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Digital Assets

Four steps you can take to help preserve your digital assets and provide for a smooth transition if you should become incapacitated or die:

 

Most digital assets have both a license element and a property-right component.  Examples are  e-mail accounts, social networking sites, and photo-sharing sites, the user often has a license from their Internet Service Provider to access the e-mail system, the social network site, or the photo-sharing sites. The user retains a property interest in e-mails in the inbox, user-generated content, and contact lists.

While these agreements vary by site, almost all contain language stating that the accounts are solely for an individual’s use and are not assignable. Therefore, once an account holder dies, the Internet Service Provider can reclaim the username and information.

Florida Statutes now grant four types of fiduciaries (personal representatives, guardians, agents under a durable power of attorney, and trustees) the ability to access, control, or copy digital assets. How do I preserve my digital assets and provide for a smooth transition following my death or incapacity?

Four steps you can take to help preserve your digital assets and provide for a smooth  transition if you should become incapacitated or die:

1. Identify and inventory your digital assets. Compile a list of your digital assets, include all hardware and flash drives, all software (including Quicken®, Turbo Tax®, and other programs where you may store financial information), your online document and photo storage sites, social media accounts, blogs, online shopping accounts (wherever your credit card information may be stored), and online licenses (newspapers and other subscription services).

2. Identify the person best suited to take control of your digital assets following death or incapacity. You should name a digital agent in your power of attorney or digital personal representative in your will.   Make sure you appoint someone technologically inclined to handle these matters.

3. Provide access. While we are frequently told never to write down passwords and PIN numbers, the reality is that without this information, your computer and accounts may not be accessible to your agent.

4. Update your estate plan. Your will should provide clear instructions regarding your digital assets. If someone inherits your computer, does he/she receive all of your files, online music, digital photos, and loaded software? Do you want your letters and e-mails deleted?  Specifically addressing these issues is imperative for today’s generation.

Specific Information for Digital Assets and the Durable Powers of Attorney

“My Agent shall have (i) the power to access, use, and control my digital devices, including but not limited to, desktops, laptops, tablets, peripherals, storage devices, mobile telephones, smartphones, and any similar digital device which currently exists or may exist as technology develops for the purpose of accessing, modifying, deleting, controlling, or transferring my digital assets, and (ii) the power to access, modify, delete, control, and transfer my digital assets, including but not limited to, my emails received, email accounts, digital music, digital photographs, digital videos, software licenses, social network accounts, file sharing accounts, financial accounts, banking accounts, domain registrations, DNS service accounts, web hosting accounts, tax preparation service accounts, online stores, affiliate programs, other online accounts, and similar digital items which currently exist or may exist as technology develops, and (iii) the power to obtain, access, modify, delete, and control my passwords and other electronic credentials associated with my digital devices and digital  above  and to access, modify, delete, control, and transfer my digital financial accounts.”

Specific Information for Digital Assets and the Last Will and Testament

“My Personal Representative shall have the power to access, handle, distribute, and dispose of my digital assets, and the power to obtain, access, modify, delete, and control my passwords and other electronic credentials associated with my digital devices and digital assets. If I have prepared a memorandum, which may be altered by me from time to time, with instructions concerning my digital assets and their access, handling, distribution, and disposition, I direct my Personal Representative and beneficiaries to follow my instructions as outlined in that memorandum.

‘Digital assets’ includes the following:

(1) Files stored on my digital devices, including but not limited to, desktops, laptops, tablets, peripherals, storage devices, mobile telephones, smartphones, and any similar digital device which currently exists or may exist as technology develops; and

(2) Emails received, email accounts, digital music, digital photographs, digital videos, software licenses, social network accounts, file sharing accounts, financial accounts, banking accounts, domain registrations, DNS service accounts, web hosting accounts, tax preparation service accounts, online stores, affiliate programs, other online accounts, and similar digital items which currently exist or may exist as technology develops, regardless of the ownership of the physical device upon which the digital item is stored.”

Bear in mind the disadvantage of will-based planning. Wills are generally unsuitable as repositories for passwords or other information that is critical to accessing on-line assets.  The information might change before a new will can be executed, but also wills become public information. A will might instead reference a separate document containing detailed account information; such a reference would be better than placing this information in the will itself.

Specific Information for Digital Assets and Trust-based Estate Planning

A trust is a more desirable place for ownership and account information because it would not become part of the public record. A digital asset can be owned by the trustee through a special digital asset trust. If the value of the digital assets is substantial, a digital asset trust may be created for digital property. The trust’s ownership of the assets will survive death. Moreover, trusts can be amended more easily than wills, a useful mechanism for both ownership of the assets and recording of information so that others can access them. Digital assets often take the form of licenses that may be, by their own terms, nontransferable and expire at the owner’s death, so a trust can provide for orderly transfer and management.

Have further questions? Let us know. You can contact us for further information and to schedule an appointment in our office.