Laws Related to Digital Assets Continue to Evolve

April 24, 2015 - Posted by: admin - In category:

taxes - No Responses

Digital Assets are often overlooked in the estate planning process.

Do you have digital photos on your phone and or computer? Do you have an e-mail account, a Facebook account, a Twitter account and/or some other social media account? Are your financial account statements delivered to you online? Do you access your bank and investment accounts online? Do you have music on your phone and/or computer? Do you have any other information stored on your tablet, phone or computer?

If you answered yes to any of the above (and I have yet to meet someone who would not answer yes to one or several of those questions), then you have digital assets and need to pay attention to these things as you plan for the future. What would happen to these digital assets if something were to happen to you? With regard to data, photos and other files stored on your personal computer and/or personal phone or tablet, the answer to those questions is less complicated. However, with regard to photos, music, and other things stored “in the cloud” and with regard to your e-mail account and social media account, the answer is anything but simple or easy.

Would your spouse, child or other loved one have authority and/or the actual ability to access the relevant electronic accounts if you were to  become disabled or die? Will your personal representative be able to access your online financial accounts to determine where your financial assets are held, and then transfer the balances of such accounts in accordance with your directives? From an even more fundamental perspective, what will happen to all of those photographs being stored in the cloud and/or on Facebook, Pinterest, etc.?

These are all important questions to ask and to address in your planning. The first step is to make an inventory of your digital assets. Identify where your photographs are stored, write down usernames and passwords, but obviously, be sure to keep such important and confidential information in a safe place!  Then, determine who needs to have access to such information. Depending on your circumstances, it might be best to simply tell a spouse or child where such information can be found in the event of an emergency, rather than giving such other person immediate access to this sensitive information. For example, you likely do not have any need or desire to let your child log into your e-mail or online investment account now, while you are alive and well. Instead, you can record that information in a safe place and let the child know that should something happen to you, there is a folder located “in your dresser drawer” (just an example) that contains the usernames and passwords that would be needed to access your digital assets.

So, recording and safeguarding usernames and passwords is the first step. You then need to ensure that your estate planning papers give specific authorization to the designated individual with regard to your digital assets. Just because someone can get their hands on certain items of property (including your digital assets) does NOT mean that such person is automatically authorized to access, keep or transfer such assets. Hence, the need to have proper legal papers in place that give such legal authorization.

Finally, various state and federal laws related to digital assets are very much in transition. If you want to read an article that traces the evolution of such proposed and actually enacted laws and regulations, Jeffrey R. Gottlieb has written several online article on the subject. Please click here to read one of his latest articles.

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