What are Digital Assets in an Estate?

Planning for what would happen to our intangible, digital assets in the event of incapacity or death is now as important as planning for traditional assets, like real property, IRAs, and investment accounts. How to accomplish estate planning for digital assets is explained in the article, aptly named, “Estate planning for your digital assets” from the Baltimore Business Journal.

Digital asset is the term used to describe all electronically stored information and online accounts. Some digital assets have monetary value, like cryptocurrency and accounts with gaming or gambling winnings, and some may be transferrable to heirs. These include bank accounts, domains, event tickets, airline miles, etc.

Ownership issues are part of the confusion about digital assets. Your social media accounts, family photos, emails and even business records, may be on platforms where the content itself is considered to belong to you, but the platform strictly controls access and may not permit anyone but the original owner to gain control.

Until recently, there was little legal guidance in managing a person digital files and accounts in the event of incapacity and death. Accessing accounts, managing contents and understanding the owner, user and licensing agreements have become complex issues.

In 2014, the Uniform Law Commission proposed the Uniform Fiduciary Access to Digital Assets Act (UFADAA) to provide fiduciaries with some clarity and direction. The law, which was revised in 2015 and is now referred to as RUFADAA (Revised UFADAA) was created as a guideline for states and almost every state has adopted these laws, providing estate planning attorneys with the legal guidelines to help create a digital estate plan.

A digital estate plan starts with considering how many digital accounts you actually own—everything from online banking, music files, books, businesses, emails, apps, utility and bill payment programs. What would happen if you were incapacitated? Would a trusted person have the credentials and technical knowledge to access and manage your digital accounts? What would you want them to do with them? In case of your demise, who would you want to have ownership or access to your digital assets?

Once you have created a comprehensive list of all of your assets—digital and otherwise—an estate planning attorney will be able to update your estate planning documents to include your digital assets. You may need only a will, or you may need any of the many planning tools and strategies available, depending upon the type, location and value of your assets.

Not having a digital asset estate plan leaves your estate vulnerable to many problems, including costs. Identity theft against deceased people is rampant, once their death is noted online. The ability to pay bills to keep a household running may take hours of detective work on your surviving spouse’s part. If your executor doesn’t know about accounts with automatic payments, your estate could give up hundreds or thousands in charges without anyone’s knowledge.

There are more complex digital assets, including cryptocurrency and NFTs (Non-Fungible Tokens) with values from a few hundred dollars to millions of dollars. The rules on the valuation, sale and transfers of these assets are as yet largely undefined. There are also many reports of people who lose large sums because of a lack of planning for these assets.

Speak with your estate planning attorney about your state’s laws concerning digital assets and protect them with an estate plan that includes this new asset class.

Reference: Baltimore Business Journal (Sep. 16, 2021) “Estate planning for your digital assets”

What are Signs of Identity Theft?

Identity thieves are searching for ways to use your personal information, charge purchases in your name, steal your medical account information and get your tax refunds.

Money Talks News’ recent article entitled “Beware These 8 Signs of Identity Theft” reports that consumers filed more than 1.4 million identity theft reports with the Federal Trade Commission in 2020—twice as many as in 2019. You should watch out by knowing these warning signs identified by the FTC.

You see changes in your credit report. When you check your credit, look through the report for anything out of place, such as charges and accounts that you don’t recognize. This can be proof that an identity thief has accessed your credit accounts or opened new accounts in your name. Check your credit report regularly. It’s easy to do online. You’re entitled by federal law to one free report every 12 months from each of the three major credit-reporting companies (Equifax, Experian, and TransUnion). In the pandemic, you can get a free report every week.
A merchant declines your check. If you balance your checkbook and pay bills on time each month, you may be surprised if a merchant refuses a personal check. However, it may signal that a thief has been using your bank account or opened an associated account in your name.
You see unexplained charges. Look through your bank and credit card account statements for unusual charges for withdrawals you don’t recognize and can’t explain. If you’re a victim of identity theft, file a report with the Federal Trade Commission at IdentityTheft.gov. You can also contact the three major credit bureaus to request a credit freeze. This prevents new accounts from being opened in your name. You can now place and lift a credit freeze for free.
You get no mail. A thief may be intercepting your mail, if your bills or other correspondence don’t come as expected.
You receive calls from debt collectors. If you’re diligent in paying your bills, and you get a call from a debt collector, it could be about debts that were incurred by someone else in your name.
Your health insurer rejects a claim. Your insurer’s records could show that you’ve reached the limit of your benefits. This can occur if thieves target your medical account and take advantage of all the benefits, so you can’t make a legitimate claim. Don’t click on unfamiliar or potentially suspicious links.
You get an unexplained medical bill. You may get a bill from a doctor for services you didn’t use. If so, be suspicious because a thief may have accessed your health insurance information and used it to receive medical care, sticking you with the bill.
You see suspicious changes in your medical records. Another tip-off that you’ve become a victim of fraud is if your medical records include a health condition that you don’t have. This could damage your ability to get the care that you need.

Act quickly if identity theft occurs and report it.

Reference: Money Talks News (Aug. 10, 2021) “Beware These 8 Signs of Identity Theft”

Act Quickly to Protect an Estate

For most families, the process of estate administration or the probate of a will starts weeks after the death of a loved one. However, before that time, there are certain steps that need to be taken immediately after death, according to a recent article “Protecting an estate requires swift action” from The Record-Courier. It is not always easy to keep a clear head and stay on top of these tasks but pushing them aside could lead to serious losses and possible liability.

The first step is to secure the deceased’s home, cars and personal property. The residence needs to be locked to prevent unauthorized access. It may be wise to bring in a locksmith, so that anyone who had been given keys in the past will not be able to go into the house. Cars should be parked inside garages and any personal property needs to be securely stored in the home. Nothing should be moved until the trust administration or probate has been completed. Access to the deceased’s digital assets and devices also need to be secured.

Mail needs to be collected and retrieved to prevent the risk of unauthorized removal of mail and identity theft. If there is no easy access to the mailbox, the post office needs to be notified, so mail can be forwarded to an authorized person’s address.

Estate planning documents need to be located and kept in a safe place. The person who has been named as the executor in the will needs to have those documents. If there are no estate planning documents or if they cannot be located, the family will need to work with an estate planning attorney. The estate may be subjected to a probate proceeding.

One of the responsibilities that most executors don’t know about, is that when a person dies, their will needs to be admitted to the court, regardless whether they had trusts. If the deceased left a will, the executor or the person who has possession of the will must deliver it to the court clerk. Failing to do so could result in large civil liability.

At least five and as many as ten original death certificates should be obtained. The executor will need them when closing accounts. As soon as possible, banks, financial institutions, credit card companies, pension plans, insurance companies and others need to be notified of the person’s passing. The Social Security Administration needs to be notified, so direct deposits are not sent to the person’s bank account. Depending on the timing of the death, these deposits may need to be returned. The same is true if the deceased was a veteran—the Veteran’s Affairs (VA) need to be notified. There may be funeral benefits or survivor benefits available.

It is necessary, even in a time of grief, to protect a loved one’s estate in a timely and thorough manner. Your estate planning attorney will be able to help through this process.

Reference: The Record-Courier (Oct. 17, 2020) “Protecting an estate requires swift action”

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