By: Pete Pichaske
You’ve drawn up a will that includes your home and all other earthly possessions, life insurance policies, stocks and bonds and all that money you have lying around. You’ve set up a power of attorney and a trust. You have, in short, done all the estate planning you need to, right?
More and more financial planners are warning clients not to forget their digital assets.
“Given the wealth of information we have housed on our computers and the Internet today, smart estate and succession planning includes addressing how to handle digital assets,” warns a recent article in the American Bar Association webzine, Law Practice Today, written by technology attorney Dennis Kennedy.
Some local experts agree.
“This is a hot, new area,” said Tom Byers, a tax partner at Ellin & Tucker and a leader of the Baltimore accounting firm’s estate tax planning and compliance group. “All the stuff people have online now … it’s become very difficult at times for the executor of an estate to access those things — or even to know that they exist.”
The most-discussed digital assets are user names and passwords that allow access to various accounts. But the term also can include such online treasures as photographs stored in a cloud or a social media site, and unpublished manuscripts. The latter could be valuable, either financially or simply for sentimental reasons — family portraits, for example.
Byers said various organizations are working to come up with ways to give executors the rights they need to access the information, but it’s a slow process.
“A lot of software folks are hesitant,” he explained. “There’s nothing they can get out of this except legal liability. … They’re there to protect confidentiality, so unless the law allows them to provide that information, they’re not going to do it.”
The Maryland General Assembly next year is expected to consider a bill dealing with digital estates, according to Robert Horne, an attorney with Adelberg, Rudow, Dorf & Hendler, in Baltimore, who specializes in estates and trusts.
State lawmakers, he said, will use as their starting point legislation dealing with the issue drafted by the Uniform Law Commission, a national group that provides states with non-partisan legislation designed to bring “clarity and stability to critical areas of state statutory law,” according to its website.
“This is an area where the law has lagged behind technology fairly substantially,” Horne said.
He said his firm now tells clients working on their estate plan to make a list of user names and passwords, and let someone trusted know where to find that list.
“Some people are reluctant to part with their passwords,” Horne said. “We leave it up to them…. But you have to have these discussions, tease these things out. It’s part of the [estate] planning process now.”
Ignoring digital assets, they advise, can lead to headaches, experts say.
“At the very least, it could slow the process,” Byers said. “Worst case scenario, the assets just sit forgotten, never discovered, never reported as part of the estate. Which I guess saves you taxes, but it doesn’t get those assets to family or friends.”
To read the whole article, click Don’t forget digital assets when estate planning