Since we originally published our post on planing for digital assets in 2011, Google and Facebook have now created Inactive Account Manager (Google) and Legacy Contact (Facebook) designations so you can name who has control of your digital assets upon your death.  For more information, see the following articles:

Google’s “Inactive Account Manager

Facebook’s “Legacy Contact

The following was originally published on August 17, 2011

What are digital assets? Generally speaking, “digital assets” are any type of data in which a person has some right or proprietary interest.  A person’s digital assets may include (but are not limited to) information in his or her email accounts, information saved on his or her Smartphones, his or her computer files, picture files, video files, music files, social networking accounts, blogs, websites, word processing documents, and spreadsheets.

Do digital assets have value?  Many digital assets have value.  Like tangible assets, digital assets can have monetary value (for example, blogs that generate revenue, or intellectual property rights, which – in some cases – may be extremely valuable), or sentimental value (family photos or video files, for example).  For this reason, it is important to establish a plan for what should happen to your digital assets in the event of your death or incapacity.  It may be necessary to access the digital assets of an incapacitated or recently deceased person in order to preserve value in his or her business or estate, even though those digital assets may have no monetary value.  For example, although a person’s email account does not have monetary value per se, many people conduct their day-to-day business primarily via email (by taking orders, making sales, arranging for deliveries, contacting suppliers, etc.)  If such a person becomes incapacitated or passes away, his or her agents or fiduciaries will likely need to access that email account to avoid contract breaches, which could be costly to an incapacitated person’s business or may result in claims against a decedent’s estate.  As discussed below, it may be impossible for your agents or fiduciaries to access your email account or other digital assets if you don’t plan ahead.

What happens to my digital assets if I die or become incapacitated?  In short, it depends.  Without guidance from you, your agents, fiduciaries and loved ones may not be able to locate or access your digital assets.  Whether anyone other than you will be granted access to your online accounts (email, social networking, e-commerce, blog accounts, etc.) will depend on the terms of the contract or agreement that exists between you and the online account provider.  If you have an email account through Gmail, for example, Gmail’s privacy policy allows your next of kin to access your email account in the event of your death once your next of kin provides Google with specific information, including proof of your death.  Gmail’s policy, however, does not allow anyone to access your account in the event that you become incapacitated.  Yahoo!, on the other hand, has a much stricter policy and will not allow anyone to access a deceased or incapacitated person’s Yahoo! account, under any circumstances.

What issues should a person creating a digital asset estate plan consider?  A person developing a digital asset estate plan should, at a minimum, establish an inventory of his or her existing digital assets (including hardware, software and online accounts) and provide a means by which the agents or fiduciaries he or she designates in his or her estate planning documents can access the inventoried assets.  One approach is to create a master document containing all of your digital asset passwords, and put that list in a safe deposit box or keep it with your other estate planning documents.  Of course, you would have to update the list and safeguard it every time you change your accounts and/or passwords.  Alternatively, it may be easier to set up a password management account with an online provider, to ensure that the agents or fiduciaries are able to access the inventoried digital assets.  Again, the digital asset inventory and the master password document should be updated periodically.  The benefit of an online password management account is that the list of passwords is updated automatically and will always be current, but some individuals have security concerns with the information being online, even if it is password protected.

Another issue digital asset owners should consider is whether the fiduciaries or agents appointed in his or her power of attorney or Will (or Trust document) possess the necessary level of knowledge and familiarity with digital assets in general to deal with any issues that may arise in the event of the digital asset owner’s incapacity or death.  If not, the digital asset owner should consider appointing a “Digital Asset Trustee/Executor” or “Digital Asset Agent” who is technology-savvy enough to handle such issues in the event of the digital asset owner’s death or incapacity.  Also, due to the content of some digital assets, some clients may want to limit who will have access to them.

What happens if I fail to create a digital asset estate plan?  Some people fail to establish a digital asset estate plan before they become incapacitated or pass away.  In those cases, the agent or fiduciary should take steps to locate and access any digital assets owned by the principal or decedent.  The fiduciary or agent may choose to hire a data forensics expert to locate and gain access to a principal or decedent’s digital assets.  The downside of this approach is that those expert’s services may be costly, the experts may not be able to locate and access all digital assets and it can be a time consuming-process, when time is of the essence.  Alternatively, some online services will conduct a comprehensive search of popular websites for accounts owned by a decedent for a fee.

A decedent or incapacitated principal’s primary email account is a particularly important digital asset for the fiduciary or agent to attempt to locate and access.  A person’s primary email account will usually contain notification emails from other digital asset accounts that can assist the fiduciary or agent in compiling a digital asset inventory.  Also, the fiduciary or agent can use the “forgotten password” feature provided by many online accounts to reset the decedent’s or incapacitated principal’s passwords and gain access to those digital assets.  A primary email account may also contain personal emails that have significant sentimental value to the family and friends of the incapacitated person or decedent.

The fiduciary or agent should act fast when attempting to locate and access the decedent or principal’s digital assets.  Some online email accounts deactivate automatically if the account is not accessed for a specific period of time.  If the account is deactivated, the contents of that digital asset will be lost forever.