Protecting Your Client’s Digital Assets

The COVID-19 pandemic has really forced all of us to get up close and personal with technology – it is unavoidable. Almost a year after the initial outbreak, many people are still working from home, kids are continuing to learn online and more and more seniors are learning the internet ropes in order to do their banking and stay connected with their loved ones. However, these technological advancements bring up a very important question when it comes to estate planning – what happens to your client’s digital assets upon death?

As an Advisor, you not only need to know what a digital asset is, you also need to ensure that your client has all the information they need to make the right decisions about their digital assets. So, what exactly is a digital asset? Well, these types of assets can range from travel rewards, digital photos, web domains to crypto assets. And while some may have financial value and a possible tax liability on death, many just have personal and sentimental value for your client. Clients often have an inventory of the physical assets they own and have given some thought as to what happens to these assets on their death. For those physical assets that might not be in the “inventory”, the executor of the estate can locate them by looking in the deceased’s house and in paper files. Sounds pretty simple. But how would the executor know where to find the digital assets of the deceased? Not as easy! And in a world full of passwords and Terms of Service Agreements, even if the executor knew where to look, they may not be able to access them – yup, passwords!

Sharon Hartung, author of Your Digital Undertaker, has provided two great resources for PPI Advisors to ensure you and your clients are asking the right questions when planning for the protection of digital assets: Today’s Executor is a Digital Executor (login required) and Information Tool Kit for Advisors (login required) – make sure to have a look!

This area of estate planning is constantly evolving, but Sharon has suggested three basic questions about digital assets that Advisors should ask their clients:

  1. How will clients and their beneficiaries feel if digital assets are lost?
  2. Is the trustee or executor ready?
  3. Are the client’s digital assets accessible?

It goes without saying that when planning your client’s will, digital assets must be considered. Their inventory of assets must now include everything, both physical and electronic assets and should not just be stored on their personal computer but in a file with a copy of their will. Make sure to have a real conversation with your client to find out their wishes and preferences for those assets; for example, do they want their social media accounts to remain after death or do they want them shut down?

The truth is that estate administration is still in its infancy when it comes to digital assets. You as an Advisor have a unique and exciting opportunity to educate and guide your clients in navigating this new area of estate planning.

For more information on digital assets and how to safeguard them for your client, contact your local PPI office.

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Protecting Your Digital Assets