Technology is in almost every aspect of life, including estate planning. This is where digital assets come into play.
Both Erika Apelis, owner and attorney at Apelis Law Office in Beachwood, and Patrick Saccogna, partner at Thompson Hine LLP in Cleveland, said digital assets are an important part of estate plans.
But what would be considered a digital asset? The professionals said they come in four forms.
“First, we have digital access to financial information, like bank accounts, retirement accounts and brokerage assets,” Saccogna said. “Second, there are purely digital assets, like cryptocurrency and bitcoin. Thirdly, there are other activities conducted and stored online, like photos, blogs and social media accounts. And lastly, but not least, we have online communications like email, text messages, IMs and phone messages.”
Apelis said this can also include things like domain names, websites and cloud storage, which is where people can host files online.
“It is a really complex area of estate planning,” she said. “The difficulty is each company tends to take a slightly different approach in accessing the assets and securing them. That is the biggest challenge for people when they are trying to navigate estate planning in that context.”
Both professionals said digital assets in estate plans have become more important in recent years.
“It’s because of the way we live our lives now,” Apelis said. “So much is electronic, you have to consider it. If you don’t consider it, you’re leaving out a whole portion of your life. I know a lot of people who don’t even receive paper bank statements, so all that is completely online.”
Saccogna added, “Its importance is growing as people are spending more and more of their lives digitally and online. You have less and less paper in the world and more business and financial planning done online. Without access to digital assets, estate planning and administration can become difficult.”
That said, the professionals noted there is heightened consideration in the estate planning field.
“We used to be such a paper-dominated society, even less than 10 years ago,” Saccogna said. “As the internet has grown, everyone is doing things electronically that they used to do on paper. So, estate planning has to catch up with it – and it has been. Without planning for those assets, they may be lost. That can lead to issues in administering the estate.”
Apelis added, “It is definitely a top consideration when people do their estate plans. This is something I include with my clients’ documents to make sure we include those assets. And if it gets to the point where there is no authority given, you need court orders. We try to avoid that by planning for it.”
When accounting for digital assets, organize the information in a way that is easily deciphered by those left behind.
“Make a list of the digital assets and include all the important passwords, emails, accounts, bank accounts, websites, domain names and servers, and currency like bitcoin, as well as their major-asset accounts and corresponding passwords,” Apelis suggested. “That is usually the easiest way to access those assets.”
Saccogna agreed, suggesting something he calls a “digital inventory” or a “digital property memorandum.” This is where passwords and other sensitive log-in information is stored, as well as instructions on where to find important files.
“The digital inventory will also address the client’s wishes on what happens to their electronic assets,” he said. “This gives those left behind specific authority to deal with those assets.”