Do You Have a Digital Estate Plan for Your Online Assets?

Estate planning for managing and transferring digital assets after death is growing in importance.

Digital lock

Updated February 2017 — In this digital age, people amass an electronic wealth of sorts in social media sites, photo-sharing sites, and online accounts. But what happens to this digital presence when its owner passes away? Who becomes responsible for the disposition and transfer of these digital assets?

Proper digital estate planning, including record-keeping, securely sharing records with attorneys and trusted parties, and creating a plan for the social networks and websites that house digital accounts, should satisfy these concerns.

Estate planning for basic digital assets

Basic digital assets can include multimedia, copyrighted materials, and credits in customer reward programs. "Photos, videos, and blogs that are online, in the cloud, or on a personal hard drive or flash drive as well as e-books, movies, music, and frequent-flyer miles are good examples," says Michael Wernersback, Senior Regional Fiduciary Manager of Estate Settlement Services with Wells Fargo Private Bank. Digital assets may include social media accounts and content on sites like Twitter, Instagram, LinkedIn, and Facebook.

These electronic valuables can be fleeting as well as precious. Without the proper precautions, they may disappear upon death. Since digital estate regulations are few and social sites typically have their own rules, one of the worst things a person can do is to leave these matters unaddressed.

"When we serve as an executor trustee, it makes our job difficult if someone has done nothing to prepare," says Wernersback. As with tangible property, if the owner does not keep digital assets in order — if there is no record and no access, or if someone has to wade through disorganized digital property — the executor may miss something, which could be lost forever.

Keeping records
"Take an inventory of digital assets," says Wernersback. Do you have songs in an iTunes account? Do you have frequent flyer miles? Do you earn income from a blog or website? "Make your executor aware of these things," says Wernersback. "Talk to your estate planning attorney. See what he or she recommends." They may suggest adding a fiduciary authority to the will or trust to preserve digital assets upon death.

People also should determine whether they own each asset or simply have a license to it. User agreements often include clauses that define whether an asset can be transferred upon the death of the original user. Reading these user agreements can be very helpful as you formulate your digital estate plan, advises Wernersback.

What to share, what to conceal
Consider recording user names and passwords for assets to enable access after death, but be careful with whom you share that information. "When you pass away, the information is readily available, and people can go in and start managing those assets. But if these passwords fall into unauthorized people's hands, they have immediate access to all of your information," warns Wernersback.

Remember that user agreements or prevailing law may prevent someone from using someone else's password to gain access. "That is another question for the estate planning attorney," Wernersback cautions.

Being too open with sensitive digital assets, such as those of a financial nature, may not be a wise move, according to Wernersback: "Keep in mind that a will is a public record. Obviously, you don't want to list your digital assets for everyone to see, and passwords should not be included in a will," he says.

However, for less financially or legally sensitive assets — photos, movies, and sentimental treasures from the cloud or Flickr — sharing freely with loved ones is not only acceptable but also may be a good idea, says Wernersback. "You may want to grant access to these less sensitive assets before death so that they have immediate control," he adds.

Status of digital estate law
"People are just now moving their lives online, and the law usually lags behind the technology," notes Wernersback.

"Only 22 U.S. states have passed any digital estates laws," says Evan Carroll, co-author of Your Digital Afterlife. These laws grant rights to executors or others, given adherence to certain conditions. Consult your estate planning attorney about proposed laws in your state.

Writer David Geer's work has appeared in ComputerWorld and Smart Computing.

Image by Thinkstock

What can Wells Fargo do for you?

As you think about your legacy and wealth transfer goals, take time to sit down with your relationship manager and outline your vision.

Wells Fargo & Company and its affiliates do not provide legal advice. Wells Fargo Advisors is not a legal or tax advisor. Please consult with your tax and legal advisors to determine how this information may impact your own situation.

This information is provided for educational and illustrative purposes only.

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