Virtual Assets and Real Advice - Clients Need Candid Advice Regarding their Digital Assets (3 of 10)

(Part 3 of 10 part series)

C. Growth of Online Digital Assets

Online digital asset creation and accumulation has grown exponentially over the past few decades with the rapid adoption and use of the internet.^[i]  Content on the internet has exploded with over 644 million websites – a number that is estimated to be growing over 5% per month.[ii]  In less than 20 years, the internet has climbed from approximately 16 million users (0.4% of the world’s population) in 1995 to 2.7 billion users (38.8% of the world’s population) in 2013.[iii]  The World Bank’s latest estimates peg internet use within the United States at 81% of the population.^[iv]  On average, American internet users are spending over two hours of their day online, the greatest portion of that time being spent on electronic communication and social media applications.^[v]  Statistics gathered from 2012 showed that on average, 204 million e-mails are sent, 27 thousand blogs are published, 36 hundred Instagram photos are shared, 48 hours of YouTube videos are uploaded, 100 thousand Tweets are sent, and 684 thousand pieces of Facebook content are shared every minute![vi]  It is estimated that the average person stores the equivalent of 600,000 books in digital information at any given time.[vii]  As online digital assets make up more of a person’s estate, estate planners are becoming increasingly anxious to help their clients plan for the disposal of these assets at death or incapacity.[viii]

II. Digital Estate Planning Dilemma

A. The Importance of Digital Estate Planning

John Berlin’s story is only one of many that highlights the turmoil and loss experienced by survivors wanting access to the digital assets of their deceased loved ones.  Technology writers and legal scholars are publishing heart-wrenching stories of families and potential heirs who were unable to control or even access e-mails, social networks, blogs, and other digital assets belonging to the deceased.[ix]  While many of these examples involve losses that are more sentimental in nature, digital estate planning supporters warn of significant financial losses that could occur in the absence of a plan.[x]  For example, if some digital information is not quickly accounted for and safeguarded, the identity of a deceased or incapacitated person is at risk of being stolen.[xi]  Also, if an incapacitated person has online subscriptions or electronic bills that are not readily accessible, important insurance coverage or services could be cancelled.[xii]  These types of losses may be preventable if digital assets can be successfully incorporated into a comprehensive estate plan.

Digital estate planners are also keen on helping people preserve their legacies for the benefit of those left behind. [xiii]  In days past, one might keep personal letters or a diary to pass on his story to future generations.  However, if one uses e-mail and social media in place of pen and paper, that person’s legacy could be lost if his personal representative cannot gain access to those assets.[xiv]  Conversely, emotional turmoil can also be caused if too much access is granted to some digital assets.  Imagine how much emotional turmoil would be caused if a surviving spouse was given access to private e-mail communications between the deceased spouse and her former lover![xv]  Preserving a person’s legacy would be much easier if that person has arranged in advance who can access and manage her digital assets in the case of death or incapacity.

Digital estate planners also want to help ease the administrative burden on representatives and family members.[xvi]  Administering a digital estate can be difficult for several reasons.  First, from a logistical perspective, it may be hard to account for every asset.[xvii]  It is estimated that each internet user has an average of twenty-six online accounts.[xviii]  If a person has an online banking account that is set to only send electronic statements to that person’s e-mail account, there is a real chance the online bank account could be overlooked if the personal representative has no access to the e-mail account.[xix]  Even if an asset is discovered, it may not be accessible if the personal representative does not know the username and password.[xx]  Having to find, access, and manage so many password-protected accounts spread across many online providers could prove a daunting and potentially impossible task for representatives and loved ones.  However, the task could be done if the estate plan had included a comprehensive inventory of the digital estate complete with login instructions.

(Rest of article continued in series)