What’s a Digital Asset?

Mette

Have You Properly Planned for What Happens to

Them If You Become Incompetent or Die?

By:  Jennifer Denchak Wetzel, Esq.

            What’s a digital asset?  Every time you use your iPhone or other device to take a picture or send an email, you create a digital asset.  Every time you purchase a book, song, or movie electronically for use on your Kindle or iPad, you obtain a digital asset.  You do not need to invest in a form of cryptocurrency (such as Bitcoin) in order to own a digital asset.  Digital assets may have a monetary value, sentimental value, contain personal information, or any combination of the above. 

Social distancing, telework, and like effects of the Covid-19 pandemic have only increased our use and reliance on electronic communications and assets.  In fact, you would be hard-pressed to find an individual who does not own, or, at least has not utilized, an iPhone or other similar device, computer or on-line account since the beginning of the pandemic.  So what happens to these assets if you die or become incompetent?  Who gets access to and control of these assets?        

In July 2020, Pennsylvania joined approximately 45 other states in enacting the Revised Uniform Fiduciary Access to Digital Assets Act (“RUFADAA”), providing default rules and guidance for the handling of and access to digital assets by fiduciaries, including an agent under a power of attorney, a personal representative of a decedent’s estate (executor/administrator), a trustee of a trust, and a guardian of an incapacitated person’s estate.  In simple English, this law says how we can direct who can have access to our digital assets in the event or our death or incompetency.  It is important for us to designate who has access to our digital assets when we are incompetent or deceased, who is to receive them once we are deceased, and/or whether they should be destroyed once we are gone.  The more valuable (both monetarily and non-monetarily) the digital asset, the more important our planning becomes. 

Under RUFADAA, agents under powers of attorney executed following the Act’s effective date (January 19, 2021) will not automatically have access to and control over the principal’s digital assets unless those powers are specifically provided for and described within the document.  You may want to grant your agent the power to access, modify, delete, control and transfer digital assets, such as emails, financial accounts, digital photographs, social network accounts, software licenses, and the like.  Further, it is important to revisit your Will to make sure that your intentions regarding your digital assets are captured following your death.  For example, although a digital asset may be found on an electronic device, you might not intend for a bequest of your personal property (such as your laptop) to include the digital assets saved on its hard drive.  It is important to be specific with respect to who is to receive the physical item and who is to receive the digital contents.  Further, within your Will, you can direct your fiduciary to have access to both the catalogue of your electronic communications as well as the content of those communications from any electronic communications account holder.  In the absence of specific directions within your estate planning documents, a fiduciary may be forced to incur the expense of a court action to compel the release of the assets in order to properly handle your affairs and/or administer your estate.

            Before meeting with an attorney, you should create an inventory of your digital assets:  What are they?  Where are they located?  What is the password?  Having a master list of all passwords greatly streamlines access to your accounts and prevents the loss of digital assets (such as Bitcoin) that can be seized and encrypted forever after a number of unsuccessful password attempts.  Then, you can determine who would be best to handle that asset and whether it should be transferred or deleted following your death.  This will be a living document that constantly changes over time with the addition/accumulation of digital assets.

The attorneys at Mette, Evans and Woodside are available to assist with updates to your estate planning documents to properly handle access to, control of, and disposition of your digital assets. 

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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