When people think about estate and asset planning what usually comes to mind are things like real estate, investments, and other tangible property. While most of us may not have significant intangible property in the form of patents and copyrights, almost all of us have assets in digital form, which may include everything from a music collection to online bank accounts. It is imperative in today’s digital world that we understand the nature of these assets and the variety of rules applicable to them. Oftentimes people are unaware of the sometimes surprising rules, leaving family members and loved ones in a lurch upon your death or disability. This article touches upon just a few of the things that are important to know about digital assets.

Failure to make the existence of digital files known to your loved ones may have unfortunate consequences. Leonard Bernstein, the famous conductor, died in 1990. Before his death he had been working on a memoir entitled “Blue Ink.” Friends and associates were aware of this and anxiously anticipated what was likely to be a popular and valuable publication. Unfortunately, Bernstein didn’t tell anyone where he kept the digital files or the password. To this day no one has been able to locate them, and a potential best seller may be lost forever.

On the flip side, you may not really own things you think you own in digital form. Many of us have tons of music and e-books stored on our digital devices. It sure beats carrying around boxes of CDs or books when you move or go on vacation. What most people don’t realize is that, generally, you only have the right to access these digital files; you don’t “own” anything. Check that agreement with the digital provider that you didn’t read when you first signed up. What you’re likely to find is that you have agreed that your account is non-transferable and that any rights you have to the contents terminate upon your death. That means you cannot transfer those files, or even lend them out. When you die, they vanish. Hopefully you didn’t throw away all of those vinyl records after you downloaded the music on your iPhone!

Accessing your digital accounts, including not only social media and email but also financial accounts and digital storage sites where you keep photos, etc., may be difficult or impossible once you die or are incapacitated unless you’ve informed someone of the location and associated passwords. While many states now have laws that provide fiduciaries a mechanism for gaining access to digital files, that’s only helpful if their existence is known in the first place. Furthermore, the laws vary from state-to-state and may be difficult to navigate. To learn strategies for avoiding some of these pitfalls, attend my webinar on planning for digital assets upcoming on January 26, 2022.