Article by R. Joseph Ritter, Jr. CFP® EA
In the age of instant downloads, cloud computing and credit card rewards, a form of asset that is often overlooked in the financial and estate planning process is “digital data.” This is a broad asset class that encompasses such things as
- Kindle purchases and e-books
- Items purchased in electronic form
- E-mail accounts
- Online accounts
- Cloud storage and computing
- Credit card rewards
- Digital photos
- Cell phones and information stored on the phone
- Computers and data stored on hard drives
- Store points and rewards
- Social media accounts
The majority of these assets are intangible but still represent accumulated value. In estate planning, many Last Wills and Testaments are now being prepared to include a bequest of “digital assets.” Who do you want to receive them? How do you want them preserved? Is it acceptable if they are just terminated and vanish into cyber space?
To protect the digital assets, it would be a helpful first step to make a list of every website where you have an account, credit cards and stores where you earn or have accumulated points and rewards, e-books and other items you bought in electronic form, and location of digital photos and electronic data. Your family or the person you designate to be the executor of your estate should be informed about the list and where you will keep it, such as with your Will and other important documents.
You do have a Will, right?
The next step is to consider what should be done with digital assets. Your intentions must then be incorporated into your Will. A discussion with your estate planning attorney would be helpful to determine if the Will should be revised or if a Separate Writing would suffice.
My mother and grandmother have done an excellent job of preserving our family history through slides and pictures. My wife and I have carried on the same tradition, except that the majority of our photos are digital. The scariest thought to me is if something happened to the storage devices – all our family history would be gone!
Once you have a list made and have decided who should inherit, take some time to consider how best you can preserve it. Photos and videos, for example, should likely be copied and stored in multiple places to ensure there is no data lost. Credit card and store points and reward statements should be printed and hard copies retained to provide evidence of your account and balances.
For the executor and surviving family members, at the very least, online accounts should be terminated on the death of a loved one to prevent future identity theft. However, before you take that step, you must first contact the host company to be certain balances, data and electronic items are not lost. Once an account is terminated, the information and status may be cleared permanently.