With each passing year, individuals find themselves living more and more of their lives in a digital environment. From online shopping rewards and digital storefronts to social media accounts and movie collections, these digital assets can be as valuable as any physical asset listed alongside them in a will. These online properties, however, might contain an additional layer of scrutiny when it comes time to distribute the assets.
Providing clear instructions as to who gets what when is a significant benefit of most estate plans. Individuals want to have control over the distribution of their wealth. Unfortunately, while digital assets are legally similar to physical assets, certain laws continue to evolve. Here are four obstacles that might present challenges to your surviving loved ones:
- A list of passwords: When creating your will, it is wise to make a list of passwords that would be used to access any hardware, software or digital domains. This list can include smartphone, computers, online banking accounts, cloud storage, social media sites or digital storage.
- Encrypted storage: It is not uncommon for an additional layer of security to protect digitally stored materials. It might be wise to download stored data to an external hard drive that can be easily locked away in a safety deposit box or a personal safe. This can include family photos and online entertainment collections.
- State and federal laws: As mentioned, laws pertaining to digital assets are constantly evolving. Many laws are in place to protect consumers from security breaches and unauthorized access. It is critical that you add language to your estate plan that grants access to your heirs. This can include authorization of access, approval to change passwords and approval to relocate the asset.
- Digital privacy among providers: In addition to state and federal laws, many organizations will likely have privacy policies in place that could make it difficult to access the accounts of a deceased individual. While these policies are in place to protect their members, it can be challenging for an heir to proceed as intended. Again, it is wise to include written authorization for users to access your accounts.
When developing a comprehensive estate plan, many individuals focus their attention on physical assets and the distribution of their wealth through trusts. With digital assets gaining prominence, it is important to devote significant resources to their proper distribution as well.