As the digital world becomes a bigger part of our lives, many people have accumulated a lot of “digital assets,” which are non-physical assets that exist online in electronic format. Most estate planning clients preserve these assets either for their sentimental value or financial value. Those held for their sentimental value include things such as digital photos, music, movies, eBooks, information and documents stored on cloud accounts, subscriptions, smart-phone applications along with the data stored on these applications, and social media accounts. Digital assets preserved for their financial value include cryptocurrencies, bank or investment accounts, credit card rewards, income-generating websites or blogs, digital videos or written works that produce income, email accounts, and digital copyrights or trademarks.
With the rise of digital assets also comes the increased threat of cybercrimes. Cybercriminals are able to steal information by hacking into online user accounts and then sell information from these accounts on the black market. They also target online investment accounts that produce substantial financial gain. A 2019 survey conducted by Morgan Stanley revealed that cybersecurity risk is a major concern for high net worth individuals. These individuals often seek attorneys who can help manage and protect their digital assets and help them navigate the legal framework controlling these assets.
Different states vary in their legal treatment of digital assets, but there are certain statutes that protect digital accounts from cybercrime. The Computer Fraud and Abuse Act (CFAA), for example, criminalizes the intentional access of a computer system without authorization. The Stored Communications Act (SCA) also prohibits the intentional access of an electronic communication without authorization. Violation of these acts is punishable by imprisonment and a fine. Additionally, all but a few US states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which allows fiduciaries such as agents under powers of attorney, executors, guardians, and trustees to access a client’s digital assets upon the client’s incapacity or death. Without RUFADAA, it is more difficult for fiduciaries, particularly executors, who have a duty to protect a client’s assets, to collect digital assets upon a client’s death or incapacity. Digital assets that live “on the cloud” unclaimed and unmonitored by owners can easily become a target of cybercrime.
Estate planning attorneys can assist clients in taking proactive steps to protect their digital estate. Clients should create a memorandum that lists all of their digital assets along with instructions on how to access each asset. This memorandum can be stored in one’s safe deposit box or vault and should be regularly updated. Secure password storage websites provide another way that clients can store the log-in information for their online digital accounts. Estate planning documents should also include how clients want their fiduciaries and heirs to access and manage their digital assets in case of their incapacity or death.
As today’s world becomes increasingly high tech, estate planning attorneys can help clients with planning and protecting digital assets by drafting estate planning documents that address the management, protection, and secure distribution of these assets. Estate planning attorneys can help clients navigate the legal system as it applies to these digital assets and implement proactive measures to preserve them.
For help protecting your digital assets or for any estate planning assistance, contact us at Wilson and Wilson Estate Planning and Elder Law, LLC at 708 482 7090 for our main office in LaGrange, Illinois or at 847 656 8958 for our Deerfield, Illinois office.