Dealing with digital assets in estate plan

Sam Moak

Editor's Note: The information in this column is not intended as legal advice but to provide a general understanding of the law. Any readers with a legal problem, including those whose questions are addressed here, should consult an attorney for advice on their particular circumstances.

One of my favorite shows on TV is The Big Bang Theory. While it’s just a silly sitcom, it does touch on topical matters frequently. Last week I saw a rerun from last year that dealt with Leonard, Howard, Raj and Sheldon’s investment in Bitcoins. I had no idea what Bitcoins were, but found out they are a cryptocurrency, a form of electronic cash.. The group couldn’t remember which computer they had the Bitcoins on when they realized they might be worth something. So, in my effort to continue to have you think about maintaining your estate plan, I want you to review your Wills and power of attorneys to determine if they will allow your executors or agents access to your Digital Assets. Just a quick refresher, a Statutory Durable Power of Attorney is an instrument by which one person (the principal) grants to another (the agent) the power to perform certain acts on the principal’s behalf. However, what if you pay your bills online? Does your agent have authority to do so? What does the Terms of Service Agreement (TSA) say? Again points to ponder in our new world. 

Many, attorneys included, make the common assumption that all digital assets behave and are legally treated just like real property, tangible and intangible assets. However, not all digital assets are transferable on death. Depending on the nature of the digital asset and the TSA, the service provider may or may not recognize a power of attorney, Will or Trust as validly transferring wither access to, or ownership of, the account. 

Powers of attorney should give the maker’s agent specific authority over digital accounts in the event of incapacity. In fact, the State of Texas in September 2017, updated their recommendation for durable powers of attorneys in Texas to include digital assets (see Texas Estate Code Section 752.1145 and Section 2001.201). Note, however, protecting privacy can trump protecting the digital assets. It is important not only to include provisions for the disposition of digital assets with monetary and sentimental value, but also to provide for the destruction or securing of digital assets the client wants kept secret. Further, fiduciary power provisions should cover digital assets, and if they are to be destroyed or accounts terminated, that direction should be accompanied by a corresponding exculpation provision. 

If dealing with a Will, personal representatives should be aware of digital assets and who controls them to determine if their disposition comports with the decedent’s estate plan. 

You should make an inventory of your digital assets, including how and where they are held, along with usernames, passwords, and password “prompts.” This list should be updated periodically (much easier said than done!). A power of attorney, nor a Will, should not contain passwords or other critical information about digital assets. 

Compiling passwords, in any manner, is risky because the list will almost immediately become outdated and must be constantly updated to be useful. Once shared, it can be used to access accounts prematurely, But, I is appealingly simple to leave written records of password and login information to family and fiduciaries. While use of an account holder’s access information will violate many a TSA, it is practical, and it works, at least until the password needs to be reset for some reason. 

You should also be aware of your email provider’s policies with regard to access. In today’s digital world, access to email is critical. A decedent’s email account may have information needed to collect assets and receivables, pay debts, manage a business and wind up affairs. Emails concerning financial and business accounts can be time sensitive too. 

Unfortunately, emails may be in an employer’s system and not in a personal account. An employer might deny a family or fiduciary access to an employer-provided account for a number of reasons (i.e., limit or prevent access to sensitive customer or client information, or access may require security clearance). 

As you can see, “living” online has created a whole new world we must think about. An attorney who focuses on estate planning can make this an easier process and help ensure that the information you want to share after your death or disability can be, and that the information you do not want shared is not.

Sam A. Moak is an attorney with the Huntsville law firm of Moak & Moak, P.C. He is licensed to practice in all fields of law by the Supreme Court of Texas, is a Member of the State Bar College, and is a member of the Real Estate, Probate and Trust Law Section of the State Bar of Texas.