Estate Planning for Digital Assets (Part 1)

Nearly everyone has a digital presence these days, but many people fail to consider their digital assets when designing their estate plan. As a result, loved ones of someone who has passed away often face great difficulties in trying to access, collect, maintain, or close their digital accounts. After addressing what digital assets are and why they should be addressed in an estate plan, I will write next week about the steps one can take to plan for their digital assets.

What Are Digital Assets?

More and more essential parts of our lives are moving online or onto a cloud, and the COVID-19 pandemic has accelerated this trend.

In a broad sense, digital assets are defined as any “electronic record” in which a person has a right or interest. These types of assets include:

  • Data, communications, and intellectual property – spreadsheets, photos, text messages – stored or transmitted on your phones, tablets and computers, or the cloud.
  • Online accounts and services, such as email, social media accounts, and financial accounts – bank accounts, investment accounts, Venmo, etc. – which you access through electronic devices.

Digital assets might have financial value (such as cryptocurrencies and domain names), might give access to assets with financial value (Paypal, online bank accounts, E-Trade, etc.), or might have sentimental value (family photos, a personal blog, or email).

Why Should Digital Assets Be Addressed in an Estate Plan?

If someone becomes incapacitated or deceased, that person’s fiduciary (the individual appointed in a Power of Attorney, a Will, a Trust, or by a Court) might be prevented from gaining access to their digital assets. Terms of Service Agreements and federal privacy laws are often two of the major hurdles:

  • Terms of Service Agreements:  Whenever we update the software on our smartphone or create an online account, there is a long agreement we must “accept” to use that product or service. Although we might scroll past it, these Agreements may prohibit anyone other than the account user from accessing the account unless they have proper authorization.
  • Federal Privacy Laws: These laws are designed to protect the privacy of a person’s digital information but can inadvertently prevent a fiduciary from gaining proper access to digital assets.
    • The Computer Fraud and Abuse Act makes unauthorized access to any computer, online service, or online account a crime. Without the individual’s express authorization, a fiduciary might technically commit a crime by logging into that person’s online account.
    • The Stored Communications Act prohibits “service providers” (such as Google providing Gmail or Facebook providing the Messenger app) from disclosing the contents of communications to anyone who is not the account user, with a few narrow exceptions. One such exception is the “lawful consent” exception, allowing the account user to consent to the release of all content of the account to third parties, such as the person’s fiduciary. However, the account user must proactively consent to this while they are living and competent. If the account user failed to provide this consent, a service provider may refuse to release the contents of the user’s account to the fiduciary.

Part 2 will address how to plan for your digital assets while designing or updating your estate plan.

For assistance with your estate plan, contact us at Wilson and Wilson Estate Planning and Elder Law, LLC at 708 482 7090 for our main office in LaGrange, Illinois or at 847 656 8958 for our Northbrook, Illinois office.