Estate planning is a series of activities that an individual engages in to manage how their property is distributed upon their death. Once they pass away, an individual’s real and personal property are referred to as the individual’s estate.
Examples of real property include:
- Land;
- Houses;
- Buildings; and
- Fixtures to land.
Personal property includes tangible items, including cash, jewels, and cars. These are assets that may be touched or seen.
There is also another type of personal property that is called intangible property. Intangible property includes assets that cannot be seen or touched.
One category of intangible personal property is intellectual property. Intellectual property includes trademarks, copyrights, and patents.
There is also another type of intangible property that is more recent in origin, called digital property. Digital property includes information that may or may not have financial value which is held, maintained, or stored online.
Examples of digital property include online accounts that are maintained by internet service providers or social media, which may include:
- Facebook accounts;
- Twitter accounts;
- Instagram accounts; and
- Email accounts, including Gmail or Outlook accounts.
There are also other types of accounts that may be digital property, such as credit card accounts and checking accounts. In general, the information, including the personal and financial information, that is contained in these accounts can only be shared by a financial institution under specific circumstances.
Typically, a financial institution is only permitted to share the information with third parties after informing the account holder that it will. There are even more categories of digital property, including information that is contained in online storage accounts, photo sharing applications, and information that may be in cloud storage.
The items listed above may be of little value to an account holder. The account information, however, may be worth a significant amount to cybercriminals or other individuals who make money by selling personal data.
There are other types of items, such as internet domain names, vlogs, cryptocurrency, and revenue-producing blogs that may have monetary value. Digital estate planning is the process an individual uses to store, sell, erase, transfer, or maintain their digital property when they pass away.
Why Do I Want Digital Estate Planning?
Digital estate planning allows an individual to exercise some amount of control over their personal information, financial information, and other items of monetary value. For example, an individual may have paid a large sum of money for their business’ domain name.
That individual may want to have their heirs sell the domain name upon their death. Another example is an individual may have a Facebook account that they want to have terminated when they pass away.
Digital estate planning involves an individual, called a testator, making a will or a trust that govern their digital property estate. In their will, the testator may name an executor.
An executor is responsible for distributing the individual’s assets and paying off the debts of their estate. A will may contain a series of instructions about how the individual’s property should be sold, distributed, or otherwise disposed of.
In order for a digital asset to be distributed through a well, the testator has to actually own the asset instead of licensing it or having some other type of ownership at the time of their death. A trust is favored over a will for digital estate planning.
There is a special type of trust, called a Digital Asset Protection Trust (DAP trust), that allows for managing digital property after an individual’s death. In general, the terms of a will may be available to the public while the terms of a trust typically are not.
If an individual does not consider how to dispose of their digital estate through a will or trust, issues may arise. For example, their beneficiaries may have competing claims to the digital property, for example, cryptocurrency.
Digital estate planning allows issues that involve digital assets and property to be clearly addressed so that, when the individual’s death occurs, disputes over their property will be minimized.
How Can I Manage My Digital Estate?
A Digital Asset Protection Trust (DAP trust) is a type of trust that can protect an individual’s digital property or rights. The creator of a trust is called a settlor.
An individual can fund their trust with their digital assets or rights, such as cryptocurrency. In this trust document, the individual will name the beneficiaries of the trust.
The individuals named in the trust will receive the assets in the trust when the settlor passes away. The individual who manages the assets of the trust for the benefit of the beneficiaries, according to the trust terms, is called the trustee.
An individual may also create an inter vivos digital asset protection trust. This type of trust is not effective upon the individual’s death but, instead, is effective during their lifetime.
An individual can create a DAP trust that includes terms stating which beneficiaries have the right to access their accounts and provide the information necessary to do so.
How Do Tech Companies Handle Accounts After Users Have Passed Away?
The laws that govern digital state planning are still being developed. The rules that have applied to traditional estate planning, for example, rules about distribution of property, have yet to be developed in many situations.
As of 2021, there was not a federal law requiring social media companies and internet service providers to handle a deceased individual’s information in a certain way. Since there are no uniform laws, different companies have developed different policies.
Facebook, for example, provides individuals with two options. The individual can choose to appoint a legal contact during their lifetime to manage their memorialized account or they may instruct Facebook to terminate their account when they pass away.
Because an individual may forget to choose an option during their lifetime, putting a provision in their will or trust that provides for either a legacy contract or a termination will allow the individual to control what happens to their account after their death.
How is Information On The Internet Handled at Death?
In the United States, in general, an individual does not have the right to have information about them on the internet removed after their death. The European General Data Protection Regulation, a law that governs European Union (EU) data privacy, contains a right to be forgotten.
Under this law, an individual may force search engines to remove links to data about themselves. Courts in the U.S. have held that the right to be forgotten is not compatible with the First Amendment to the U.S. Constitution, which includes the freedom of speech and freedom of the press.
Are There Any State Laws Regarding Digital Estate Planning?
Because there is no federal data privacy law that regulates digital property and digital estates, there are some states that have enacted digital estate legislation. The majority of states have laws providing for managing digital estates.
For example, in Ohio, House Bill (HB) 432 adopted a model law called the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). RUFADAA provides terms for how trustees or executors may access an individual’s digital assets after death.
The majority of other states also have a version of this law. However, not all of them are the same as they may differ regarding what the trustee or executor may access, and in what information qualifies as a digital asset.
Do I Need an Attorney to Protect My Digital Estate?
If you are considering creating a digital estate plan, it is in your best interests to consult with an estate planning lawyer. Your digital estate planning attorney can advise you of the laws in your state and help you create your digital estate plan.
