18 Oct Digital Assets
At Phelps LaClair, serving Chandler, Mesa, Phoenix and Scottsdale, we create estate plans for many families. Some of our clients have accumulated great wealth; others have a more modest estate. All of our clients want to protect the wealth they have and pass it along to the next generation. Real estate, financial accounts and personal property are often the primary components of an estate. Yet, as many of us who have been working from home this year have discovered, digital assets also play a significant role in modern life. Therefore, you need a plan for including digital assets in your estate plan.
What Are Digital Assets?
Digital assets are those things of value that are created or managed in digital form. We create and use digital assets hundreds of times a day. If you use social media, email, You Tube, etc., you are creating or using digital assets. The photos that you take and store on your computer or upload to Facebook (along with all of your posts) are digital assets. So are the videos that you take of your child’s first birthday, or the vacation your family went on last summer.
Other digital assets might include work-related items such as Excel spreadsheets, Word documents and Powerpoint presentations. While the programs themselves are not considered personal assets, the content you create with them are. Graphics, logos and other branding items are digital assets; if you write computer code or record a musical event, you are creating digital content that has value.
The qualifications for digital assets are: it is digital, it is unique, and it provides value. Some digital assets are more valuable than others. These would be items of value that are difficult or impossible to replace, such as once in a lifetime events, a database that took years to assemble, or a computer program that contains thousands of lines of code. These kinds of assets have ongoing value that exceeds the time and cost of their creation, and so should be part of your estate plan.
Online Accounts
Financial accounts that are created or managed online are considered to be digital assets. Bank and investment accounts, insurance accounts, and retail accounts are all linked to your finances and need to be considered as assets to protect and pass along to your heirs. Paypal, Venmo, Cashap and credit cards fall into the same category as bank accounts. Amazon, Netflix, and iTunes are examples of retail accounts that can contain digital assets. Soundcloud, iBooks, Kindle and YouTube are creative cloud accounts that can contain valuable assets such as books, songs and videos that you have created. These should be included in your estate plan.
How to Include Digital Assets in Your Estate Plan
Including digital assets in your estate plan is not difficult. But it will require a bit of organization and upkeep. The first step is to make a list of all of your digital assets. You need to include all of your social media accounts, financial accounts, online retail accounts and online creative accounts. Every one of these accounts will have a password that needs to be included in the list. Note which accounts are financial or have monetary value. If you want some of these assets to be handled differently than others, note that also. You may want some to go to particular people or charities; if so, you will need to state that.
The next step is to name a digital executor. This may or may not be the successor trustee you name as the executor for your estate. This person should be familiar with online accounts, storage and access. Make sure that the master digital asset list is securely stored in a safe or in cloud storage. And don’t forget to give the password to your attorney for safe keeping.
We Plan for Your Future
At Phelps LaClair, we help you plan for a secure future. More than ever, it is important to maintain good digital asset record keeping. This means updating the number and value of your online accounts and updating passwords as you change them. We are in our fifth decade of estate planning, and we know that laws and regulations are constantly changing. To include digital assets in your estate plan, give us a call for a free, first time no-obligation consultation. We will bring you up to speed as we discuss your plans and goals. There is no time like the present to plan for the future of your estate!
Images used under creative commons license (Commerical Use) 10/18/20 Photo by Benjamin Dada on Unsplash