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Planning for Digital Assets and Information in Your Estate Plan
from Bell Wealth Q3 2023
by Bell Bank
By Shara Fischer, CRPC VP/Wealth & Fiduciary Advisor
New technology heightens the need to review and update estate plans, providing for all important matters that need attention following incapacity and death – including digital assets and information. In today’s world, alongside the property typically addressed in estate plans, digital assets and information should also be incorporated.
Inventorying Digital Assets And Information
Digital assets are any identifiable representation of value recorded and stored digitally. Examples include cryptocurrencies, software code, digital music and film, non-fungible tokens (NFTs) and valuable data or code. Digital information encompasses data that is stored, transferred and used by networks, computers and other technology. Examples include software, digital videos and photos, video games, web pages, social media, digital data, audio and electronic documents, and electronic books.
Preparing an inventory is the first step to identifying digital assets and information and their current or future value. Most estate planning attorneys use detailed checklists to delve into how to access, preserve and determine the disposition of digital property. Some digital assets may not pass through your estate – for example, if there is no monetary value at the time of your death, or if right-to-transfer-ownership restrictions are limited to the owner’s lifetime.
Your advisors can guide you in the legal and tax planning steps to address digital assets. Digital assets with high appreciation potential may offer tax advantages if they are transferred as lifetime gifts. Specific steps in case you are incapacitated may need to be addressed with the digital platform and in your estate plan.
Even though your digital assets may not have value, your fiduciary or representative may need access to sites including email, social media, financial accounts and online/cloud file storage. You may wish to plan how digital photos and similar heirloom items can be accessed and distributed. If you have an e-commerce business that uses eBay or Etsy, a successor may need to be positioned to run the transactional account or process closure. People who hold a website domain name should review the licensing agreement to determine if it is transferrable at death. Other digital areas to consider are mobile apps, loyalty accounts such as credit card rewards, commerce transactions via social media accounts and online gaming/gambling accounts.
