How would you feel about losing over $220,000,000? Stefan Thomas said, “time heals all wounds,” and he is at peace with losing over 220 million dollars’ worth of Bitcoin. Mr. Thomas’s potential loss is the result of forgetting his password to the USB hard drive containing the digital wallet holding 7,002 Bitcoins! He has already failed 11 attempts to access the account and if he reaches 13 failed attempts, the Bitcoins are lost forever.
If you think you don’t have digital assets, think again. For purposes of this article, a ‘digital asset’ is an electronic record in which an individual has a right or interest. We all have a digital presence, and that digital presence has increased significantly over the last year and a half since the pandemic. How can we best plan and manage our digital assets?
Digital assets management is complicated due to various laws and agreements in effect. The Federal government enacted the Stored Communications Act in 1986, which provides statutory privacy protection for customers of network internet service providers. Meanwhile, 46 states have adopted the Uniform Fiduciary Access to Digital Assets Act to give access to digital assets for authorized parties. To complicate it further, each platform or service provider has its own Terms of Agreement which controls access to and disposition of assets. The Terms of Agreement is the seemingly endless document that most of us do not read and just click accept before establishing an account.
Digital assets can be divided into several categories:
- Personal assets can include photographs, videos, music and other creative montages.
- Social media assets encompass your Facebook, Instagram, Twitter, YouTube, Pinterest and other comparable accounts.
- Digital financial assets may be your Venmo or PayPal, as well as Bitcoin and cryptocurrency that you own.
- Finally, don’t forget your loyalty programs and earned miles or points that may be transferable upon death.
While not considered digital assets, many people have online account access offered by banks, brokerage firms and other financial institutions. Due to a desire to reduce costs, many former monthly paper statements are now only accessible online. If anything happens to you, your digital assets may not be easy to locate. For instance, many millennials do all their transactions on smartphones. If they lose their phone, they may have trouble restoring assets without proper planning.
To start planning for your digital assets, take inventory of your computer equipment such as a desktop, laptop or notebook, tablet, smartphone and external storage drives. Document any unique user IDs and passwords to access them, too.
Next, make a list of all your online financial accounts and digital assets. These can include social and digital media accounts such as Facebook, Twitter, LinkedIn or Pinterest. For your banking and financial institutions, include the account number, account type and whether it is set up for paperless. Keep account of Cloud storage providers you use, such as iCloud, DropBox, Microsoft One Drive or Google Drive. Be sure to record what is stored on each one. Jot down any domains or blogs that you maintain. Include online shopping accounts in your name. Also, a list of any subscriptions you subscribe to is helpful to know in order to cancel them when they are no longer necessary.
For every online account, make a note of the associated username and password. Don’t forget security questions and answers. Be sure to keep this list in a secure place and update it regularly. If you utilize an extra layer of protection with Two-Factor Authentication, remember to note it with your instructions.
How can you ensure your personal representatives and heirs can access your digital assets? Think about who you would want or need to have access to these accounts if you became incapacitated or upon your demise. Write a letter to that person or executor that includes access credentials and instructions. Tell the person what you want to happen with each account. Maybe there are accounts that you want no one to see. If you don’t want anyone accessing certain digital assets, say so. Keep the letter in a safe place with your other important documents. Remember that your will is a public document so do not include this information in your will.
Discuss with your attorney about including a provision in the Power of Attorney to access online accounts. You can consider appointing a separate digital executor under your will or specify that your executor has authority to deal with social media accounts and other digital assets. Remember to check the Terms of Agreement of each of your Internet Service Providers or platforms.
With proper planning and ongoing management, you can make sure your digital assets are accounted for and that your loved ones will be able to access them, when needed.
If you have any follow-up questions or concerns, please contact your relationship manager.