Estate planning is the process of designating who should manage your affairs if you are unable to, and of describing how your worldly goods should be distributed after death. Digital assets, also known as electronic assets, are an increasing part of everyday life, and constitute assets that have to be planned for. Planning for control of these assets in case of disability or death is a relatively new idea in estate planning. The objective is to ensure that your agent, executor or trustee has access to your online accounts to manage or close them as needed.
Paper records used to be a starting point for an agent or an executor to identify the assets and liabilities, bills to pay, or investments to manage. Paper records may be an incomplete starting point to identify the assets of someone who pays bills online, reads magazines and newspapers online, receives electronic bank and investment statements, manages retirement assets online, uses email, shops from online websites, maintains music and photo files online and uses a remote backup service to store copies of financial, tax, medical and other important documents.
A starting point for digital estate planning is to create an inventory of all the online services that are used, including usernames and passwords. It is important to ensure that the agent or executor is aware of the inventory and how to gain access to the online presence. Consider placing a letter of instruction to the agent or executor with other estate planning documents, and storing the important and sensitive information on a CD or flashdrive. It is equally important to plan to grant your agent or executor access to your computer, netbook, IPad or smart phone.
It is possible to include provisions in your Durable Power of Attorney, Will or Living Trust granting your agent or executor authority to deal with your digital assets. Each online entity has its own rules in its service agreement concerning who may be granted access. For example, in 2004, Yahoo refused to grant family members access to the email account established by a Marine killed in Iraq. In enforcing the privacy provisions of its service agreement, Yahoo required the family to get a court to order release of the email account.
Some assets, such as frequent flyer miles and rewards points, may be identified in your Will or trust as assets of your estate to be left to a specific beneficiary or to the residue of your estate. There is no uniform treatment of these assets, and many airlines hold that they, not the traveler, own the miles. Delta treats the miles as the property of the traveler and allows them to be inherited, willed or divided in a divorce settlement. American allows persons specifically identified in a Will to receive the miles. United’s written policy says that miles do not belong to the traveler and miles are not transferable upon death.