Just as fast as Facebook outpaced Myspace in the social media wars, technology has outpaced the law’s ability to come to grips with the protection of digital assets.
Estate planners have started to see more clients’ digital assets outlive them, and they’re now tasked with helping families manage that digital legacy. Challenges include the ownership, transfer and disposition of digital assets, ranging from passwords to web domains to financial accounts.
“There’s no paper trail anymore,” said Sharon Klein, Wilmington Trust’s managing director of family office services and wealth strategies, at a “Money and the Modern Family” press briefing last week in New York. “How does the executor get access to digital assets?”
The digital asset issue has become such a hot-button topic that seven states now have laws in place for estate planners and 13 other states have pending legislation, said Klein, who is based in New York and serves as chair of the New York City Bar’s Trusts, Estates and Surrogates Court Committee.
For example, New York State lawmakers this year passed a bill that authorizes the fiduciary of a deceased client to take control of certain website accounts of the deceased, and to continue or terminate the account on any social networking website, microblogging or email service.
“Executors can face…challenges in marshaling assets — indeed even discovering assets — the information about which is digitally stored,” Klein wrote in a New York legislation update, noting that the new law gives fiduciaries access to, ownership of or a copy of property within 60 days upon written request to the property’s custodian.
But estate planners should take action before such extreme steps become necessary, Klein said. Here are some of her suggested best practices for protecting digital assets, along with more tips from other estate-planning experts.
1) Manage passwords. Klein recommends that web accounts, user names and passwords be tracked, updated and stored in a safe place. They can be stored online, she said, but she also recommended keeping a paper printout stored in a safe place.
2) Don’t put passwords in a will. A will is a public document, so passwords should not be written into a will, although domain names can be added, Klein says.