- Many people own a trove of digital assets, which can include anything from domain names and electronically stored photos and videos to email and social media accounts.
- Make a list of your digital assets and passwords so trusted others know where to find them. Back up data stored in the cloud to a local computer or storage device.
- To help protect your online assets, work with an attorney to provide consent in legal documents.
You may have planned for your loved ones to eventually inherit your house, the Steinway grand piano, your Dad's 88-year-old Swiss watch, or other family heirlooms, but with life increasingly being lived online, you may be overlooking an increasingly important kind of property: Digital assets.
If your estate plan doesn't account for digital assets properly, your heirs may not have access to them. Family photos and videos could be lost forever, social media accounts could stay online long after you've passed, and your heirs may not receive all the money that you'd like to see come their way.
Estate planning attorney James Lamm, with Gray Plant Mooty in Minneapolis, MN, has seen such problems firsthand. He first noticed the importance of digital assets in estate planning a few years ago. "A client had passed away, and there were no paper records," says Lamm, a nationally known expert and author of the Digital Passing blog. "All of the client's financial information was stored on computers and protected by passwords. This really opened our eyes. We're dealing with a new world."
It has become the norm to store financial records in smartphones, computers, or the cloud, and to conduct financial transactions electronically. Most people also own a trove of digital assets, which can include anything from domain names and electronically stored photos and videos to email and social media accounts.
The upshot: Accounting for digital property in your estate plan has become essential. Fortunately, it's relatively simple to do.
Obstacles to digital access
From a legal point of view, digital property is like other kinds of property because it can be passed on to designated parties through estate plans. Yet the laws regarding digital property are still evolving, as are the practices of companies like Facebook and Google. For these and other reasons, gaining access to digital assets, and to digitally encoded financial information, can present challenges for anyone other than the original owner. Lamm identifies 4 main obstacles faced by family members of someone who has recently died when trying to access the decedent's digital assets and vital personal information:
- Passwords. If they don't know your passwords, family members may not be able to access information or property stored in your smartphone, computer, online accounts, or the cloud. Some passwords, such as the one you enter to log in to your desktop computer, may be easy for experts to bypass; others are more difficult to bypass—and some are practically impossible.
- Data encryption. Digitally stored data may be encrypted, adding another layer of protection on top of your passwords. Encryption can scramble data in a particular location—in a single file, on a device or in the cloud—so thoroughly that it is practically impossible for anyone without the proper passcode to unscramble it. Take cell phones, for example. "With older phones, it was at least plausible to find services that could exploit security flaws in the devices to help a family retrieve information after someone passed on," says Lamm. "But new phones can be practically impossible to decrypt. So, for example, if you've taken photos on your phone without transferring them elsewhere, family members may not be able to access them unless they know your passcode."
- Criminal laws. Laws on both state and federal levels prohibit unauthorized access to computer systems and private personal data. These laws serve to protect consumers against fraud and identity theft, but they also may create virtually insurmountable obstacles for family members trying to gain access to the digital assets and information of a deceased loved one. The law is evolving to keep up with the rapidly changing online world, but much in this area is still unclear. For that reason, it’s essential to ensure that your estate plan gives your fiduciaries the authorization they need to access any necessary digital data.
- Data privacy laws. Generally, federal data privacy laws prohibit online account service providers from turning over the contents of your electronic communications to anyone other than the owner without the owner's lawful consent. That means companies like Google and Facebook may lock up your content unless you give express permission for others to access it. That might leave your heirs unable to gain access to photos, email messages, or other information stored in the cloud. Fighting for that access in court probably would be cost prohibitive, says Lamm. "Trying to gain access to a deceased person’s digital accounts without lawful consent may involve a court battle with an online account service provider," he says. "That could be extremely expensive."
Make your estate plan digital-savvy
Fortunately, you can avoid these obstacles relatively easily by addressing digital property and information in your estate plan. "By planning ahead, you can arrange for full access to your digital property, keep administration costs down, and ensure that no valuable or significant digital property is overlooked," says Lamm. He recommends taking the following 4 steps:
- Make a list. Start by listing your digital assets so your loved ones know what you have and where they can find it. Include all your important passwords, online accounts (including email, social media, PayPal, etc.), and digital property (including domain names and virtual currency). Store your list in a secure location and make sure your family members know how to access it.
Tip: Inexpensive password management apps such as and can help simplify this effort.
- Understand what you really own. There are instances where you may have thought you purchased a digital asset, but in fact you purchased a nontransferable license to use the asset. That’s the case when you buy music on iTunes®, according to the terms you agree to when you make the purchase.* There may also be limitations restricting the number of times you can burn the music to a CD.
Tip: Check the terms of agreement for vendors of music or other digital assets to see whether it sells the asset itself or simply a license to it.
- Back up data stored in the cloud. If you store any digital assets in the cloud, back them up to a local computer or storage device on a regular basis so that family members and fiduciaries can access them with fewer obstacles. "A lot of companies make this extremely easy," says Lamm. "Facebook, for example, has a One-Click Download option to download all your data to a computer."
Tip: Don't just rely on the cloud for backup. Also back up your data to a local computer or personal storage device.
- Provide consent in legal documents. Work with an estate planning attorney to update your wills, powers of attorney, and any revocable living trusts. They should include language giving lawful consent for providers to divulge the contents of your electronic communications to the appropriate people. You also might consider exactly which information you want to make available, according to Lamm. "A blanket authorization may not be appropriate," he says. "You might not be comfortable making all digital assets accessible to your fiduciaries."
Tip: In your estate planning documents, specifically allow your fiduciaries to bypass, reset, or recover your passwords.
Since digital assets are still a relatively new phenomenon, the laws that deal with them are changing rapidly. Talk with your attorney about the steps you can take now, and check in regularly to update your estate plan to accommodate any changes in the law or in your digital property.
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