Digital asset ownership has increased significantly, yet many people have not considered it in their will and estate planning. Irene Yee, Certified Financial Planner and a member of the Financial Planning Association of Singapore (FPAS), shares her insights in the article “Digital Assets And Your Estate Planning”.
Life can be unpredictable. It is therefore important for us to plan and prepare for untoward life events such as incapacities and death.
Estate planning is not just the distribution of one’s assets when one passes on. It is also about planning for untoward mental incapacities such as dementia, Alzheimer’s, and coma. In Singapore, advanced planning for mental incapacity is possible with the LPA.
For specific instructions involving the management of digital assets on one’s mental incapacity, the LPA Form 2 is the relevant document.
What are Digital Assets?
A digital asset is any electronic device, account, or password-protected website.
It can include your mobile phone, especially the photos and text messages inside it.
Other common digital assets are email accounts, payment accounts (e.g., GrabPay), financial accounts (e.g., bank and brokerage accounts) and cryptocurrencies.
Digital assets can also include email accounts and accounts related to your interests, such as iTunes.
Various social media accounts are also digital assets. These include Instagram entries and photos.
Any website or blog created using a third party’s services and hosting facilities is a digital asset.
Your personal computer, if it is password-protected, is also a digital asset.
Why have an estate plan that includes Digital Assets?
It is essential to ensure someone manages your physical assets after you are not around or unable to do so; this is also true for your digital assets.
You need to include digital assets in your estate plan to be sure someone can access and manage them after you are unable or not around to do so.
If your estate plan doesn’t correctly account for digital assets, your Will or Trust beneficiaries may not be gain access to them.
You may lose your family videos forever; your social media accounts may stay online long after you have passed, and your heirs may not receive all the money that you would have liked to leave them.
When you include digital assets in your estate planning, you not only make it easier for your executor and loved ones to manage your estate, but you will also protect your privacy, even after death.
It is therefore vital to plan for your digital assets the same way you would any other valuable tangible asset.
What are some of these estate planning strategies for Digital Assets?
Some possible ways to plan for digital assets in your estate planning
1) Create an inventory
a) Prepare a list of all your digital accounts, assets, automatic payment plans, and subscriptions
The list should include the name, digital address, or another way to access it, and the access information such as username, password, and security questions.
b) Include digital liabilities
Examples include automatic payment plans, renewal programs, and other arrangements under which your bank account or credit card is automatically charged regularly.
c) The inventory is essential
Without the inventory, your executor and heirs will have a challenging time. Your executor may have to hire computer experts to crack passwords to computers and accounts. Or worse, your executor may not even know of your digital assets.
2) Decide what you want to get done and who should do it:
a) If you want a family member (instead of the executor) to access your email accounts, specify this in your Will.
You may wish only family members to handle social media accounts, such as LinkedIn. Note that the major digital providers have adopted policies that allow heirs some access to digital accounts.
Although such guidelines are in place for Google, for example, your expressed intention in an estate document will override limitations in a provider’s service agreement.
b) State your decisions in your Will or your Trust document.
Instructions in your Will or living trust control who has access to your digital assets
Note that some digital accounts are not assets. For example, when you purchase and download an e-book from Amazon’s Kindle service, you have only a personal-use license under its service agreement. You do not own the asset to be able to give it to someone. The rights are supposed to end with your passing.
c) Keep details of digital assets in a sealed letter stored with your Will
Do this, instead of placing the information in the Will, since certain digital assets are potentially sensitive and personal.
Once you pass on, your Will becomes a public document. When you keep such information in a sealed letter, together with your Will, you will maintain more privacy.
Conclusion on Digital Assets estate planning
Digital asset ownership has increased significantly as more people spend more of their lives online and acquire digital assets.
Yet many people are unaware of this change and impact on their own estate plans and have not considered it in their estate planning.
But you have now taken the step to learn and then plan how to better manage your digital assets during your mental incapacity and death.
Including digital assets in your estate planning will minimise any potential mess or confusion regarding your digital assets if you have mental incapacity and when you pass on.
The article “Digital Assets and Your Estate Planning” – by Irene Yee, CFP, first appeared in Financial Planning Magazine, a FPAS publication.