Your Digital Legacy: How to Include Digital Assets in Your Estate Plan

[00:00:00] Atty. James Jones: Welcome to Legacy Talk. I’m your host, James Jones. I’m an estate planning and probate attorney in Tacoma, Washington. I’ve been practicing for over 20 years, and my main practice areas include estate planning, probate, and estate administration. On Legacy Talk, we discuss topics surrounding families and estates.

[00:00:17] Estate planning is often a confusing and complicated topic. My goal with this podcast is to make it understandable and accessible to those who need it. So if this is something that interests you, I’d appreciate it. If you click the subscribe button and like this episode so that you can follow along as we break down the barriers to a state planning, I’m excited to get to today’s topic.

[00:00:39] Today’s topic is Your Gigital Legacy, How To Include Digital Assets In Your Estate Plan, because digital assets as part of an estate are an under emphasized and under considered portion of your estate and should be part of your estate plan.

[00:00:57] So on today’s episode, we’re talking [00:01:00] about your digital legacy, how to include digital assets in your estate plan.

[00:01:05] So let’s get to it. We live in a digital world and I am a digital girl or boy. If you’re wondering what that is, it’s an homage to Adam Sandler’s character in The Wedding Singer, quoting Madonna’s Material Girl. Just swap out digital for material. Anyway, digital assets are everywhere. Where do you keep your copy of The Wedding Singer now?

[00:01:29] Probably not on a DVD or a Blu ray. Maybe you do. Maybe it is on an old DVD. But do you watch that DVD? Can you even watch it anymore? Like mine, it’s in the cloud, right? It’s on a streaming service that I own. What happens to that copy when I die? We all have email accounts, social media, online banking accounts, but there’s other types of digital assets that you might not know that you have or realize that you have that should be planned for, [00:02:00] okay?

[00:02:00] Like that digital copy of The Wedding Singer that you like to watch on the weekend. And the more that you do to plan for what happens to those assets, the better it is for your state. Because without proper planning for digital assets, like any other asset, right? But in particularly with digital assets, they need to have some specific things mentioned that we’ll go over today.

[00:02:23] And so, without mentioning those things, there could be significant complications and complexity to an estate administration process if those assets are not properly mentioned or provided for.

[00:02:36] So today we’re going to discuss some things to consider regarding your digital assets and how to incorporate those into your estate plan.

[00:02:43] So we’ll start with this definition. I think as to let’s sort of get it on the table. Like what are these digital assets you’re talking about, James? What is, what are you talking about? We all know the general stuff, right? Digital assets encompass a wide range [00:03:00] of electronic accounts records. Examples include social media accounts like Facebook or Instagram or LinkedIn or TikTok or whatever, right?

[00:03:11] Like I mentioned before, we all have email accounts like Gmail, Outlook. Those are Google and Microsoft, by the way, as you probably know.

[00:03:19] Online banking accounts. Many of us have online bank accounts where there isn’t a physical branch, right? We have an account that does not have a branch that we can go to. We have brokerage accounts that are online. We have digital music and video libraries like at Netflix or iTunes or Amazon or Vudu or whatever you’ve got.

[00:03:38] And then we’ve got cloud storage like Dropbox, Google Drive. We all have Google Drive now, right? It’s free for the most part. So most of us have it. I store my podcast episodes on Google Drive. We have domains, right? Domain names, websites, and then we also have virtual currencies. So those are digital assets to like Bitcoin or [00:04:00] Ethereum.

[00:04:00] Those are all digital assets that we need to consider. So that’s really what they are. You know, social media, online banking, websites, digital currencies, cloud storage, digital media. I guess I said that. So it’s essential to consider these. The other thing that people don’t consider it as a digital asset or like rewards programs on a credit card, like sky miles, frequent flyer miles, cash back points or reward points for travel on your credit card.

[00:04:30] And then the other thing is online businesses, right? It’s very common nowadays to have an online business that doesn’t have a physical location and might not even have physical assets. It might have everything online in the cloud. or you know, store it on your computer or whatever. It’s not something that you can physically hand the keys over to necessarily.

[00:04:48] So that’s really what digital assets and that’s kind of what we’re talking about today. Those are the assets we’re discussing today. So first thing to do, I would say on with these digital assets is create an inventory.

