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The importance of a digital inheritance plan has grown exponentially over the past decade as technology continues to engage our daily lives. This leads to the question: who can access my online accounts and how are those accounts managed and distributed if I become incapacitated or die?

To answer that, we need to break down the details of digital estate planning.

What are digital assets and why should I care?

 

A digital asset can be a variety of electronic records and files that are stored online, on mobile devices or on personal computers. Simply put, almost anything you record digitally is considered a digital asset and should be included in your digital wealth plan.

For further clarification, a digital asset may contain:

 

• Email accounts
• Social media accounts
• Accounts for Online Banking
• Accounts based on online subscriptions
• E-commerce or marketplace accounts (such as Amazon, eBay, etc.)
• Photos stored online or in the cloud
• Accounts for online chat rooms
• Mobile phone apps
• Online dating or game accounts
• Online Utility Accounts
• Loyalty program benefits (i.e. frequent flyer miles, credit card benefits, etc.)
• Any other personal information that you store on your computer, mobile phone or tablet

While this is a fairly comprehensive list, there are certain assets that, despite suspecting the contrary, are not considered digital assets. For example, underlying financial assets, such as electronic bank statements, can be considered digital assets.

However, the actual money held in the bank account is not considered a digital asset. Another example is cryptocurrency ownership. While the account access platform (i.e., Coinbase) would be a digital asset, the asset itself (i.e., Bitcoin, Ethereum, etc.) would be included as part of the estate and therefore subject to a different set of laws.

digital estate planning - facebook accounts

Why is it so important to understand the size of your digital assets?

By prioritising creating your digital estate plan (aka a will on your digital assets), your family members and loved ones will be relieved of the added stress that comes with death. If your family can count on a written plan that includes the passwords for your digital assets and how those assets should be managed, they don’t have to worry about a more elaborate probate process.

By creating a digital inheritance plan, you protect your online assets against risks such as identity theft, hacking and fraud. They also give your family more security (and allow access to important information such as financial documents and insurance data).

Create your digital estate plan in 4 steps

Since technology has become such a big part of our daily lives, it can feel natural to store important information about us and our loved ones online. Computers immediately store our passwords, cell phones keep our photos, tablets hold our downloaded movies and music, and much more.

Additionally, password requirements for many accounts are getting tougher (we’ve all seen statements like ‘Passwords must be 8 characters long and contain a capital letter, symbol, number, etc.’), making it easy to forget where important information is saved.

social-media-planning-afer-death

Enter: A Digital Estate Plan.

Follow these four steps to make sure your digital assets are kept safe and properly distributed.

a) Make an inventory

The first step in creating your digital wealth plan is to take inventory of all of your digital assets. With so much of our lives stored online, you must go through your checklist carefully and think about everything from social media accounts to online banking information.

Not sure where to start? Use our bulleted list above as a guide!

If you have a list of all online accounts on your behalf, make a note of the username and password associated with each account. It’s also a good idea to write down your answers to frequently asked security questions in case family members need to refer to these answers after you provide them.

b) Assign access

Now that you have your master list of digital assets, you need to determine how those assets will be distributed. You may want to keep some information, while other information should be deleted. Other assets can be directly assigned to specific friends and family members.

You may want to equip your children and your online photos maintained by your spouse with digital assets of monetary value. If you have income-generating assets or online accounts related to your personal business, you want to grant access to a selected business partner.

Another example might look like this: Let’s say you own an online ecommerce business that uses a platform like Etsy or eBay. Do you want a family member to keep this business or do you want it to close? These are the types of questions to think about when creating your digital inheritance plan.

Digital Estate Planning in the Internet Era
Digital Estate Planning in the Internet Era

 c) Appoint an Executor

Appointing an executor for your digital assets is the next step in creating your digital asset plan. Your digital executor is the person you hire to fulfil your desires for your digital assets.

This person has access to all of your online accounts and is responsible for how they are distributed or destroyed. This person can be anyone, but appointing a lawyer or friend is often helpful in relieving unnecessary stress from your grieving family.

While a digital executor doesn’t necessarily have to be a legally binding or enforceable designation, it’s still smart to include the specific classification in your will.

d) Make it legal and safe

The final step in legitimizing your digital estate plan is to secure your information and turn it into a legally binding document. Because certain states don’t recognize a digital inheritance plan, formalize it by making a note on your will or adding it to Will as a Codicil.

Your digital estate plan must be separate from your will for two reasons. First, because after your death, your will becomes public information and you don’t want strangers to have access to important usernames and passwords.

Second, you can update your digital estate plan annually as you create and delete online accounts without having to update your will or add additional codicils. Your appointed digital executor should know where to store your digital asset plan so that he or she can access it in due course.

The best way to make sure your digital estate plan is secure is to keep it with your attorney, store your information in a password-saving online database (such as LastPass), or lock it in a file cabinet. That way, when the time comes, the people who need access to your information can do it easily.

 

SHOULD I CONSIDER DIGITAL PROPERTY PLANNING WHEN MAKING A WILL?

 

Data protection laws make it easier to protect your personal digital information. Most people have some form of digital legacy, even if it’s just a Facebook account. Many people conduct their financial and personal affairs online and these digital assets remain there after death.

If this account information is not organised in one place, it can lead to problems in the management and distribution of the deceased’s estate. Thіѕ іѕ whеrе digital estate planning соmеѕ іntо play. For the executors to manage your estate smoothly, you need to give them access to your digital estate.

Digital Estate Planning in the Internet Era

The Importance Of Digital Estate Planning

Traditional estate planning involves assets that you can see and touch. Homes, bank accounts and stock brokerage accounts are just a few examples. While many people today have more than physical assets, they also have digital assets. Digital assets such as websites, domain names, digital photos and even social media accounts are not tangible. This creates a grey area as to who can access them and when it is illegal to touch them.

Just because you leave a physical asset such as a computer to a beneficiary does not mean that you also leave the digital files on the computer.

Digital estate planning is where the digital files need to go and does not have to be with the person receiving the computer. In some cases, access to accounts can pose legal problems for users, even if they are beneficiaries of the estate.

When you make a will, it is possible to appoint a digital executor to handle your digital assets after your death. After your death, that person can be provided with the full username and password for your accounts so that they can access important information from your online accounts, which can be of great help in managing your estate. Your digital estate plan can be kept with your will.

Preparing a will and filing a digital inheritance plan can also address the issue of who should inherit your digital assets. Digital assets can be very valuable, eg. Online music libraries, or of great sentimental value, eg. An online photo collection.

These assets are often forgotten when making a will. If you are sitting with a will and attorney to draft your will, we recommend that you consider appointing a digital estate plan and an executor and encourage you to include your wishes for your digital assets.

Need help with your digital estate planning? Get in touch with Aussie Wills to book a consultation. Free, phone consultation to discuss your options. AFTERPAY available.

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