Estate Planning for Digital Assets

Published:

Authors:
Howard Essner, JD, General Counsel, Family Wealth & Retirement Plan Advisor


Traditional estate planning addresses how your assets will be distributed at your death and provides for access to these assets if you become incapacitated. To make this process as smooth as possible, we always recommend that clients maintain a current list of assets such as bank, investment and retirement accounts, insurance policies, physical assets and real property. These days, many of us spend much of our time online, making it increasingly important to also address “digital assets” as part of an estate plan. Fortunately, there are now laws in many states, including Ohio, that help ensure that fiduciaries have access to these assets.

Digital assets may include the following, among others:

  • Purely electronic items that have an actual monetary value, such as cryptocurrencies like Bitcoin and others, domain names, and online businesses
  • Access to computing equipment, hard drives, smartphones, tables and other digital devices
  • Online access to social media accounts, such as Facebook, LinkedIn, Twitter, etc.
  • Online access to financial information, such as bank and investment accounts
  • Electronic communications such as email accounts and private and public messages
  • Personal items stored online, like photos and videos, genealogy information, etc.

The first step to prepare a digital estate plan is to complete an inventory of these assets. This inventory should include a list of the online accounts, login information, passwords, secondary passwords or dual-authentication methods and the location and passwords for the hardware itself. A written or electronic inventory can also be used, but it is important that this document be updated regularly and stored securely. There are many secure online storage programs built for this purpose, including eMoney, the online vault used by Ancora for our clients. No matter which method, you will also need to make sure that the person who you wish to manage these matters or your estate planning lawyer knows how to access your inventory.

It is important to consider who should have access and what they should do with the information. You may want to make sure that your family has access to family photos and other information. On the other hand, there may be sensitive information that you do not want shared with certain family members and which should be deleted from the digital realm. Digital assets that have monetary value may need to be sold or transferred to family members or business associates. You can document your directions as part of your inventory or in a separate document that is incorporated into your estate plan.

It is very important to note that just giving a third-party access to your list along with instructions is not sufficient. Without the proper authority under law, a third party accessing your accounts may violate the provider’s Terms of Service, resulting in loss of access to the account. It may also be a violation of the law. In Ohio, for example, a properly designated fiduciary has legal access to your online accounts and the custodian of those accounts must provide access to manage the account. However, because the electronic communications are afforded greater protection under Federal law, the fiduciary does not automatically have the right to access these communications unless you specifically grant this authority.

Under this law, you can name this fiduciary authority in many ways. For example, the fiduciary could be the executor of your estate as designated by your will, a trustee of a trust, a guardian appointed by a court, or an agent named by you under a power of attorney. Also, some online services are now allowing for the designation of a legacy manager. Examples of this include Facebook’s legacy manager and Google’s Inactive Account manager. These online designations are recognized under Ohio law and have priority over other methods. With these new laws, many estate planning lawyers are now including specific language in their documents concerning digital assets.

Note: this article is intended to provide broad, general information about the law, and is not intended to be legal advice. Before applying this information to a specific legal problem, readers are advised to seek advice from a licensed attorney.

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