[00:04:58] So when you create an [00:05:00] estate plan, you typically want to list out what are all your assets, right? Where do you have, what’s your house worth? Do you have any other real estate? Do you have investment accounts? Do you have life insurance, right? Do you have bank accounts, cars, right? But you also want to make a specific inventory of your digital assets because you want to make this list so that when you’re gone, or if you’re incapacitated, someone knows where to go, right?

[00:05:28] Because it’s difficult to, you can’t see this stuff. Like, you can’t go to the house and say, dig through the stuff and find the digital assets. That’s not a thing because they’re not physical, right? They’re not there. And so creating an inventory with the list of all your digital assets with usernames, passwords, answers to security questions, those kinds of things makes it so much easier to deal with.

[00:05:52] And there’s secure methods to secure and store this stuff, right? You can do a secure online inventory and a password, [00:06:00] storage tool online digital vaults, right? So that your executor knows where to go and they know how to access this stuff. Okay. When you’re incapacitated or when you pass away.

[00:06:10] The other thing to consider is the, when you’re talking about, digital assets. And this is why it’s important to consult with professional estate planning attorneys. There’s significant liability that these companies that manage digital assets are trying to prevent. So we want to understand our access rights to these assets. Okay?

[00:06:30] So if number one to consider is create an inventory, number two is understanding access rights to these assets, right?

[00:06:37] The legal ability for executors or heirs to access digital assets can be complex. As we talked about, most digital platforms like Google or Apple or Microsoft or Yahoo or whatever have specific terms of service that dictate how accounts are managed or accessed, particularly once when someone passes away. Okay?

[00:06:56] We’ll talk about this later in one of my stories, but, it could be a [00:07:00] fiasco if you don’t have that dialed in.

[00:07:02] There has been legislation passed nationally for the most part. There’s two states that don’t have it apparently. But Washington does have it, Uniform Fiduciary Access to Digital Assets Act.

[00:07:14] And that offers a framework as to how to access that information or those accounts, those assets, when someone passes away or they’re incapacitated. Okay? And it talks about the holder of that or the owner of those assets giving consent, right? How a state planning documents can allow an executor or a trustee to, or fiduciary, right? That’s a fiduciary to access those accounts. Okay? And how they can do it, so that’s super important.

[00:07:44] The next thing to consider doing is appointing a digital executor. And when I say this, I’m not saying, well, James, do you have to have the regular executor or trustee and someone that’s dealing with only the digital assets?

[00:07:56] The answer to that’s no, unless you think that person that you’re [00:08:00] appointing as executors, not great at the digital stuff, but if they’re able to be your trustee or executor, they’re probably competent enough to talk to Google or Apple or Microsoft. So you could appoint a digital executor or specifically mention that this executor or trustee of your estate has the authority to deal with digital assets. Okay?

[00:08:21] So ideally, you know, and I did an episode on how to choose your trustee or executor. I didn’t mention that they should be digitally savvy, but they should be savvy with regard to accessing accounts and stuff like we access accounts these days, which is online almost always, right?

[00:08:36] They also need to be trustworthy and all those things. Go back and find that one if you want to know what to consider as far as picking an executor. But this digital executors job or part of the regular executor, if you don’t pick a digital one, which you probably won’t, but you could. They could be responsible for archiving personal files, closing accounts, transferring valuable assets that you have, [00:09:00] mothballing like a social media site, like memorializing it, I think you can do that.

[00:09:06] And this digital executor should be legally empowered within your will or trust to handle these digital assets according to your wishes. Okay? With these specific companies, right? And we’ll get into this. In conjunction with having a digital executor or trustee, you want to specifically include in your will or trust specific instructions for handling digital assets based on that act, right?

[00:09:34] The Uniform Fiduciary Access to Digital Assets Act. You want to probably mention that in your will or trust, as this thing that the trustee can deal with, right? Under this act, they can do this. Okay? So specific instructions for handling digital assets, you want to specifically give directed, detailed instructions on how each type of digital asset is dealt with, okay?

[00:09:56] For instance, like if you have personal photographs that are [00:10:00] family photos, you can say, well, they go to my family, or if you have, you know, social media profiles that you want to have, either deactivated or memorialized, like I mentioned, you want to mention that, okay? And these instructions will help minimize disputes, which we’re all trying to do. And that’s one of the things we do estate planning for.

