By Nadine Burns • January 7, 2017 • Comments Off on Remember your Digital Assets in Divorce
You hear it all the time, people complaining about having so many passwords today, even on our phones. We do our banking online, have business conducted via website, reach out to friends on Social Media, store our music on our phones, post how-to’s on You Tube, transact with Bitcoins, store important documents digitally, and much, much more. Our passwords are the locks and keys to a very vibrant world behind a screen, a world filled with digital assets, yet these digital assets are just now creeping into the legal world as assets we need to consider when divorcing or even at death.
Step one, identify all digital assets
Digital assets include “any online account that you own or any file that you store on your computer or that you store in the cloud.” Nathan Lustig HIWI Blog, Digital Estate Planning: What Are Digital Assets? (Apr. 19, 2010). During the divorce process we want to identify these digital assets and add them to the list of items to be discussed for personal property division. Many times the assets contain family photos, online bank accounts, online businesses, music libraries, domain names or social media accounts. Some of these are shared accounts with both parties having access.
Step two, determine if the assets have value, intrinsic or personal
“A recent poll conducted by the company McAfee found that, in the U.S., people value their digital assets at nearly $55,000.00” stated an article in the Dallas Bar Association by Chris Muese. Some of these assets you would not consider do have a financial or replacement value, such as digital music libraries. Like most personal property, the value can change over time. Some assets will decline in value due to popularity, such as a digital movie release or new song. Other assets such as domain names, could possibly increase in value over time.
Step three, Determine how the assets should be divided
Asking how these assets should be divided is important in the divorce process and should be part of any personal property discussion, along with action steps and dates required for actions to be taken. Due to the current trends in photography, the divorce decree might include a requirement that digital family photos must be copied digitally and given to the other party, then changing access to any photo site.
When we are married, the spouse can have some rights to access these digital accounts, especially financial in the case of the death of one spouse. But unless specified, that usually does not extend post marriage.
The power of attorney is a very powerful legal tool that allows someone to appoint a person to handle some or all of your legal and financial affairs when you are unable to do so yourself. However, what happens when you become incapacitated or pass on and your agent is unable to gain access to your digital accounts? For example, many bank accounts and social media sites will refuse to allow someone access to an account who is not the account holder themselves. Although many digital services have policies when it comes to the death of an account holder, not all have developed these policies.
Digital asset planning
There are many benefits to engage in digital asset planning. First, because this is a relatively new area of estate planning many states have yet to deal with the issue. Second, digital asset planning can help avoid on-line identity theft. When a person becomes incapacitated or passes away and can no longer access their digital accounts, criminals have an easier time hacking into these accounts. Third, digital asset planning can ease the process of administrating digital and non-digital accounts. Administering accounts online in some cases can ease the probate process. Also, some accounts may only be able to be accessed digitally so planning accordingly is key.
Finally, in the new digital era we possess many digital assets online that may not be monetarily valuable, however, they are emotionally valuable to us and our loved ones. For example, today emails and social media accounts act like a shoe box of old love letters and digital photo albums are the only way we preserve many memories. In order to ensure that your loved ones know these assets exist and give them the proper access to them, digital asset planning is vital.
Michigan is one of the few states that have started to take a step in the right direction in this uncharted territory. A bill was recently signed into law in Michigan that allows you to designate a person in your will to have access to your digital assets. Nevertheless, although the legislation provides more guidance it may not be easy for your “digital custodian” to retrieve your digital assets, so taking the proper steps today can avoid these issues down the road.
In order to avoid the muddy waters of digital assets you can ensure security over your digital assets by including specific language about your digital assets for wills and powers of attorneys. The following sites provide example language for security over your digital assets after incapacitation or death, but it is always best to speak with your attorney to discuss the importance and security of your digital assets.
About the authors:
Alexandra Stafford is a law student at Michigan State University in East Lansing Michigan serving as a Legal Intern at the Elder Law of Michigan.
Nadine Burns is a financial advisor, MBA, as well as a Certified Divorce Financial Analyst (CDFA™), and proud mother of Alexandra Stafford.