is that regardless of what the rules are, if you die tomorrow and you haven’t shared with anybody else what all of your accounts and passwords are, there’s nobody who is going to be able to find those accounts and do with them what you want or leave them to whom you want.
So if a person, for example dies, and has all of his financial assets in online accounts, and hasn’t shared the accounts, user names and passwords with anyone, no one, including his family, may be able to find those assets.
It’s that kind of thing that makes it so important that if something happens to you, someone will be able to access to your accounts even if the rules governing you accounts are very restrictive. A lot of terms of service agreements provide that nobody else has permission to access your account if you die, some of the terms of service agreements provide that when you’ll die, your account dies. But at least if someone knows where that account is, they are way ahead of the game.
Facebook has recently become more enlightened than some of the other major digital asset providers in providing a set of rules for what people can do and what people can’t do in the event of death. The new Facebook rules allow you to make choices with Facebook as to what you want to happen to your Facebook page if you die. But as already said, for the most part, it’s still like the Wild West out there.
The thing that is very troublesome in planning for digital assets is this. If you have a piece of real estate, the rules that were around in 1800 for dealing with it and passing it on are essentially the same as they are now. But in the digital asset area, probably two years from now from now there are going to be devices and technology that we have no clue about today, but which will then be mainstream technology that we are using every day. The technology is travelling at the speed of light, but the laws governing technology will likely continue to move at a snail’s pace.
This article was originally published by Steve Spewak on EstatePlanMO.com. It is republished here with permission.