Estate Planning for Digital Assets

Included with the assorted shopping bags and file storage boxes full of paper recently delivered for a new estate administration file was a personal laptop computer requiring an access password which no one seemed to know.  Based upon a cursory review of the documents (which don’t include many current paper statements) it appears that our (former) client maintained a number of active online bank, brokerage and e-mail accounts.  We have yet to discover any information that suggests what the username, password or other access information to these accounts might be.  If this matter is consistent with similar recent experiences, we will not find that information absent the intervention of a skilled computer technician, if then.

While technology can simplify our lives while we’re living, it can complicate things significantly when we become ill, incapacitated, or die.  The law is in a state of flux.  That is why it is essential to address with our clients the importance of planning for access to, and disposition of, their digital assets.  We need to guide them to identify their digital assets and document their choices for the people they wish to have access to and control of the assets in the event of the account holder’s illness, disability, or death, as well as the ultimate disposition of their digital assets. 

 Identifying Digital Assets

The initial task is to identify the client’s “digital assets.”  Such assets include any kind of digital file: e.g., e-mail, documents, images, audio, video and any online account (which may include e-mail, software licenses social networking accounts; file sharing, domain registration, domain name service, financial management, online store, games, professional sites, frequent flyer accounts) or any file stored in a computer or other electronic device, (e.g., desktop, laptop computer, tablets, storage devices mobile telephone, smartphone), or in the cloud.   

It has been reported that Leonard Bernstein, who died in 1990, left a manuscript of his memoir, Blue Ink, on his computer in a password-protected file.  To date, no one has yet broken the access code.  The story emphasizes the importance of encouraging our clients to prepare a complete digital asset inventory including all accounts; numbers, usernames, passwords; PINs, security questions and answers, information on whether the accounts have monetary value, and any special instructions.  For security purposes, certain aspects of the inventory information should be kept or stored separately from others.  For example, the client might make a list of accounts and numbers, and a separate, related list of some or all of the access information for those accounts.  As passwords and electronic accounts can change from time to time, the inventory should be kept current.  You might suggest that your client review it on a quarterly basis, or annually at the very least.

Once the digital asset inventory is completed, the information must be safeguarded.  Perhaps the client is comfortable entrusting the information to a family member or prospective fiduciary.  If the estate is more complex, or involves business assets, a better option may be a secure storage online service.  A number of resources are available for storage of digital documents, passwords and access codes, including those such as: SecureSafe (securesafe.com), Legacy Locker (legacylocker.com) and AssetLock (assetlock.net).  Services such as these may also make frequent updating of the digital inventory more convenient.

Access to Digital Assets

The rights of fiduciaries to digital assets are not clear.  The Uniform Laws Commission Drafting Committee on Fiduciary Access to Digital Information recently held its first meeting.  A number of states (including Connecticut) have enacted their own laws concerning access to digital assets. Given the lack of clarity under current law, it’s important that our clients’ estate plans ensure that only the people they choose have access to their digital information, and that the selection of a representative in the event of illness, incapacity or death is documented.  Many online accounts are contractual, license arrangements that control who other than the account holder may access the account and under what circumstances.   As there are as many different policies as there are online account providers, it is important to specify in a power of attorney that the agent’s authority extends to digital assets or online account management.  The executor or administrator of a Connecticut decedent’s estate is granted express statutory authority to access or obtain copies of a decedent’s “electronic mail account” [C.G.S. §45a-334a].  Digital options that have emerged since the statute went into effect in 2005, such as social networking and blogs, are not covered by the statute.  Some commentators recommend a more expansive approach by naming a “digital executor” or “social media executor” in a will and expressly granting the fiduciary the power to administer and distribute all forms of digital assets.  Incorporating express powers in the appropriate instrument should protect the fiduciary against an inadvertent violation of the federal Computer Fraud and Abuse Act or the provisions of online “terms of service” agreements.

Disposition of Digital Assets

Some forms of digital assets have actual monetary value, such as an online bank account which can be transferred when accessed.  Others hold inherent financial value that can be exchanged or transferred, e.g., an iTunes account or PayPal credit balance.  Other assets may exist only in digital form, for example photographs, recipes and manuscripts, and have tremendous sentimental or family historical value.  Regardless of the nature of the digital asset, it is important for our clients to consider and document how the assets should be distributed. 

A traditional will can be an appropriate tool for many digital assets, particularly those with monetary value.  Another option may be a so-called “digital asset trust” which functions similarly to a traditional revocable grantor trust by holding title to the electronic account and governing who may have access to what information, and when.   

Regardless of the form of the governing instrument, it is essential to document the client’s wishes concerning various electronic accounts.  Should an account be cancelled? Should it be accessible to family and friends, particularly if there is personal material (e.g., photos, writings) associated with the account?  These are all issues that need to be addressed.

As online accounts expand exponentially, and the rate of digital growth significantly outpaces the related law, it is incumbent upon estate planners to work with clients to make appropriate arrangements for their digital assets.  For further information on this topic, and others related to “digital afterlife,” you may enjoy a visit to thedigitalbeyond.com.

Deborah S. Breck is a Member of the Trusts and Estates Department at Pullman & Comley, LLC. Reprinted with permission from the January 21st issue of Connecticut Law Tribune. ©2013 ALM Properties, Inc.  Further duplication without permission is prohibited.  All rights reserved.