“There are some cases in which people find that they might, under the law, have only a lifetime lease on an asset they created.”
Few people are planning adequately for the ownership transition of digital assets, which range from social media profiles, digital artwork and online-only businesses to cryptocurrency. When it comes to planning, the complexities of traditional estate planning are present but are made more complex by the nature of the digital world, according to an article from Think Advisor, “Why So Many Estate Plans Are Out of Date: Jaime Hopkins.”
Most Americans own some form of digital assets, even something as simple as a LinkedIn commentary video or as complex as lucrative social media profiles. Nevertheless, most trust documents, powers of attorney and wills have not been updated since the creation nearly ten years ago of a set of rules enacted under the Revised Uniform Fiduciary Access to Digital Asset Act, known as RUFADAA. Since the law came into existence, it’s been passed, or a version has been passed in most states.
RUFADAA requires estate planning documents, including wills and powers of attorney, to be very specific about the language used in giving various parties access to or ownership of digital assets upon the death of the original owners. The owner must provide specific directives as to their wishes.
The ownership of digital assets is rarely straightforward. In many cases, people only have a lifetime lease on an asset they created based on the contract made with the digital platform. Even a widely popular and income-generating social media account may belong to the digital platform, with only the data belonging to the original owner.
One place to start is reviewing the Terms of Services agreements. Everyone reflexively clicks on these long content screens when creating a new account. Most people don’t realize these are binding contracts setting forth the terms of ownership.
For digital assets to be part of an estate plan, they’ll first need to be identified and inventoried, including their location on the web (URL), usernames, passwords, and if they use two-factor authentication requiring access to a cell phone or personal computer.
Create a disposition plan. If the asset has value, do you want to leave it to someone, have an executor shut it down, or delete certain assets first and then shut down the account?
Review all your estate planning documents with an experienced estate planning attorney to ensure that your documents are updated with directions for digital assets. Don’t include the usernames, passwords, or account specifics, just as you wouldn’t include account numbers for a bank account in your will.
Inform your executor and heirs about digital assets and your wishes for their disposition. Be sure that your executor, in particular, is comfortable with digital assets and traditional assets and is willing to manage the necessary tasks.
Reference: Think Advisor (Feb. 14, 2024) “Why So Many Estate Plans Are Out of Date: Jaime Hopkins”
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