Are Your Digital Assets Covered By Your Estate Plan?
If you use an electronic device like a phone, tablet or computer, you probably own digital assets. Have you considered what happens to all of that information if you become incapacitated — even temporarily — or after you pass away?
The best way to protect your digital assets is to include them in your estate plan after you have a detailed discussion with your estate planning lawyer.
What Are Your Digital Assets?
Your digital assets include much of the data stored on your device or in a cloud account, as well as information in accounts you access online with a password. Photos and videos are usually the first digital assets that come to mind for most people. But you probably also have a lot of other information stored on your computer and in your online accounts.
Digital assets include a lot more than you may realize. In addition to files on your computer or in a cloud account, digital assets include your email accounts, financial accounts, online subscriptions, social media accounts, reward accounts (like frequent-flier and shopping rewards), and even your shopping accounts themselves.
What Happens to Digital Assets in Your Estate?
When you pass away, your digital assets do not automatically transfer to your beneficiaries or heirs. Access to many online accounts is limited to the account owner according to the site owner’s Terms of Service, which are different for every site.
While Arizona law provides access for certain fiduciaries, those fiduciaries must be properly designated for the law to apply. The law also applies only to access by fiduciaries, not to access by others. Addressing your digital assets in your estate plan is a far superior approach to relying on the law to provide necessary access if you pass away or become incapacitated.
Why Should Protect Your Digital Assets in Your Estate Plan?
There are four very important reasons to protect your digital assets in your estate plan.
First, if you become incapacitated or pass away, your online presence continues to exist. That exposes your files and accounts to hacking. If an account or file (like a PayPal account or website) has value, it may be accessed and stolen. If no one has access, there is no way to protect your accounts and information.
In addition, you probably care about who gets at least some of your digital assets. Family photos and videos are important, but you also may want someone to be able to continue a website, blog, or social media account that you maintain.
Another reason to address digital assets in your estate plan is to provide immediate access to the assets by your agent under power of attorney (if you become incapacitated), personal representative (if you pass away), or other fiduciary. Without express authorization from you, that access becomes difficult at best, even with the Arizona law that provides access for fiduciaries.
Finally, your digital assets can affect administration of your estate (and therefore your estate plan) in a number of different ways. For example, if you have substantial digital assets, the value of those assets alone (or together with your other personal property) may exceed the $75,000 limit for using the small estate affidavit process to avoid probate for personal property. If that’s the case, your estate plan must take that fact into account.
Revised Uniform Fiduciary Access to Digital Assets Act in Arizona
In 2016, Arizona adopted the Revised Uniform Fiduciary Access to Digital Assets Act, A.R.S. § 14-13101 through § 14-13118. Many other states also have adopted the Digital Assets Act.
The provisions of the statute are somewhat complex. Generally, they provide access to digital assets to fiduciaries, including an agent under a power of attorney, personal representative of an estate, trustee, or conservator appointed for an incapacitated person, when there is no other authority for the fiduciary to access the assets. In addition to providing necessary access for fiduciaries, the law avoids a fiduciary being prosecuted under state or federal law for unauthorized access to digital assets, including electronic communications.
The law provides two mechanisms for providing access digital assets after incapacity or death. First, you may use an online tool provided by the custodian (site owner) to designate another person to have access to your account. If you use the tool provided by the custodian, your designation in the tool overrides any direction contained in your will, trust, or power of attorney.
Under the law, if you do not use a custodian’s online tool or the custodian does not have one, you may distribute your digital assets in a will, trust, or power of attorney. The power of attorney must be a durable power of attorney to remain in effect if you become incapacitated.
How Can You Protect Your Digital Assets?
To begin the task of protecting your digital assets, you should make a complete list of all your digital assets. Include all your online accounts, together with the password that you use to access the account. On the list, you should note whether you have used a tool provided by the site that hosts each account to provide another person access to the account. If so, record the name(s) of anyone you designated to have access.
For files on your computer or stored in your cloud account, part of your inventory process should be saving a copy of the files on a separate hard drive, smart card, or thumb drive. Store your digital asset inventory list on that separate copy too. The copy can be stored with your estate plan, or you can include a note with your estate plan about where the copy is located. Regularly creating a backup of your digital assets is always good idea.
After you inventory your digital assets, give thought to how you would like to distribute your digital assets and which trusted people close to you should have access to them. Then, contact an experienced estate planning attorney, and integrate your digital assets into your estate plan.
Schedule a Free Consultation With an Experienced East Valley Estate Planning Attorney
At Peterson Law Offices, estate planning is a core part of our practice. We provide top-quality services at affordable prices and can assist you in creating a new estate plan or revising an existing plan to include your digital assets.
We welcome inquiries from clients throughout the East Valley, including Queen Creek, San Tan Valley, Gilbert, Mesa, and Chandler. Schedule your free initial consultation by calling 480-878-5998 or using our online contact form.