By Betsy Ehrenberg, CEO & Founder of Legacy Concierge
Strictly speaking, digital assets are content that is stored in any electronic format. That could mean photos, videos, emails, spreadsheets or text. New digital formats are constantly emerging therefore the definition of a digital asset is always expanding as well. Rather than a definitive list of file formats that qualify as a digital asset, digital assets can be any content, in any format, that is stored electronically and provides value to a company, user or consumer.
Over $58 billion in digital assets are lost from estates each year. This is a combination of theft (one out of eight estates experience identity or other theft) and people not knowing where all of the assets may be. Data shows that the average person under the age of 75 has more than 160 records in their digital footprint, both financial and social.
Your Digital Footprint Encourages Theft
Trusts and estates increasingly are comprised of digital assets in the form of computer records that represent assets managed by the individual, their estate managers, trust officers and ultimately their fiduciaries. Given this expanded definition of digital assets (beyond social media, emails, messages and calendars) the scale and scope of an estate plan and administrative effort that secures and protects digital assets is an open-ended complex responsibility.
Digital records are created by individuals, attorneys, wealth managers, private client advisors, institutional trustees, financial consultants and family offices comprising the trust and estate planning and administration landscape. When digital assets are left scattered in the cloud, trust and estate components and their asset value are subject to devaluation and disappearance.
Attorneys and others involved in estate planning and administration need a systematic approach to handling digital assets during probate. Attorneys have been writing articles in their law journals about this problem since 2013, presenting papers at their local and national meetings, but still experiencing the devastating effects of identity theft against some estates they are handling.
The Digital After Life is your client’s legacy. Who will manage their last wishes, their assets, their digital footprint? Now is the time to help your client create a plan for a meaningful Digital After Life as a gift to the next generation. By providing a safe and secure home for your client’s data, documents and asset account records, their affairs are electronically organized at their death so that their executor has a comprehensive plan for settling their estate and avoiding the costly nightmare for their family of proceeds remaining with custodians.
Ten Ways to Protect Digital Assets
Protecting the estate and its digital assets is an ongoing activity. Knowing where to start, what information to collect and keeping on top of the process is a monumental task. How will your client communicate their passwords and pins to their executor? Who will own the rights to their website and user names? If left to the successor and/or the fiduciary, many digital assets and electronic records will remain in cyberspace potentially creating accounting and disposition problems that are costly and embarrassing.
Your clients can start by organizing, documenting digital assets and storing asset descriptions in a secure and private encrypted location, a Legacy Vault, and providing a roadmap to access digital asset disposition instructions after death. It is appropriate to name a digital curator for each estate and share access to the encrypted vault with family, friends or professional advisors. Password manager applications are a good start but generally are used because your client cannot remember all their accounts and all of their passwords.
Let’s get your client’s digital asset protection program started by assembling data and documents and then resolving the following ten items:
- Everything is digital; electronic records exist for both digital and tangible assets.
- Assets are at stake; tax returns provide one roadmap for creating an inventory.
- Wealth and estate components are elusive; electronic files can be stored in many formats.
- Multi-factor authentication is needed for access to sensitive files and digital assets.
- Unclaimed assets and escheated property are in government files and business accounts.
- Subscription and automatic payments from credit cards and bank accounts can stop.
- Collection inventory lists - art, jewelry, wine, furniture, coins and the like – can be updated.
- Intellectual property, website names, trademarks, designs and patents can generate royalties.
- Social networks, community service groups and charities can remove names upon death.
- Data and media privacy coverage should change for individuals and their successors and heirs.
Digital assets represent and are a dynamic road map to major portions of an estate and your client’s Digital After Life. For this reason, your client should have an annual digital asset review with their attorneys and wealth managers, trustees and financial planners. Although a secure list and library may have been built at the beginning of their trust and estate planning process, content review and updates should be done periodically. With forensic precision and innovative automation, you can ease the stress of one’s family after a passing by securing client’s assets and identity, finding hidden wealth and closing down necessary accounts, both financial and social.
Learn more from digital asset experts
Betsy Ehrenberg, Lee Poskanzer, and Sharon Hartung
at InterActive Legal's Hot Topic Webinar
Thursday, August 12
1:00pm – 2:30pm EDT
Betsy Ehrenberg is CEO and founder of Legacy Concierge, a service that builds a unique connection to their clientele by bridging the gap between estate planning and the location, control, curation and collection of their Digital After Life as a gift to the next generation. By providing a safe and secure home for records of the assets, financial and sentimental affairs are electronically organized at death so the executor has a comprehensive plan for settling an estate. Legacy Concierge operates internationally and currently maintains over 300 notification protocols for government agencies and private enterprises to save money and memories.