When it comes to estate planning, you might start by thinking of who you want to leave your house or business to or how you want to distribute your finances. Years ago, property and financial assets were all that comprised most people's estate plans.
As the founder of a legal firm that specializes in estate planning, I've observed that today, digital assets also form an integral part of the estate planning process. Many aspects of our lives that once required the physical exchange of documents or money have now been digitized and exist in an intangible form online. In addition, much of our personal lives has also made its way to the digital realm through social media. Family albums and the like are now shared with others as online posts.
What is a digital asset?
With so many areas of our lives transferred into the digital realm, it stands to reason that digital assets have come to form an important part of estate planning. But what exactly constitutes a digital asset?
Basically, a digital asset is any online record that a person owns. Online records cover a vast expanse of content held on the web, from a blog on cooking to an online rewards program.
Digital assets are especially sacred for industry leaders. In today’s digital economy, a lack of protecting your digital assets can lead to serious consequences. Regardless of your industry, most professionals acquire multiple streams of revenue during the course of their lifetime. Whether those include bank accounts, brokerage accounts or stocks portfolios, today all are generally managed online.
With the convenience of today’s cloud-based systems, other sentimental digital assets such as photos and videos are also easily stored and accessible for years. Whether it is your college graduation photos or a video of your first dance at your wedding, these are memories to be shared for generations.
Without planning for control, distribution and access, your digital assets can be squandered or fall into the wrong hands. When discussing estate planning and what assets you wish to secure, here are a few categories that you'll want to keep in mind:
• Financial accounts: In keeping with the times, a majority of banks now allow their clients to conduct bank transactions online. Some banks are also partnered with digital payment systems, such as PayPal or Zelle, that allow clients to conduct online money transfers. Both bank accounts and online payment services are considered financial accounts and should be included in an estate plan.
• Online rewards programs: As companies have moved their goods and services online, they've also created online rewards programs for customers. These types of programs often reward returning shoppers with points, cash back or discounts. Over time, these rewards can become valuable enough to warrant being added to an estate plan.
• Electronic communications: Online interactions have undergone a massive transformation thanks to the rise of social media. Indeed, a person has on average at least five social media accounts that they use regularly. Although it is unlikely that someone's Facebook or Twitter account might yield any monetary worth, it is important to include these and other electronic communications in an estate plan so they can be properly administered.
• Digital collections: Any photographs, videos or music files that have been digitized fall under the umbrella of digital assets. As with electronic communications, digital collections might not have much financial value, but they might carry a great deal of sentimental value, which is worth including in an estate plan.
Protecting Your Digital Assets
The previous section illustrates the different forms a digital asset can take and highlights just how widespread digital platforms have become. Yet, despite the prevalent use and exchange of online data, many people neglect to include their digital records in their estate plans. It might be that this transition into the digital era doesn't fit in with people's conception of what an estate is or should include. But whatever the reasoning behind it, failing to incorporate digital assets into your estate plan can have undesirable consequences.
As an example, consider online banking. Many banks allow their clients to conduct their bank transactions and pay bills online. Should your family or loved ones need to eventually access these digital assets, even with your password, they may not legally be able to access your accounts without your permission via a will or other estate document. The same goes for rewards programs, social media accounts, etc.
If you are one of the millions of people who use online services, be sure to put together a list of the different accounts you own, as well as their corresponding access information (username, password, secret questions, etc.). Establish how you want your digital assets handled and distributed. In addition, you'll need to appoint someone to act as a digital executor. This person will have legal access to your online accounts and oversee the management and allocation of your digital assets.
Digital records have become an integral part of daily life for many people. As such, they've also come to form a part of people's estates. Make sure you've prepared your digital assets for the future.
This article originally appeared on Forbes.
