As technology has progressed, establishing digital accounts for individuals and their businesses has grown immensely. These digital assets are often archived and need to be taken into consideration for estate planning or business succession planning.
Differentiating between digital accounts and digital assets is essential. Digital assets comprise emails, documents, images, and audio and video files. They are stored on digital devices, such as desktop computers, laptops, tablets, storage devices, and smartphones.
Digital accounts store data based on the terms and conditions of a service agreement, which controls ownership rights and access. These accounts include email, social networking, file sharing, financial management, domain registration, web hosting, tax preparation accounts, and online stores.
Since significant information and assets reside online, the terms and conditions of a service agreement may affect access to the information. Both individuals and businesses need to identify the types of digital accounts and assets in use and understand their rights under the service agreements.
Managing Digital Resources
Digital accounts and assets usually fall into four major categories: personal, financial, business, and social media.
- Personal accounts and assets include personal email accounts with a service provider. Other items may comprise webmail, photography or video sites, music sites, eBook sites, and other sites containing personal information.
- Financial accounts and assets are online bill payment sites; online access bank, retirement, investment, and trading accounts; and PayPal accounts.
- Business accounts and assets usually include a website with a domain name, email address, and documents housed on Google Drive or iCloud. Also, firms may have blogs and vendor agreements for marketing or public relations services.
- Social media accounts are those where social interaction occurs within networks. The most recognizable are Facebook, Twitter, and LinkedIn, although hundreds more exist for specific niches.
Once all digital accounts and assets are identified, develop a comprehensive inventory. A digital account and asset inventory will allow an individual to assess which family member should inherit certain files and the content of accounts. Businesses should determine how accounts are handled for succession planning or the sale of the business.
The inventory should be detailed, updated regularly, and stored with instructions for access. If an outside storage provider is desired, find vendors in the online Digital Asset Management Vendor Directory (damvendors.com). Inventory contents must include the name of the account, user name, password, security questions and their answers, and which person should have access to it upon disability or death of an individual or business owner. Other issues include whether the account should be terminated or memorialized.
Another consideration is the location of the digital accounts and assets. Do they reside on a home or business desktop computer within proprietary software? Or are they in a folder that is accessed through a service provider? The location may also be on a laptop, smartphone, or online financial management accounts.
While the cloud is often used for storage and backup, it's important to regularly back up computer files, lists, and data. If online storage is an option, certain vendors focus on estate planning, such as Password Box (formerly Legacy Locker) and SecureSafe.
Password Box serves as a digital safe deposit box where users put in all online accounts and assign beneficiaries. SecureSafe is a data safe for storage of passwords and documents.
Whether hard copy, CD backup, or online storage, keep the inventory current. Since many sites require regular password changes for security, an update may be necessary every few months.
Valuing Digital Resources
Once the inventory has been completed, review the inventory to determine accounts and assets of value, and whether the value is sentimental or financial. Many individuals and businesses overlook the financial value of a domain name, blog, or ads from webpages and blogs.
For example, the Drudgereport.com blog is reportedly worth millions. Does a blog by a gardener with 2,000 followers have financial value if continued by the next generation?
The potential loss to an estate, whether it is of sentimental possessions or items of financial value, becomes evident once the list of digital assets and accounts is evaluated.
Individuals may seek specific guidance under their state laws. While a few states have adopted legislation, the Uniform Laws Commission has approved model legislation for states to adopt or revise to state specific issues. This Fiduciary Access to Digital Assets Act in its original form or as revised has been introduced in 26 states. This act addresses the rights of beneficiaries and fiduciaries to access digital resources.
When reckoning with digital accounts and assets, here are the key points. Differentiate between digital accounts and digital assets, and identify as personal, financial, business, or social media. Maintain a comprehensive inventory, and determine where the accounts and assets reside. Decide which assets have value and designate an appropriate beneficiary.
This article is sponsored by the CCIM Foundation @ www.ccimef.org