Digital Assets Part 1: Identifying Digital Assets
The digital world is a large and growing part of our lives. More and more of the things we buy, subscribe to, or that contain critical personal and business information are available exclusively in digital format. This makes it more important than ever for digital assets to be a key consideration when planning for incapacity and death, especially for more tech-savvy individuals and younger generations. This is the first in a short series of entries that will explore digital assets, give practical tips for protecting them, and explain how a solid estate plan can help safeguard your data now and in the future.
What are Digital Assets?
Digital assets are not limited to the technophiles among us. If you have a smartphone, you likely have digital assets. An email account? Digital assets. Shared pictures of your grandkids? Digital assets.
A “digital asset” is anything of value that only exists in digital format on computers, cell phones, and other devices, or that you keep in internet-based storage accounts. In Part 1 of this series, we will explore common types of accounts and assets that should be considered in developing a comprehensive estate plan.
Online Portals
Online portals are accounts used to access or manage real-world assets, such as banking and investment accounts. Some newer cars and “smart homes” may come with portals, too. While portals are not themselves digital assets, it may nevertheless be important to ensure that fiduciaries have access to these accounts in the event of your incapacity or death. However, note that access to these accounts by a third party may violate the Terms of Service Agreement (TOSA) that governs the account, so you should make sure that your fiduciary accessing your account will not violate those terms. In either case, your fiduciary should never impersonate you when acting on your behalf in portals and other online accounts. Terms of Service Agreements will be discussed further in the second entry of this series.
Social Media
Social media accounts include sites such as Facebook, Twitter, Instagram, LinkedIn, Snapchat, TikTok, Reddit, YouTube, Tumblr, Discord, and Twitch. Social media sites come and go, but the information on these sites can remain on the Internet indefinitely (anyone remember MySpace?).
Like portals, social media accounts are not digital assets per se, but they may house digital assets that you may want your fiduciaries to have access to, such as photos and electronic communications. You also might consider arranging for your personal representative to close your account after your death—more on that in Part Two.
For most people, email accounts will contain a large amount of personal digital assets. Email accounts not only contain communications, photos, files, and other personal information, but are often used to reset passwords and validate identity for other websites and services. Having access to someone’s email account can give you access to many of their other online accounts.
You should consider all the documents, photos, file attachments, and other information that you have ever sent or received with your personal email account. Would you like your fiduciary, beneficiaries, and heirs to have access to that data?
Digital Content Purchases
Digital content purchases are items that only exist in digital form that provide some sort of entertainment or information content. Music and movies purchased from iTunes, Google Play, or Vudu, or e-books purchased from the Amazon Kindle Store or Apple Book Store, are all digital content purchases.
Keep in mind that the songs, shows, movies, or books that you purchase are different from the media that you receive from a subscription service. Whether you own the assets and can pass them on to a beneficiary is up to each individual service, but there is a growing movement among states and countries to allow purchased content like this to be passed on to a user’s beneficiaries or heirs.
Electronic Subscriptions
Electronic subscriptions are services that allow you to access digital content in exchange for an annual or monthly fee. Apple Music, Spotify, Netflix, Amazon Prime, and Disney+ are all examples of subscription services. The content you can access after subscribing are not assets that you own, but you may want to permit your fiduciary access to the account so that they may close the account or, if the provider allows it, transfer ownership of the account to a different person.
Files Kept in Online Storage Accounts
Online storage accounts are likely where most of your digital assets are stored. Own an iPhone, iPad, or Mac? Your photos, videos, and other documents are probably stored in iCloud. Use an Android phone? Your data may be backed up to Google Drive. Have a PC gathering dust in your attic or tucked away under a coffee table? There is a good chance those files are backed up to Microsoft’s OneDrive.
These accounts are often baked into your smartphone, tablet, or computer, and you may be using these services without knowing it. On iPhones, for example, iCloud Photos is usually enabled by default, so any pictures you take or save get automatically backed up to the cloud. If you have ever seen that dreaded “iCloud Storage Almost Full” notification, at least some of your data is being held in the cloud.
Online Stores and Marketplaces
Online stores and merchant accounts should not be confused with digital subscriptions or purchases. These are accounts on online marketplaces, such as Amazon, eBay, or Etsy, that you use to buy or sell products. If you sell anything on these sites—and especially if you run your own business on one of these—you should arrange for another person to finalize transactions and close these accounts if you become incapacitated or die.
Domain Names & Income-Generating Sites, Accounts, or Blogs
Whatever you think of the Internet as a whole, it is undeniable that it has opened many avenues for income for a wide variety of people. Pretty much anyone can find a way to make money online. If this includes you, your site’s or store’s domain name, merchant accounts, and the content you place online may be a digital asset that should be secured for your fiduciary and heirs. If you produce a good amount of original content, you should also consider consulting an intellectual property attorney to make sure that content is protected.
Digital Payment Methods & Virtual Currencies
These final categories of assets are also the newest on the scene. Digital payment methods such as PayPal, Apple Pay, and Google Pay already have widespread adoption, and more merchants are accepting these forms of payments every day. Contactless payment methods like these saw an explosion in use during the COVID-19 pandemic, with many stores and merchants asking customers to use these methods if possible. Apple Pay and Google Pay are generally tied to specific devices, but online methods such as PayPal and Visa Pay may be accessed from anywhere by logging in.
Virtual currencies, on the other hand, are bleeding edge and not yet widely adopted—and the future of these types of currency remains uncertain and unpredictable. Nevertheless, if you own any digital currency, such as Bitcoin, you should take any necessary steps to ensure those funds remain accessible if anything happens to you.
Part 2: Coming Soon
This first entry in our series on digital assets explored common types of digital assets. Part 2 will analyze how these assets can be protected under current law and give practical tips for safeguarding these assets and accounts.
Have questions about which digital assets should be included in your estate plan? Contact us today.