When people think about estate planning, they often focus on tangible possessions like their home, car, or a treasured sports memorabilia collection.
But what about property in cyberspace? Most people have an online presence that includes social media accounts, where assets are kept behind firewalls and encrypted passwords.
These so-called digital assets could include valuable property such as business ventures and websites, domain names, e-mail accounts, music and photography collections, copyright work, cryptocurrency, and bank accounts.
Many of these online properties have monetary value as well as emotional worth.
Today 72% of Americans use some form of social media. (Pew Research 2021). In the United States, consumers places an average value of $55,000 on digital assets they own across multiple devices, according to a separate study. (McAfee computer security, 2011, most recent available).
These accounts and collections could be lost forever if individuals neglect to include them in their estate planning.
If passwords and other important access information are not shared with family, friends, or beneficiaries, it may be impossible to transfer those assets when the account owner dies. For example, if an entrepreneur sets up an online business with a website and emails that are only attributed to them, it may be difficult to transfer that business name or emails to the next owner. Today, 71% of small businesses have their own websites (Top Design Firms, 2021).
Privacy remains a challenge
With the proliferation of social media, many laws have been introduced to protect the privacy and identity of account owners. Until recent years, however, lawmakers have not comprehensively addressed transferring digital assets to someone else.
State laws can vary and heirs can face major obstacles in gaining access to digital assets. Beneficiaries and estate executors may end up challenging service providers operating under stringent privacy laws and service agreements.
In 2015, the Uniform Law Commission introduced “The Revised Uniform Fiduciary Access to Digital Assets Act.” The act governs access to an individual’s online accounts when the account owner dies or loses the ability to manage the account. To date, the rule has been enacted in 47 states. In light of the changing social media landscape , the Commission has created new drafting and study committees in recent years. For example, in 2021, the Commission introduced a committee to draft amendments for the use of electronic estate planning documents, other than wills.
Private companies offer solutions
Most social media channels have introduced policies and procedures for families seeking to access or delete information stored by a deceased family member on the internet or in the cloud computing space.
Apple, for example, launched a program allowing users to set up a Legacy Contact. The account owner can designate a contact, giving them permission to gain access to their Apple information online and in the cloud. For users with older operating systems, the company has other mechanisms to help heirs. Apple needs to receive and verify certain legal documents before they can assist with a deceased person’s account. This generally includes a death certificate, and may also require a court order or other documentation. The requirements vary by country and region, according to Apple.
Each social media platform has different policies. Facebook and Instagram, for example, allow family members to memorialize or delete a deceased person’s account. Documentation is required, such as a death certificate, or other proof of authority. Twitter, LinkedIn, Snapchat, and Pinterest also have published procedures for deactivating accounts.
Include digital assets in estate planning
Consider discussing your online profile and digital assets with a financial professional as part of an estate plan. The nature of innovation means that there are new social media channels gaining popularity all the time, or forms of cryptocurrency, that will require specific documentation or procedures to transfer these assets to heirs. Federal and state privacy laws will need to be amended to keep up with innovations. As individuals increasingly move access to their valuable assets online, it will be important to meet with a professional advisor with expertise in estate planning to develop a comprehensive plan.
More in: Estate and Wealth Transfer