By Sasha A. Klein
We clearly live in a digital age. There are more than 2.4 billion users of the Internet worldwide, up 566% since 2000. Among Americans, 85% of adults and 95% of teenagers use the Internet. Of those Americans, two-thirds of them engage in social media and more than 40% receive paperless credit card and bank statements. Social media absorbs more than 25% of all time spent online! More than 50% of American seniors are online and a surprising 92% of children under the age of two have a digital presence.
When You Hear Digital Asset — Think Electronic Record! | |
| Computers & their Content (including documents, PDFs and spreadsheets). Tablets / Phones & their Content Social Media, e.g., Facebook, Twitter, Linkedin Photos / Videos /YouTube Websites / Domain Names Contact Lists / Address Books / Calendar Streaming Video Accounts, e.g., Netflix, Vimeo Online Accounts, e.g., Amazon, iTunes | Online Stores, Shopping, e.g., Amazon Emails Music accounts, e.g., iTunes Electronic Library, e.g., Kindle, Nook, iBooks Electronic Financial Accounts & Records Electronic Medical Records Documents Stored in the Cloud, e.g., Dropbox Blogs Virtual Currencies, e.g., Bitcoin |
Digital assets are exploding in size, nature and value. Documents are stored in the cloud, photographs are uploaded to websites, conversations are now text messagesand stacks of letters are now email folders. Digital assets have changed the way we interact and conduct business.
Presently, every 60 seconds:
- 168,000,000 emails are sent/received.
- 695,000 Facebook accounts are updated/posted.
- 600 digital videos are added to YouTube.
- 320 new Twitter accounts are created.
- 100 new people join LinkedIn.
- 6,600 photos are uploaded to Flickr.
According to a 2014 global survey (McAfee), the average person has digital assets worth approximately $35,000. Even though digital assets may not be your most valuable assets, they can be some of the most cherished, e.g., family digital photos/videos.The Issue
We as a culture are amassing significant digital assets. Our smartphones, computers and online accounts have accumulated valuable and significant electronic data. From Facebook to banking, we use password-protected sites to complete daily affairs for business and pleasure alike, with a reliance on the security of access promised. But what happens to that promise of security when one dies or becomes incapacitated?
The growth of digital assets has outpaced the state and federal laws governing them. Terms of service agreements (those pesky “small print” documents that pop up when establishing an account that people typically check “agree” without reading), as well as those federal and state laws, do not contemplate that death or incapacity may prevent access to digital assets. Knowing their prevalence, access to your digital assets after death or incapacity is a must. However, without proper planning, administering them can be a nightmare.
A Solution — The Model Act
The legal world took notice of the obstacles an executor and other fiduciaries face and created a model act called the “Uniform Fiduciary Access to Digital Assets Act.” The act’s primary purpose is to grant your fiduciaries the authority to access, control and manage your digital assets, while maintaining your privacy and intent.
Longstanding fiduciary law exists that allows a representative, a/k/a fiduciary, to stand in your shoes after death or incapacity to manage your real or tangible property. The act is meant to clarify those same laws and apply them to digital property. In other words, the act fills a void by creating a legal right where none had existed.
The act is model legislation that can be enacted by state, not federal, legislatures and does not become law until approved and enacted by such states. This act has been introduced but not enacted in the state of Florida. It is on the docket (again) for the 2016 Florida legislative session.
Plan!!
Amidst the developing legal landscape, it is important that you take a proactive planning approach to secure and protect your digital footprint by:
- Inventory/Roadmap - Keep an updated list of valuable and significant digital assets, including accounts, usernames, passwords, etc. It can be written, stored electronically or hybrid.
- Tangible Media - Regularly back up data, e.g., digital photos, to a local storage media (computer’s hard drive, DVD, USB flash drive, etc.).
- Online Tool - Use an online tool where available, e.g., Google Inactive Account Manager or Facebook’s Legacy Contact, to name another person to manage and have access to your account after death or incapacity.
- Estate Plan — Include specific language in your estate planning documents authorizing websites to release data to your fiduciary during incapacity or death.
Such a plan is essential to (i) make a transition easier (or perhaps possible) for your family or fiduciary in the event of death or incapacity, (ii) prevent identity theft, (iii) prevent financial loss, and (iv) protect your digital assets with sentimental value (e.g., photographs, videos, blogs).
Treat your password like your toothbrush. Don’t let anybody else use it, and get a new one every six months!” — Clifford Stoll.
Sasha Klein is a Senior Vice President and Director of Trusts and Wealth Services for Sabadell Bank and Trust, the exclusive private wealth department of Sabadell Bank United for high net worth individuals. She oversees Sabadell’s estate planning and fiduciary services group for Southeast Florida. Klein is responsible for providing wealth and advisory services for high-net-worth individuals and families. Klein can be reach at (561) 653-2058
South Florida Legal Guide 2015 Financial Edition