[00:10:18] So we have fewer disputes and they ensure that your digital assets and legacy are handled the way that you want it to be handled and not, you know, certain things you might not want out there. You might have in the digital world. And those things you might want to have them delete, right?

[00:10:35] Or there’s certain things you might want to say, well, I wrote this stuff and I was thinking, you know, maybe this would go for posterity or something. Maybe you kept an online journal or something, and maybe your Facebook or Instagram or something is your photo album. And you want that to be out there with your family, right?

[00:10:52] That kind of stuff should be specifically mentioned because if you don’t, then it could be lost, okay? Now, some legal considerations, I guess we’re all [00:11:00] legally considering legal considerations in this legal podcast, but understanding current laws with regard to how digital assets are managed like the fiduciary act that we mentioned regarding digital assets.

[00:11:11] These laws that regulate access and control over the assets should be something to consider, right? And these vary from state to state, typically, if you’re writing your estate plan in Washington, that would control in California or Delaware, wherever these companies are like headquartered. And so, you want to make sure that your plan does sort of sync that fiduciary act regarding digital assets.

[00:11:35] It’s not accepted or it’s not implemented in California or Massachusetts, which is kind of a every other state in the country has that act sort of implemented. It’s like a universal uniform act, but California doesn’t have it and neither does Massachusetts.

[00:11:51] So the other thing too, when we’re talking about digital assets and legal considerations is, there’s, and this is something you [00:12:00] probably know and understand, right?

[00:12:01] Digital assets and the whole digital environment changes like overnight, constantly changes, right? It’s changed significantly. Like I’m doing a digital podcast on my iPhone, right? Uploading it on the cloud on a digital platform, right? Where a couple of years ago, this wasn’t even a thing, right? That you probably would do it this way.

[00:12:24] You probably do have something else, right? But everything’s virtual on this. And so, these laws that regulate digital assets also consistently change. And so, you want to be up on this and you want to work with someone that stays up on it, so that if something does change drastically, they can advise you, right?

[00:12:45] So I always try to update my documents over the years. One of the major updates that I’ve made to my documents over the last several years is including specific provisions for digital assets because I’ve experienced where people’s [00:13:00] documents didn’t have any provisions and it made it much more complicated.

[00:13:02] The next thing to consider, which I think is number six, maybe on our list. If we’re talking about numbers, privacy and security concerns, you want to discuss ways to protect your privacy and the security of your assets. So that’s like going back to that digital executor. Like you really trust that person, right?

[00:13:20] And then there’s sensitive personal information on all this stuff, right? We don’t want someone to have control of this that might release it without your permission or clumsily, maybe we’ll say unintentionally clumsily. And so, we want to consider implications for granting someone access to your entire digital life, right?

[00:13:40] And take steps to limit exposure to certain things that you might not want people to see that are more private to you, right? We don’t want to have like, private things should stay private, okay? Or family things should stay in the family. So, we want to make sure that those sort of privacy and security concerns are thought of, okay?

[00:13:59] The other thing to [00:14:00] consider number seven, I think on our list is digital assets with monetary value. So what are those? Digital assets with monetary value are things like domain names like websites copyrighted materials that you have that are in the digital sphere. Cryptocurrencies are a significant thing now, right?

[00:14:15] People invest in cryptocurrency. They have cryptocurrency. And they’re in vaults, right? They’re in digital vaults. And so then they have significant value, right? They can have significant value and they should be part of your estate. I have a client who has significant positions in cryptocurrencies. And so he’s gone through and we’ve gone through in his estate plan to make sure that stuff is accessible and protected.

[00:14:40] And all of that stuff is dialed in as far as what happens to it when he’s gone. These digital assets with monetary value do require specific strategies to ensure that they’re transferred smoothly and that their values preserved. So we want to make sure that if we have cryptocurrency that our digital executor or executor in general has the [00:15:00] ability to access these digital wallets, right?

[00:15:03] And a lot of these are encrypted and there’s like multiple layers to get into them because it’s such a, you know, high value item and it’s out in the cloud and it’s not physical. So there’s lots of steps to get in. So you want to make sure that person can get in there and deal with them. Same with things like websites, right? Copyright items.

[00:15:22] And that leads us to the number eight thing, which is considering online businesses and succession planning for online businesses. So if you have a web domain, it often means you’ve got a business, which in many cases might just be an online business. Right? And so, you want to make sure that you’ve got a succession plan in place with regard to that online business and who accesses it, right?

