Estate Planning for Your Digital Assets
A news report popped up online a number of years ago about Bruce Willis and his iTunes collection. The story was that Willis, furious that he would not be able to pass on his vast iTunes music collection to someone else after he passed away, was suing Apple.
The story was picked up by a number of other publications before Bruce Willis’ wife, Emma Heming-Willis, commented on Twitter that the report was not true.
But this fake story raised a good point—what you own of your online and digital assets is not always straightforward. It depends on the user agreement with the company and the nature of the digital asset it covers. Even though you can now download movies and music DRM-free on iTunes, the user agreement states that the license to the files is non-transferable.
That means you can use it during your lifetime, but you cannot pass on the license to someone else after you pass away.
And music is not the only “digital asset” that most people have. If you are online at all, you likely have a full portfolio of online accounts, music, movies, e-books, data, software, and so on. Not to mention years of memories stored via cloud photo storage, e-mails and your well-curated Spotify playlists.
Don’t Neglect Your E-assets
If you have written a last will and testament before, it probably included the normal things: what to do with your property, bank accounts, debt, assets, etc. But, depending on when it was written, it may not have included any instructions on what to do with your online accounts and digital assets.
Others have learned the hard way that getting access to their loved one’s online banking, social media, and other online accounts after they have passed away is not always an easy feat — one of the many reasons to share passwords with your loved ones. Some companies make it easy to transfer accounts after the passing of the account holder. But some make it difficult, and some companies do not have any policy at all.
How Can I Pass On My Digital Libraries?
The major problem with transferring your e-book, music, app and movie libraries to someone else is usually the End User License Agreement (EULA). Most EULAs restrict usage of an asset to the individual who purchased it.
When you buy an e-book, for example, you may think that you now own a copy of the book, but what you are actually buying is a license. And that license is for your personal use only, non-transferable. Your heirs may still be able to access your digital assets if they have access to your account credentials. But that may violate the EULA for the assets.
Some estate planners are experimenting with creating a trust that lists their client and their client’s heirs as beneficiaries and using the trust to purchase digital assets like e-books, digital music, and movies.
And that might work.
But there is a risk that any of the tech companies that provide these digital assets may change their user agreement at any point. If that happens and certain types of users are excluded, the trust may be out of luck.
How Can I Pass On Access to My Accounts?
Other digital accounts (e.g., cloud storage and e-mail) are often subject to Terms of Service Agreements (TOSA) and/or privacy policies. Most TOSAs and privacy policies restrict non-user access to an account. Some agreements allow access by heirs or executors, but some are silent.
If you care a lot about giving your heirs access these accounts, it helps if you live in one of the 27* states that have legislation on digital estates. Digital estate legislation gives heirs or executors some ability to access or manage a decedent’s digital accounts.
However, legislation and rights of access differ significantly from state to state, so creating your own digital estate plan is a better bet.
Your Digital Estate Plan
Some providers (e.g., Gmail) have “inactive account manager” tools that allow you choose who can access your account after you pass away. It’s a good idea to use these provider-approved tools if they’re available.
Second, you should have a will that explicitly gives your executor and heirs access and control rights to your digital assets.
Third, a good way to speed the process is by creating an inventory of your online accounts and assets. You could consider using a password manager app or service to create your inventory. There are a number of commercial apps that can store the user IDs, passwords, and security questions and answers for all of your digital accounts. You can then pass on details for your password manager and how to access it to your executor. Your executor will need to formally ask for access first or risk penalties under federal and state laws.
Finally, you may want to include the right to access digital accounts in any lifetime power of attorney that you sign.
Preserving your digital accounts requires some thought and planning, but luckily there are a number of tools that make that job easier. And if you are thinking now about how to protect those digital assets, you are already ahead of the game.
*As of January 1, 2017, 27 states have legislation allowing some kind of access to digital assets. These states are: Arizona, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Louisiana, Maryland, Michigan, Minnesota, Nebraska, Nevada, New York, North Carolina, Oklahoma, Oregon, Rhode Island, South Carolina, Tennessee, Virginia, Washington, Wisconsin, and Wyoming. As of February 1, 2017, 14 additional states have introduced, but not yet passed, digital account access legislation.