Planning for Digital Assets

By:  Thad Ismart, CFP ® | Financial Planner

Many of us do much of our communicating and shopping online. Our email and social media accounts, along with many of the things  that  we  purchase—songs, books, movies—exist only in electronic form, often behind password-protected accounts. Even though many of the “digital assets” that we accumulate live in a “cloud” and are only accessible with an Internet connection, they are still things that have real value.

you can pass on your digital assets by creating a digital estate plan…

But what happens to our digital assets when we pass away? Just as you create  an estate plan to ensure that your tangible assets pass as intended, you should also create a digital estate plan to ensure that your digital assets pass as intended.

When you sign up for many online accounts, you agree to their “terms of service” (ToS). (In case you’re wondering, no, nobody ever reads these.) Many of these ToS agreements indicate that your username and password are never given out to anyone, even the executor of your estate. This may sound great at first, but imagine all of your music, books, and other digital media that you purchased from iTunes, Amazon, or Google inaccessible to anyone who does not know your passwords.

Only a small number of states—including Rhode Island, Oklahoma, Connecticut, Indiana, and Idaho—have laws governing an executor’s accessibility to online property.   With Maryland yet to pass any such legislation, it is becoming increasingly important to provide some direction to your executor and heirs regarding the disposition of your digital assets after you pass away.

You can pass on your digital assets by creating a digital estate plan, which is simply a list of your digital assets that hold value—monetary, sentimental, or otherwise. The list should include:

  • The name of the account
  • The content of the account
  • Username
  • Password
  • Security questions
  • Instructions for the disposition of the account, including the name of the person who is to oversee the disposition

This list should be kept in a secure place, such as on a thumb drive, which you should store in a fireproof safe along with your estate documents. This way, it can be easily updated as your digital assets grow.

It is important to know that, while you might have specific instructions regarding how you would like your digital assets to  be distributed, the assets are ultimately subject to the terms of service you agreed to when you opened the account. The instructions you leave for the executor could violate the ToS and, consequently, might not be permitted. If there is an account that is particularly valuable to you, you should contact the service provider to get a clear understanding of the disposition options for the account and the assets it contains after you pass away.