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We are gradually, and grudgingly, learning that our online presence can outlive our physical presence and possibly take on a life of its own. As we begin to move more of our activities — financial, social, work, leisure, creative — to the Internet, the question about what happens to our online presence and how we best prepare to handle that have begun to grow in quantity and complexity.

Historically, we have viewed property as falling into two major categories — personal property and real property. Personal property is traditionally divided further into tangible personal property, meaning items that you can see or hold, and intangible personal property, meaning items that lack physicality. Recently, a new subdivision has emerged that many label as “digital assets.” There is no real consensus about which property category digital assets belong in.

Some say that they are intellectual property; some say that they are intangible property; and others say that they can be transformed easily from one form of property to another with the click of the “print” button. In actuality, some accounts that we consider “assets” are simply just licenses to use a website’s service that generally expire upon death.

Only two states (Oklahoma and Idaho) have statutes that directly address digital assets in a probate context — and even then only in the administrative phase. Most estate planners have not figured out how to address the disposition of digital assets. It is important to understand digital assets and to incorporate the disposition of these assets into a person’s estate plan.

Conceptually, the same principles apply to planning for our digital assets after our demise as apply to our real-world assets. Yet handling digital assets can quickly become quite complicated. It usually takes a simple conversation, a page or two of notes and pointing loved ones to the file cabinet or box where the important assets are kept to handle 90 percent or more of the “things” one owns. In comparison, making arrangements for digital assets can be an order of magnitude much more difficult than making arrangements in the physical world.

Digital assets include “any online account that you own or any file that you store in the cloud.” Online accounts include, but are not limited to: email accounts such as Gmail, Yahoo and Hotmail; pictures stored online at Flickr, Picasa, Shutterfly, or Kodak EasyShare; videos or documents on YouTube, Google Docs or Scribd; websites or blogs such as Typepad, Blogger or WordPress; online banking, investment and credit card accounts; PayPal; domain names from Go Daddy or Network Solutions; Web-hosting accounts; social networking accounts such as Facebook, Myspace, Twitter and LinkedIn; online shopping accounts such as eBay or Amazon; virtual businesses; online auction houses; avatars on World of Warcraft or Second Life; professional and personal data backups; and online bill payment accounts for loans, insurance utilities and website hosting. Examples of the types of files many clients store on their computers include personal and business letters and other documents, photographs, videos, artwork and music. While many of these assets do not have monetary value, many of them may have sentimental value to family members. Thus, every category of digital assets needs to be considered when drafting an estate plan.

Can you quickly and easily find all the valuable documents and files on your computers? Or, as is likely, are they scattered among many folders, several computers, flash drives, and backup CDs, DVDs or tapes? How easy will it be for someone to sit down at your computer and find everything they need, especially if it’s now a struggle for you to do so?

Add to that the simple fact that establishing a succession plan works against every recommendation for good security practices. Security experts want you to create strong passwords, to use different ones for different accounts and to change them frequently. How many times have you heard that you should never write down passwords? If you do a great job on security, you all but guarantee no one can get easy and timely access to your digital world when the time comes.

Some of the benefits of planning for digital assets are:

  • To make things easier on executors and family members
  • To prevent identity theft
  • To prevent content theft
  • To prevent losses to the estate
  • To avoid losing the deceased’s story
  • To prevent unwanted secrets from being discovered
  • To prepare for an increasingly information-drenched culture

The rights of executors, agents, guardians and beneficiaries with regard to digital assets are uncertain. Many online account providers have vague policies regarding the fate of online accounts after the user’s death — or no policies at all. Such policies are important because they outline steps that family members or executors must take to protect the deceased’s email or social networking accounts. While some states have passed laws granting personal representatives the power to deal with some of the digital assets, it is still unclear what happens if these laws conflict with service agreements. Thus, family members may have to go to court for legal authority to gain access to some of these accounts. Even after gaining legal authority, the company running the online account still may not acquiesce to a family member’s authority without a battle. Some of the more popular online accounts, along with their current deceased-user policies, are described below.

Facebook: Family members can either remove the deceased’s account or “memorialize” it. Memorializing means that the account continues; other Facebook members can interact with the deceased’s wall; all status updates and contact information are deleted; access is restricted to confirmed friends; and future logins are prevented.

Hotmail: Family members can either delete the deceased’s account or receive a CD-ROM of the contents of the email account after providing proper documentation.

Gmail/Google: Family members can gain access to the deceased user’s account in the same manner as required by Hotmail, with the additional requirement of providing an email correspondence between the family member and the account owner.

LinkedIn: Family members can memorialize the deceased’s account, meaning that profile access is restricted and messaging functionality is removed. Family members can also close the account.

Although these deceased-user policies help to protect the deceased’s accounts, they do not solve all the problems involved with handling digital assets. Because these deceased-user policies cannot ensure the proper and efficient disposition of a deceased’s accounts, these accounts need to at least be considered when drafting an estate plan.

There is currently no “right” answer regarding how to plan for digital assets, so each individual should consider all the options and decide which option, or combination of options, is best for him or her. The first step is to take an inventory of all your digital assets, writing down usernames, passwords, and security questions and answers. From there, your attorney can decide whether to utilize a will, separate document, trust or online afterlife company.