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Planning for Your Digital Legacy

An estate plan often focuses on tangible property such as jewelry, artwork, money, and vehicles. However, in this age of technology, it is important to remember to include your digital assets. Digital assets consist of everything we own online. Because we spend more time on computers and smartphones than we ever did before, you may not realize how much digital stuff you own, from photos and videos to online accounts, cryptocurrency, and nonfungible tokens (NFTs).

Why Is It Important to Plan for Digital Assets?

Planning for digital assets is important for several reasons. First, without a plan, digital assets may get lost in the Internet ether and not pass to your loved ones after your death due to the simple fact that their existence is unknown. Second, planning now means your family will not have to worry about hunting for these items upon your death while also grieving a beloved family member. Third, like most adults (roughly 70 percent of them), you want certain aspects of your digital life to remain private. If you do not create a plan, your loved ones may learn things that you wish to keep secret. Finally, planning now can minimize the risk of identity theft, which happens to 2.4 million deceased Americans each year. Keep reading to learn more about why it is important to include digital assets in your estate plan and how to account for them.

Digital Assets: What Are They?

Instead of existing in photo albums and on videotapes and DVDs, most of our family photos and videos are now digital. Even if they lack commercial value, they certainly have sentimental value that you want to preserve for your family and friends. Social media accounts containing your photos and videos can also have value to your loved ones when you are gone. For example, a Facebook account can serve as a memorial after you pass away. When you consider all of the other accounts that you log into (more than 130 on average), the list becomes quite lengthy. 

Digital assets that you may own include the following:

  • Social media accounts (e.g., Facebook, Twitter, LinkedIn)
  • Financial accounts at brick-and-mortar and online institutions
  • Business documents and other files stored in the cloud
  • Cryptocurrency
  • NFTs – (A digital asset that can come in the form of art, music, in-game items, videos, and more.)
  • Databases
  • Device backups
  • Internet domain names and uniform resource locators (URLs)
  • Streaming service accounts (e.g., Netflix, Peacock, Hulu)
  • Merchant accounts (e.g., Amazon, Etsy, eBay)
  • Gaming tokens
  • Virtual avatars
  • Points-based loyalty programs (e.g., for groceries, gas stations, airlines, and hotels)
  • Rights to intellectual property, artwork, and literature
  • Online betting accounts
  • Monetized video content

Including Digital Assets in Your Estate Plan

Taking inventory of your digital assets may take some time, but it is worthwhile. If something were to happen to you, your estate planning attorney or another trusted person should have complete access to your online footprint. This includes usernames and passwords for all accounts. Tools such as Dashlane or the password manager integrated in your browser can be used to simplify the storage of usernames and passwords. 

In addition, you should continuously back up all digital assets, including photos and important documents, to the cloud, and ensure that your attorney and trusted person can easily access them when the time comes. 

Because they are not controlled by governments or banks, cybercurrency and NFTs must be handled carefully. You do not have the option of calling customer service to reset your password if you forget or lose it. NFT and cryptocurrency passwords should be stored online in a “hot wallet,” or in an offline device known as a “cold wallet.” Either way, someone needs to know how to access your passwords when you cannot. 

Other estate planning considerations for digital assets include the following:

  • Your estate plan can provide that your digital possessions be handled by one or more cyber successors who can distribute your digital assets like tangible property. 
  • One cyber successor can control your Instagram account, for example, while another can take possession of your Bitcoin. 
  • Keep in mind that passwords should not be memorialized in your will, especially regarding cryptocurrency, as they could be made public if the will is submitted to probate court. 
  • Consider how technologically savvy a person is before appointing that person as your cyber successor.

Next Steps for Your Digital Assets

Talk to us, your estate planning attorney about your digital assets and cyber successors. Have a conversation with potential cyber successors about how they would handle your assets, and make sure that they would carry out your wishes before appointing them. Digital assets can be placed into a trust or distributed through your will, or you could grant access to them through a power of attorney. With the help of experienced estate planning attorneys like us, you can feel relieved that your digital assets will be easily located, managed, and passed to your loved ones.

