inFocus: Estate Planning for Your Digital Assets: Your Digital FootprintDate: March, 2016
Have you ever Google-searched your name on the Internet? If so, were you shocked at what you discovered?
Perhaps it was the number of people with the same name as you, or the search uncovered an embarrassing experience that you wished would just go away? Similarly, have you ever temporarily lost your cell phone and gone immediately into a state of panic? What if all your accounts were wiped out, if every aspect of your online presence (your digital footprint) was deleted, how would you feel?
Although we often overlook it, I cannot stress the point enough that organizing and documenting your digital assets is a key component of any estate plan. When I last wrote about estate planning nearly two years ago, I stated it had entered a new frontier and that our growing online presence required us to consider our digital assets. Those assets continue to grow at an alarming rate, adding to your digital footprint.
Vangie Beal, managing editor of Webopedia, defines “digital footprint” as the trail, traces or “footprints” that people leave online. Information transmitted online such as form registration, e-mails and attachments, uploading videos or digital images, and any other form of transmission of information leave traces of personal information exposed. So, how do we keep track of these assets as they continue to grow and how do we protect them from prying eyes? It may seem like a daunting task, when compared to our physical assets.
About a year and a half ago, my mother-in-law passed away. After writing my first article on digital assets, I had already starting thinking about reviewing our wills and powers of attorney to incorporate them. But a life event (both the emotional and practical aspects) only added to the immediacy of doing so. This article will convey my own personal experience in applying the concepts that I have learned in addressing digital assets as part of my overall estate plan as well as provide guidelines for developing your own.
Evan Carrol and John Romano, authors of “Your Digital Afterlife*,” provided some of the necessary tools to help my wife and I steer our digital plan in the right direction. Here are three tips that you can use to develop your own plan:
1. Digital assets inventory
My first step was to take an inventory of our digital assets. A couple of ways to compile your assets is either separating the places where your digital content and online accounts are stored between:
- Computers and other devices;
- Social websites; and
- Financial and commerce accounts.
Or compiling your assets by category**:
- Personal digital assets, e.g., videos, e-mails, medical records, loyalty programs;
- Social digital assets, e.g., Facebook, Twitter and LinkedIn accounts;
- Financial digital assets, e.g., bank and credit cards, tax documents; and
- Business digital assets, e.g., contact lists, customer and vendor information.
Regardless of the approach taken (we used a combination of the two), for each of the four categories noted above, we created a spreadsheet of our list as follows:
- Asset: Provided the name of the asset and its contents;
- Access: Provided the location, username and password;
- Wishes: Gave basic instructions, the name of the recipient (beneficiary) and added any relevant notes.
2. Awareness, Access and Wishes
For each asset, we established that our (digital) executor (we will address the importance of the executor later on) knows of its existence, how to access the asset and what our wishes are; the more information you can provide the better. For instance, until recently, Facebook managed the death of a member by simply freezing the account or creating a memorialized status for that profile. In 2015, it launched a new feature called “Legacy,” which lets you assign a contact to manage your account after you are gone.
If you set up a Legacy contact, it is important that your executor be notified. The details of establishing a Legacy account are beyond the scope of this article. Suffice it to say that the nature of your digital assets is constantly changing, and so must your digital estate plan.
3. Creating your Plan
The last step is to establish a plan to ensure your instructions are carried out. You will need a person or service to implement the plan. There are four aspects to that plan:
- Storage: Where are you going to keep your inventory and instructions;
- Trigger: An event that triggers your plan;
- Digital executor: A person or service to distribute or delete your assets;
- Beneficiaries: Those people who will receive your assets.
There are several ways to carry out your plan. Two useful digital estate planning tools include Legacy Locker, or the Toronto-based Looking Ahead Inc. You may also choose a do-it-yourself method. We initially chose the do-it-yourself method: however, storage was a concern for us. Would we store it as a spreadsheet on our computer and back it up; store it on a spreadsheet on our computer and have a hard copy with our wills and powers of attorney; or store it as a spreadsheet on a USB key and keep in a safe-deposit box? These were just a few of the options available. You have to do what makes sense for you, but you can start to see why a planning tool simplifies the process of keeping everything in one place.
Here is one tip for selecting your digital executor in particular: if you are using a manual plan, there are three key considerations in choosing a digital executor. First, you have to trust the person. Second, you have to determine whether you choose a family member or friend dependent upon the sensitivity of the content that your executor will be privy to, and third, how capable is the executor technically? We chose a relative on an informal basis, who has the time and willingness to work with our executors and we made sure everyone involved was advised.
Finally, ensure that your lawyer is conversant with drafting the appropriate clause(s) in your will that are needed to cover digital assets. For instance, the clause added to our will covers the definition of digital assets and states that if I draft a memorandum with instructions concerning my digital assets, which may be altered by me from time to time, that my executor(s) follow such instructions.
It was only a short time ago that we only had to deal with physical assets as part of our estate plan. Now, we not only have to contend with digital assets, but they could potentially surpass the value (financial or otherwise) of our physical assets, if they have not already done so. Whether you wish to transfer financially valuable assets, emotionally valuable assets, or assets that have familial or historical significance, consider your digital afterlife. Make sure you preserve your digital footprint.
*Evan Carrol and John Romano, authors of Your Digital Afterlife,New Riders, 2011.
**Larry S. Dushkes, principal at Dushkes Law Corporation, Westlake Village, California.
This article has been prepared for the general information of our clients. Specific professional advice should be obtained prior to the implementation of any suggestion contained in this article.
Connect with the Author
Alan Wainer, CPA, CA, CPA (Illinois), Alan Wainer Professional Corporation, Partner – Audit & Advisory
Alan is a partner with Crowe Soberman. He co-leads the firm’s Succession, Retirement and Estate Planning (SuRE) and Healthcare Groups. Alan’s particular focus is working with Owners and Managers of Residential Care Facilities.
Connect with Alan at 416.963.7121 or firstname.lastname@example.org.
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