Estate Planning for Your Digital Assets with Sand Hill Global Advisors
April 26, 2018
As our lives are increasingly spent online from bill pay, to email and blogs to Facebook and Instagram, have you thought about what happens to your digital assets when you die? How will your successor trustee, executor or loved ones gain access to important records or treasured photographs stored in a vault in the cloud? What happens to your Bitcoin or money left in your iTunes account? Including these digital assets, some with only sentimental value and some with real financial value, in your estate plan is becoming increasingly important. According to a report by IBM, 90% of all the data in the world has been created in only the last two years.¹ This trend is not likely to slow down anytime soon, so your digital footprint is likely to continue expanding right up until the day you die.
In California, the Revised Uniform Fiduciary Access to Digital Assets Act (AB-691) provides guidance over the disposition of digital assets and electronic communications to a designated surviving fiduciary. Information contained in an online platform like Google or Facebook is typically controlled by the company that stores it. For that reason, you should ideally provide legacy instructions or designate a surviving fiduciary within the online platform itself. Some sites now provide tools to accomplish this. If no such designations are made at the site themselves, but you have designated a fiduciary in your will or trust, this new bill should allow that person access to the data once the required documentation such as a death certificate and copy of the trust has been provided. If no designation is made at all, the courts may be left to determine if a fiduciary should be granted access using the terms of service you agreed to when you established the account. Yes, those long paragraphs of legalese you likely didn’t read before clicking “I accept” may likely determine what happens to your personal information.
While you may not care about what happens to your LinkedIn account when you’re gone, you may care about your Bitcoin or other assets with real monetary value. For example, since Bitcoin exists only in virtual and encrypted form, it is the ultimate digital asset with its own set of challenges for heirs. Without the necessary encryption key and clear instructions on how to use it, your Bitcoin could become lost forever – the modern day buried treasure. Digital currencies have been in existence for almost a decade but certain elements such as holding the assets and encryption key securely has not to date been built with sufficient infrastructure to ensure the safety of these assets. If you don’t trust your heirs to have the key now, and you might not since there is no way to prevent theft while you’re alive, you could store it in your safety deposit box or another similarly secure location until your death. The use of third-party vendors such as Coinbase2 is another option for encryption key storage, and they allow joint accounts, which could make the transfer to an heir easier.
In the same way you’ve thought about what should happen to your tangible assets when you pass, planning for your digital assets deserves your time and attention. But where to start? First, make a list of all online accounts and passwords and indicate the action that should be taken with each (i.e. delete, download contents, etc.) and store it in a secure location. Second, discuss with your estate planning attorney on how to include these assets in your estate plan. Taking these basic steps now can make it easier for those who survive you, and also help preserve both your legacy and your privacy.
1 IBM Marketing Cloud “10 Key Marketing Trends for 2017”
2 Sand Hill Global Advisors, LLC (“SHGA”) in Silicon Valley is a Registered Investment management services Adviser with Securities and Exchange Commission. Such registration does not imply a certain level of skill or training solutions and independent investment management. Coinbase is a separate entity and not affiliated with Sand Hill Global Advisors, LLC, and as such, SHGA advisory firm neither represents nor endorses any product named in this article.
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