Sadie Says… Owning intangible and digital assets
Owning intangible and digital assets
Q. What are digital assets and how do they apply to estate planning?
A. Do you have a Twitter handle or Facebook account? Listen to music on iTunes? Buy Kindle books on Amazon? Operate an email account?
If you answered “yes” to any of those questions, you own digital assets. Your estate no longer consists of personal property, bank accounts or life insurance. You now own an asset that is intangible and requires more deliberate planning.
The concept of digital assets is still somewhat amorphous and in its infancy. The term does not refer to your cell phone or computer.
Instead, digital assets refer to electronic records, such as JPEG images and Word documents, published content on social networks or blogs and stored and transmitted communications such as email.
The digital asset is the information stored on a device, like a server or hard drive.
To use and adapt Supreme Court Justice Potter Stewart’s famous remarks on obscenity: “I may not define the scope of digital assets, but I will know a digital asset when I see it.”
The flock to digital is no longer a trend. Digital has become an integral part of our existence. As of last year, 71 percent of online adults use Facebook, and over 85 percent of people are online or use an email account.
Rather than store letters, records and photo albums in desk drawers or boxes in the basement, mom and dad are now more likely to listen to digital collections of music and use Facebook or email to convey personal sentiments to loved ones.
These assets become no less important simply because they are digital rather than tangible.
In fact, these assets may become increasingly valuable as they can be maintained in the same condition for future generations to enjoy (if not enhanced as technology continues to improve), are more readily searchable, accessible and require less physical storage space.
Estate planners must assist their clients in addressing the digital development because these mediums have changed the way people live and communicate.
As a result, new issues arise in dealing with estates and matters related to incapacitated individuals.
Americans continue to see a rise in online security attacks and credit card data breaches, and identifiable information must be protected.
Some financial institutions operate exclusively online, and no longer maintain branches that you can travel to and collect physical records.
An executor or heirs may no longer need to rent storage units to keep personal effects but instead may require additional server space or encryption software. Each of these is a uniquely digital encounter that a decedent’s executor or agent acting under a power of attorney must have the authority to address.
The complicating factor to this discussion is that there are unique terms of service for each provider. The terms of service may present restraints on accessing or transferring the asset.
For instance, Google allows you to utilize an “interactive account manager” to list who should receive notice and access to your content if the account goes inactive for a predetermined time period (three months to 18 months). A Google user can also direct that his or her account be deleted if it becomes inactive for such a period.
In contrast, iTunes only provides you with a nontransferable license to use the software, whereas Facebook permits users to select a “legacy contact” who monitors a memorialized account upon the death of a user.
What does all of this mean to you? First, your estate planning documents should specifically account for these assets and allow your appointed fiduciaries (executor, agent and trustee) to access or manage assets. The provisions should be addressed in your Last Will and Testament, Power of Attorney and Trust, as needed.
At the current time, Pennsylvania estate planning practitioners are addressing these practices on their own and without a statutory backdrop. Legislation has been introduced to address this emerging area of the law.
The Fiduciary Access to Digital Assets Act will amend existing state statutes to add provisions concerning digital assets.
The objective is to ensure that an Agent, Executor or Trustee can manage a digital asset to the same extent that they can write checks from a checking account or sell a vehicle.
Secondly, you should begin keeping accurate records of your digital assets. You can either maintain these records yourself or enlist the help of a digital asset management service to do the same.
Regardless, it’s important for your entrusted individuals to know:
• What you own.
• How to access it.
• Your instructions regarding the particular asset.
Above all else, you need to have these conversations and give your digital assets the attention they deserve.
— Sadie Says is provided by the Lycoming County Health Improvement Coalition.