The importance of accounting for digital assets in your estate plan
Digital estate planning is vitally important for today’s Internet-oriented society.
Though it may seem maudlin, death is a fact of life; with that in mind, it is important to plan for the inevitable. Most people understand, at least on an abstract level, that their assets must go somewhere after they pass away. After all, as the saying goes, you “can’t take it with you.” Those people may assume that, if they are married, then their assets will automatically pass to their spouse or to their children and that will be the end of it.
While there is some truth to that, unfortunately, things are rarely that simple. What the basic state laws of intestacy can’t possibly take into account are such issues are estate taxes (also called “inheritance taxes,”) disputes among family members who feel they should have received a larger share of assets, business succession planning and the impact that the need for long-term care could have on a person’s estate. State intestacy and probate rules also don’t help shield assets from creditor collection actions.
There is another key aspect of estate planning, relevant in today’s ever-connected world – one complete with 24/7 Internet access, websites, mobile phones, social media, networking and digital marketing – that has never been necessary in the past: the protection and disposition of so-called “digital assets.”
What are digital assets?
We all have digital assets, even if they may not have monetary value. For example, our email accounts are our personal digital assets. They are electronic property that contains information intended solely for us or for a selected group only. They are password protected and relatively secure, just as a bank account containing our hard-earned money would be.
Another digital asset without an easily assignable dollar value would be a social media or networking account, particularly one for personal use (not on behalf of a business, organization or commercial enterprise). The things posted there – our thoughts, messages, greetings, photographs, etc. – hold sentimental value, but they aren’t considered as part of our personal wealth. Since they preserve our memory and our lives, however, loved ones could want to access them after we are gone, something that could prove difficult given the unique terms and conditions of use for various sites.
Something that could have a concrete dollar value, however, is a digital currency account (Bitcoin, PayPal, Amazon, credit for an online retailer, etc.) or website, particularly one that sells products and can be traced to a particular amount of income. Of course, online/digital “goodwill” can also be an invaluable part of running a successful business these days, and it might be nearly impossible to properly “value” that for estate planning purposes. That being said, it is of vital importance to appoint someone to assume administration of the company website, and to handle any digital marketing strategies after you are gone. This can be done by naming someone in your will (and providing the person with important log-in and password information as needed), or as part of business succession planning in conjunction with a comprehensive estate plan.
Regardless of the method you and your estate planning attorney utilize to pass along your property after your death – be it a will, trust, family limited partnership or some combination thereof – take the time to plan for your electronic assets in addition to your “brick and mortar” ones. For more information about this and other important estate planning topics, seek the advice of an experienced estate planning attorney like those at the Houston law office of Robert M. Mendell, Attorney at Law.
Keywords: estate planning, wills, trusts, estates, business succession, digital assets