New Attorney Announcement

David Marshall Datz, P.C. is pleased to announce the addition of Michael Clancy and Ryan Cunningham to the firm’s Real Estate Practice.

Both Michael and Ryan will be working out of our Boston Office.  Welcome!

We Are Here for You

170524 - david datz ad - modified for spring newsletterThe real estate market is complicated in Massachusetts. It is a “seller’s market” and that can make things more complicated for our clients who are looking for a home.

So how do you navigate this market? When you look for a new home, you may encounter questions like these:

  • Should I forgo a home inspection?
  • Should I forgo a mortgage contingency?
  • How can I avoid mistakes?
  • Should I offer more than the selling price?

There are lots of questions you may face and quick decisions may need to be made when our office is not open and when you need an answer.

If you have any questions, please don’t hesitate to call us!  You can call our Boston Office at 617-357-9333 or our Provincetown office at 508-487-3900. If it’s after hours, please leave a message with your phone number in our general mailbox and we’ll get paged and get back to you ASAP!!

The ABCs of Estate Planning

Estate Planning ChartEstate planning comes in two parts: basic and advanced.

A basic estate plan benefits both you and your loved ones in the event of your incapacity and upon your death. People plan when they are healthy to choose appropriate fiduciaries to handle their affairs. Without such a plan in place, the court will appoint a conservator if you are incapacitated and will appoint an administrator upon your death. The court will also appoint guardians for your minor children.

By taking the time to plan now, you make these decisions yourself instead of leaving it up to the court. Moreover, you choose your beneficiaries instead of having the state determine them for you; you are able to plan the manner and timing of distributions to those beneficiaries; and you can avoid probate and minimize taxes.

People who come to see us to discuss estate planning are discussing business issues at the same time. Thus estate planning has benefits to business and these benefits to business will have benefits to the estate.

 

Generally, the documents comprising a basic estate plan are:

  • A revocable living trust
  • A pour over will
  • An advance health care directive or health care power of attorney and living will
  • A durable power of attorney for financial matters, and
  • A Health Insurance Portability and Accountability Act Authorization

Revocable Living Trust

People often use a revocable living trust to avoid probate, for tax planning and to control the manner and timing of distribution to beneficiaries. Unlike a will, which is a public document filed with the court, the trust is private. Property held in the name of the trust is not subject to probate proceedings.

You need to transfer your assets (e.g. real estate) into the trust, generally with the assistance of an attorney. You continue to control and manage the assets as you do now, but upon your incapacity, your named successor trustee manages the trust assets on your behalf without a court having to appoint a conservator. Upon your death, your successor trustee distributes the assets to your beneficiaries according to the terms of the trust.

Will

A “pour-over” will is typically used in conjunction with a living trust, to catch any assets that may not have been transferred to the trust, so they can be distributed according to the trust’s terms. You also nominate guardians for your minor children in the will.

Durable Power of Attorney

A Durable Power of Attorney for property management enables a designated individual to handle your non-trust assets (e.g. pay your bills from a non-trust checking account, transfer assets to your trust) in the even you are incapable.

Advanced Health Care Directive and Living Will

An Advance Health Care Directive or Power of Attorney for Health Care allows you to designate an agent to make health care decisions for you in the event you are incapacitated. In addition to the release and execution of health care records and forms and consent to surgery and the like, it can be used to express your preferences regarding life sustaining care. In some states, you express your directives to medical providers and medical institutions in a living will.

Health Insurance Portability and Accountability Act Authorization

A Health Insurance Portability and Accountability Act (“HIPAA”) authorization permits your designated agent to obtain protected medical information about you in order to handle your medical affairs.

These wrap through a basic estate plan and are the building blocks of advanced plans, which are used to transfer assets to the next generation. We’ll talk about advanced estate planning in this space at a later time. We’ll also talk about some common client comments about estate planning in this space, as well.

If you haven’t taken care of your own estate planning, there are a lot of great lawyers that can help you with these decisions. If you live near us, give us a call. We would love a chance to work with you. If you don’t live near us, give us a call anyway and we will route you to some very good people.

We can be reached at 617-357-9333.