[00:15:47] Digital ass access to ownership, who owns the website, who owns the content, who owns the client lists, right? All of this stuff is digital on the cloud. Who gets it right? Who accesses it? And so that kind [00:16:00] of planning is crucial to continue the business’s operation without major disruptions, and to preserve its value, right?

[00:16:08] If you pass away and have an online business, our business is mainly online and all of the assets of the business are online and there’s a significant disruption, the value of the business can go down and significantly suffer, which means your family and your heirs suffer and your employees, right?

[00:16:23] So you want to make sure that kind of stuff is sort of, not sort of, you want to make sure that kind of stuff is clearly laid out, right? And mentioned and inventoried, right? We want to know where your stuff is, people need to know that are managing your estate, where your stuff is. So that’s why the inventory is such an important thing.

[00:16:38] And finally, another thing to consider, and all of this stuff that we’ve talked about is like, Incorporatable, is that a word? Can be incorporated into your estate plan. And, you know, if you have a will or trust, it can have provisions with regard to your digital assets. Okay? And so, those things are binding, right?

[00:16:56] The will’s binding, the trust is binding, these are approved [00:17:00] documents that the courts approve, right? That they’ve been around a while. So they’re good. Right?

[00:17:05] The other thing to do, and I often recommend this for like people with regard to how they want to have their kids raised and what church they want them to go to and stuff like that, right? That doesn’t necessarily have to be in the will, but sort of, these are my wishes, people that are helping me when I’m gone.

[00:17:19] A letter of instruction. Okay? And you can do this letter of instruction, it’s non binding, but you can do it with and put it with your state regarding, you know, personalized guidance as to how you want your digital assets dealt with, right?

[00:17:33] Maybe certain accounts you want completely deleted, maybe certain accounts you want memorialized like we talked about, maybe you want to download all the photos on your facebook or instagram or tiktok or whatever.

[00:17:44] And so this letter can explain the significance of certain assets to you or to certain people, offer context of your wishes, provide nuanced instructions as to what the legal documents allow that person to do, right?

[00:17:58] The legal documents don’t necessarily [00:18:00] capture, right? So your will’s not or trust or will, whatever you do is not going to probably give like a plain language description as to what you’d like. Whereas this letter of instruction could, okay? It doesn’t replace and it’s not a substitute for having these assets dealt with in your legally binding documents.

[00:18:20] So this letter of instruction is like, hey, I’ve got these documents, they give you all the power in the world. But hey, I’m thinking this when I’m writing it, right? I want, ideally I’d want this to happen, right? And so, that’s kind of the point of the letter of instruction.

[00:18:35] So, let’s see, we’re at story time, story time is here. And I’ve got two stories this episode. The first one is one that I’ve talked about before. And it’s a story about a mother and her young 20 ish, you know, early twenties son who was living here in Washington. His mother was living in a different state and he died unexpectedly [00:19:00] out of nowhere.

[00:19:00] They don’t even know why he died or how he died necessarily, but he didn’t have a lot of physical assets, like he didn’t have a house, right? He didn’t have, he had a car, I guess he didn’t have a lot of physical assets, but he had a lot of digital assets.

[00:19:13] You know, he had a Google account, he had an Apple account, right? He had bank accounts that were digital. He had investment accounts that were digital. And this is a while ago, so this is before, and he didn’t have a will ’cause he was a younger guy. So we were sort of hand hamstrung a little bit as far as, we didn’t have direct guidance on this.

[00:19:35] And this is before those fiduciary with regard to digital assets came out, before that. And so, we had to open a probate because there was no will and there’s assets to administer. But the most difficult things to administer were the digital assets because these companies like Google, for example, or Yahoo, which is not really as big of a thing anymore.

[00:19:53] Apple, Microsoft have specific terms that they’ve laid out. Their lawyers have laid out cause they don’t want to have liability issues and they [00:20:00] want to protect their people, right? They want to protect their customers and their information. They don’t want it to be hacked. They don’t want it to be accessed without authorization.

[00:20:08] They want to make sure that people are protected and safe online. And so they have procedures in there that basically if you’re not authorized to get into an account, you’re not off, you’re not getting into that account. Okay?

