One of our clients is a die-hard classic rock fan. So it wasn't surprising that when we reviewed his estate plan, he had very specific bequests in regard to his extensive vinyl record collection and vintage concert tees.
But he surprised us when he mentioned that he also had a sizeable digital music library full of
remastered, high-quality audio files.
He didn't have a plan to pass it on - and he didn't know if he even could, since they weren't tangible. Would bequeathing his computer and all of its contents suffice? Or could he leave those assets to someone separately from the digital environment in which they were housed?
It was (and is) a great question. We take great care to help ensure every person's assets are distributed in precisely the manner they outline in their will, and digital assets should be treated no differently. But what happens to your digital estate when you die? Furthermore, when you think about all of the protections that guard your digital assets, how can you ensure that your loved ones can gain legal access to them?
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Here are a few ideas to help prevent this portion of your estate from being overlooked or lost.
First, the obvious: Make a list of all your online accounts and assets, as well as any usernames and passwords. There are a few ways to accomplish this, from handwriting them to using an online password aggregator.
Second, you should include specific terms regarding who should be granted access to these areas. Will your executor or personal representative have access to everything, or will you selectively choose who can access certain digital assets?
Third, regularly back up your most important digital files. Cloud-based technology is wonderful in many ways, but if you want to divvy up portions of your digital property, the easiest way to do it may be by using a thumb drive or external hard drive. That's especially critical if you don't want your loved ones to have to jump through hoops to access your digital bequests.
Fourth, know that the realm of digital property is still evolving. It's important to meet with an estate planning attorney on a regular basis (we recommend every few years, or when a significant life event occurs), to determine if your plan still meets your expectations and legal requirements.
We often counsel our clients to collect paper statements when a loved one passes, and while you used to be able to accomplish this by watching their mailbox, the new reality is that many of the most important communications are now delivered via electronic mail and many of the most important accounts are managed by online portals. Don't overlook this critical area of your estate.
Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of "Your Money" on KLKS 100.1 FM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com .
