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When you hear estate planning, images of the ultrawealthy working to avoid federal estate taxes probably come to mind. Maybe end-of-life planning as well, like living wills and health care proxies. But, in today's digital world, estate planning entails much, m more.
Say you take a picture with your phone and store the image on a hard drive. If you bequeath your tangible personal property, which would include the hard drive, does your bequest also include all the files on that drive? What if the photo were stored in the cloud or posted to a social media site? There’s no hard drive involved, but you may still own the rights to the digital picture itself — or would you?
Answering these questions can be yet another compelling way to plus the value proposition for clients, something that has taken on greater significance in an era where investment management has become increasingly commoditized.
Basically, digital estate planning is concerned with the process of cataloging, organizing and planning for the disposition of one’s digital assets after death. Some assets have intrinsic financial value, such as cryptocurrencies, popular digital storefronts — e.g., eBay or Etsy pages — and valuable web domains. In other cases, digital assets may have no such value, but are gateways to accessing assets with value — e.g., the credentials to log into online banking or brokerage accounts. Digital assets can be just about anything and everything that is created, communicated, sent, received or stored by electronic means.
Increasingly, digital assets also include massive amounts of nonfinancial information as well, like email accounts, contact lists, social media accounts, pictures, videos, purchased digital music and movies and other information that has been stored in a digital format.
LEGAL CONSIDERATIONS
From the beginning of the so-called information age up until only a few years ago, access to digital assets by anyone other than the owner of those digital assets — typically the user of some online service or website — was governed almost exclusively by the service/website’s Terms-of-Service agreement, rather than by property law.
This created a number of issues when the owner of those assets died or was otherwise incapacitated and unable to effectively manage their own affairs. Heirs may have no way to log into...