If your house was engulfed in flames, and you could only grab one item before it all burnt to the ground, what would you take with you? Do you grab your wallet? Your cellphone? Your laptop? What about the family photos?
What if I told you that this party game was a trick. You actually have the time to get more items but that you only chose one. Wouldn’t you want to know if it was possible to grab all of your precious valuables and save them? If you are like me, you are looking for a loophole to grab more than one item.
It may seem a bit puzzling why an article on digital assets starts off using a party game; but having a limited estate plan that only takes care of your real property and personal assets is like choosing one item in the house to save when you want to protect it all.
Even with well-drafted custom estate plans, a part of clients’ assets are often overlooked largely due to two confusing words for clients and drafters alike: digital assets.
Digital assets are defined as digitally stored content or an online account owned by an individual. This definition is broad and means a variety of things. This includes social networking sites (i.e. Facebook, Twitter, Pinterest, SnapChat, Instagram, LinkedIn, Myspace, Goggle+, Tumblr), email accounts (i.e. Gmail, Outlook, Yahoo!), online financial or brokerage accounts and online bank accounts including bill pay (i.e. Venmo, Ca$h, Bitcoin, E-Trade, ING, Fidelity), music and video sharing (i.e. YouTube, Vimeo, Vine, Apple Music, Spotify, Behance, Netflix, Hulu), photo-sharing sites (i.e. Picassa, Snapfish, Flicker), messaging applications (i.e. Tinder, Bumble, Marco Polo, hi5, CoffeMeetsBagel, OkCupid, Whatsapp, Yik Yak, Viber, Telegram), rideshare applications (i.e. Lyft, and Uber) and food and health applications (i.e. GrubHub, FitBit, MyFitnessPal), blogs, etc.
Further, digital assets also include online resources like eBay, Yelp, PayPal, domain names and URLs, or avatars on video games and virtual worlds, such as Second Life or World of Warcraft. This is not by any means an exhaustive list. With the development of new technology comes more opportunities to possess another digital asset.
It is important to note that digital assets don’t discriminate; instead they impact each generation in different ways. This should be addressed in a comprehensive estate plan. Although estate planning typically attracts people considering planning for their children or retirement, estate planning should be of concern for all adults. Young adults and professionals should consider their property interest in all of the accounts that they have created over their lifetime. From emails and automatic bill pay to social media accounts, Baby Boomers and Generation Z all need to consider what will happen to their digital assets. Regardless of age, everyone has an interest in digital assets nowadays.
So why does this all matter? The dreaded word—probate—there I just made you shudder. If there is an asset in your loved one’s name that you want access to, you may have to go through probate to get access to that account. In other circumstances, not only does poor planning lead to forgotten asset management, but also opens up the opportunity for fraud and identity theft.
While you may already have an estate plan, the California Legislature acknowledged that starting in January 2017, individuals have a property interest in their digital assets by introducing California Probate Code § 870 et seq. This law created methods that must be used to enumerate the powers you have given to your agents to explicitly have access to your digital assets, otherwise a probate may be necessary.
Further, the management of your digital assets is necessary to prevent identity theft. The most common form of identity theft happens with deceased individuals. Digital accounts are particularly susceptible for identity theft when there is no one designated to manage these accounts. This is something my office has personally seen. Once a decedent has passed away, their accounts are used by individuals impersonating them—or more easily by online transactions– and their loved ones are forced to go through the process of filing a report of identity theft.
There are different strategies for managing these accounts for all users that will be addressed in the next article in this series. However, before we conclude, I want to provide one warning: while there are companies that are marketing to provide access to all of your accounts to designated individuals, there are concerns with providing this access on the current platforms. The best protection for your assets is to make sure you have someone designated to manage your accounts in case of your death or incapacity just as you would want anyone to manage any of your financial assets. We will address strategies in more detail in the next blog post of this series.