- September 7, 2016
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We’ve discussed the importance of your clients protecting their digital assets, and how you can assist them in the process. There are hundreds upon hundreds of statistics about digital assets, the amount of time the average person spends on the internet, and the sheer number of digital accounts people possess. However, there is one thing lacking from all of this information; a concrete definition on what exactly a digital asset is.
Before tackling the complex definition of a digital asset, it’s important to differentiate between an asset and property. An asset is “a useful or valuable thing”. On the average computer, many people possess thousands of files. Not all of these files will be considered digital assets. While they’re all the property of the owner, only specific items can be deemed assets that must be considered in the preparation of estate documents. For example, in the average person’s cloud account, you’ll likely find photos, some old papers, copies of important documentation, receipts for payments, bank records, and correspondence, but how much of this is a digital asset?
Due to the complexity of the terminology, it’s difficult to know the difference between a digital asset and a junk file. You’re sorting through the list above and determining which of the aforementioned items is a digital asset, and how you’ll educate your clients about the distribution of such during the estate planning process. Truthfully, it all falls under the category of a digital asset, because the definition has such a broad spectrum, it’s difficult to ascertain what has value to the person whose property it is.
It’s not easy to educate your clients about digital assets, when the community in general has failed to truly describe the terminology in a sensible way. We’ve all heard the colloquialism that one man’s trash is another man’s treasure, haven’t we? That very statement is the reason why there are no hard and fast rules in place to govern what can be considered a digital asset and what cannot. Nearly every electronic file or account that people control can be considered a digital asset, but not every piece of digital property needs to be accounted for.
As an estate planning professional, you’ll need to inform your clients of the importance of locating and delegating control of every digital account they possess. However, the client must be made aware that in some cases, their digital assets will be under the control of the service with whom they’re held, unless they create specific instructions. The client will have to be able to list what is of importance to them versus what accounts/assets don’t really matter. For example, if your client has a Gmail account that is used primarily for online newsletters, weekly ads, and junk mail, they may want to take the reins on this account themselves, by accessing the unused accounts settings.
If your client has a cloud account that contains many personal documents, photos, or things they’d rather not leave open for public consumption, this is the type of account that must be considered a digital asset whose control requires delegation. At this point, you’ll need to have your client consider who he’d allow to see the contents of said account and who he’d like not to see it. This leaves the door open for you to suggest a specific directive be provided, rather than a blanket directive that leaves control to one person.
Of course, this leaves onus to the estate planning professionals. You’ll need to be informed enough to educate the client about the delegation of said accounts. While defining digital assets may be tricky business, the hassles associated with undefined access to accounts will be trickier.
DCS Can Help
Our program provides a comprehensive listing of any and all accounts or assets of which the user is in possession. We’ve created a system to streamline to process for estate planning professional by providing the knowledge they’ll need to instruct their clients how to proceed.