[00:20:20] And so, in this case, because of those restrictions and without any clear guidance from the decedent, right? Then we had to go to court to get court orders, particularly for Google, for Apple, Microsoft, to get access to his email account, to his digital assets that he had there, right, his digital presence, online presence.

[00:20:42] And the thing that really we needed it for, like, to get access to his phone. We had to do a court order just to get access to open his phone with his a wireless carrier. So that’s another thing, but your wireless phone is separate from the other stuff to the wireless carriers have [00:21:00] these privacy agreements too.

[00:21:02] And so we had to get court orders for all of that stuff just so that his mother, the executor of his estate could even look at it to sort of find out where his assets were, right? He had no inventory, no list. So it’s kind of a mess, right? So that’s like the worst case scenario when there’s just nothing in place, right?

[00:21:20] And it’s like, you’re completely flying blind and then having to go to courts. And typically, so when you’re in an executive of an estate, you get a letter from the court saying you can administer the assets and that letter’s like your get out of jail free. Like you can get on to anything for that person’s estate with that letter, but you can’t, it doesn’t get you into Google and it doesn’t get you into Apple and Microsoft, right? Those kinds of accounts.

[00:21:43] So we had to get specific court orders just for those accounts. So we had to do several different motions to get that stuff sort of figured out.

[00:21:50] And the other story, I was thinking about this recently. My dad passed away almost five years ago and he was in his [00:22:00] retirement years. He wrote a lot and he had some online businesses like, you know, just for fun. He’s an entrepreneurial guy, but he wrote a lot of poetry and like short stories and stuff like that. He had. Published a few books.

[00:22:14] And you know, I was wondering, I wasn’t the executor of this state for some reason. I did all the drafting of his documents, but we didn’t have at that point when we did the documents, any consideration specifically for his digital assets. And we never really even talked about it with him. And so, his I’m still not sure exactly what happened to his websites and stuff.

[00:22:34] They’re not there though. I don’t know what happened to the information. I know I can still buy a couple of his books on Amazon, which is interesting. I don’t know where that money goes, you know? So it’s kind of, I’m not sure. It was a missed opportunity and I feel like we weren’t even considering it back then when we set this thing up for him, we were considering other things.

[00:22:53] My mom had long term care issues, dementia. And so we were considering much different things with his plan than maybe a, you know, we might [00:23:00] consider as far as digital assets are concerned. So I really wish we would have been better about dealing with those digital assets in his case, because I don’t know if some of that stuff’s lost forever, I don’t know.

[00:23:12] And so, I’m kind of going on the journey to figure that out at this point, because I’ve realized that it’s not there and we need to figure out where we can get it. And so, that’s my personal story on this digital asset thing. It’s like, if you don’t consider it, you can have problems, right?

[00:23:29] And then that means you miss out on stuff, right? Like you miss out on, like, where’s the rough draft stuff of the books that he wrote? You know what I mean? I don’t know where that stuff is, hopefully my brothers might know. Anyway, I asked them the other day, they didn’t tell me. They didn’t mention, they didn’t write me back.

[00:23:47] So I got to follow up on that. Anyway, but if you want to buy my dad’s books, Taylor Jones on Amazon, he wrote a couple of Westerns that are on there. Anyway, they’re fun little books, they’re not like great literature. They’re [00:24:00] not Ernest Hemingway or something like that, but they’re pretty good anyway.

[00:24:02] So, so digital assets are important, right? That’s the point of this thing. Digital assets are important. They’re important thing to consider as part of your estate plan.

[00:24:10] And so, I think that this is an important episode to, you know, just sort of put these things on the forefront of your mind when you’re planning for your estate, because we don’t want to have what happened to my dad’s stuff potentially happen to your dad’s stuff or your stuff for your kids, right? If you’ve got that digital stuff.

[00:24:29] So that’s it, that’s the end of today’s episode. No in the news segment today. I, there wasn’t anything interesting. I looked and I looked, I didn’t see anything. So maybe this is like a semi regular part of the podcast.

[00:24:40] Like it might not be every week. So I’ll try, but there’s nothing really that interesting I don’t want to waste your time.

[00:24:46] Anyway, thanks for listening today. Thanks for listening to today’s episode of legacy talk. If you liked today’s episode and would like to learn more, please like and subscribe for more great content.

[00:24:58] I’ve been your host, James [00:25:00] Jones to your legacy.