Article written by Rhiannon M. Hartman, Esq.
Imagine that you have been named the Executor or Trustee to handle the estate of a distant relative and you know very little about its assets. In 1980, acquiring this type of information would have been relatively straightforward. Upon assuming your duties as Executor/Trustee, you could locate a file cabinet in the home and begin to review financial statements, tax returns, and regular household bills. You could also have the post office begin forwarding the deceased’s mail, to ensure you receive additional financial documents which may not have been located in the home.
What about in 2019? Unfortunately, while serving as an Executor or Trustee has always been challenging, such responsibility can be difficult in unexpected ways in the modern world. In this age, you may enter the home to find the decedent has fully embraced a minimalist aesthetic, minimizing paper and clutter by switching to paperless statements. The file cabinet of 1980 may no longer exist at all. And the mail won’t help you for those paperless accounts.
As your trusted advisors, we ensure your legal documents reflect your wishes and are updated in light of family or legal changes. However, the unique challenges your Executor or Trustee may face in carrying out your wishes means that we should take a more holistic approach. It is not sufficient to prepare appropriate legal documents. The success of the estate plan we prepare for you rests on its ability to be implemented by a fiduciary; therefore, we also counsel you to be mindful of storing and conveying critical information that your fiduciary will need.
To allow for ease of administration of your estate, it has become important to employ the same focus on digital assets that has typically been placed on personal items. The traditional model of estate planning has often included careful planning to ensure tangible personal property is distributed to intended individuals. Without question, that traditional model is much simpler. The collections of fine china, jewelry and Waterford crystal are usually located in the home, which needs to be cleaned out and sold. It is easy to see what exists and valuation is possible. Estate plans traditionally include a list of who should receive personal property. Carrying out a deceased person’s wishes with regard to tangible personal property can usually be done without undue difficulty.
Digital Assets are unique. Unlike tangible personal property, we tend to overlook our “collections” of digital assets. Therefore, digital assets are at particular risk because they are intangible and exist in the ether. It is immediately apparent what an individual’s physical possessions are. However, it is unlikely that anyone knows the user names and passwords for every online account you access, other than you. Maybe you have tried to organize this information into a typed word document on your computer. However, what if no one else knows the password to your computer? This example was illustrated in dramatic fashion earlier this year when the 30-year-old CEO of a cryptocurrency exchange died, leaving no one with the password to access $145 million of bitcoin and other digital assets. Password records are important, but counsel is needed. For example, passwords should never be written in a will, which must be recorded after death, and thus would mean the passwords would become publicly available.
It is also important to be mindful that some previously tangible possessions may now exist only in an online format. Where there used to be photo albums on the bookshelf, perhaps now the record of family memories and photographs are stored only in an online photo storage website. Some digital assets may even have actual value, such as airline miles or credit card rewards points, which may be lost if the companies’ policies are not followed with regard to redemption or transfer of those assets after death.
The time has come to treat digital assets the way we have always treated tangible personal property and financial accounts. If you have questions about how to ensure your trusted Agents, Executors or Trustees will have access to information about all assets, whether they are tangible or intangible, please do not hesitate to contact us. Your digital assets are part of your estate, and every aspect of the estate needs a plan.