There’s a new wrinkle in estate planning these days: planning for the disposition of virtual (or digital) assets. Most people understand the importance of having a will stating who will inherit their physical assets when the time comes. Expanding your will to include who will receive access to your virtual assets is equally important.
Consider this scenario: Amanda, a hypothetical small business owner, dies before addressing the disposition of her company’s digital assets (in a will or an advance directive). As a result, no one has the legal right — or the information necessary — to access the business’s website, online bank accounts, or business e-mail account (which includes the only contact information for several overseas customers). Access is also blocked to accounts Amanda established to make automatic electronic payments to several vendors (essentially virtual liabilities).
Her personal virtual assets are also in limbo, including several social media profiles, the balance in an online money transfer account, and all the information (photos, documents, medical and financial information, etc.) stored on her home computer, smart phone, and tablet, all of which are password protected.
The business in this hypothetical situation may survive the owner’s death, but not without some disruption while access to her online business accounts is sorted out. Amanda’s loved ones will also have some hoops to jump through since she didn’t plan ahead.
If your will hasn’t been updated for the digital age, here are the basics:
- Identify each digital asset
- Specify who (a person or persons) will have access to the assets
- Provide all necessary access information (usernames, passwords, security answers, etc.)
You also might want to draft a “virtual asset instruction letter” giving your beneficiaries specific directions about what you want them to do with your various accounts (e.g., send a final e-mail to all your contacts and notify social network friends).
In addition to sentimental value, virtual assets may have economic value and should be included in an estate plan for tax reasons.
Contact us with any questions at 585-419-0670.
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