Digital Assets: What are they and how you should safeguard them

Years ago we saved photos in albums, music in CD’s (or tapes!) and correspondence in letters and we saved all of that around our house for the most part. But technology has changed all of that. Now, many of our personal mementos are saved ‘digitally’ on our computers or hand held devices as well as on social media websites and somewhere ‘in the cloud’ which even though we may not understand how it works; we are glad that it does.

The value of these ‘digital assets’ can really add up. Some of those digital assets might actually be income earning like a website that generates revenue from advertising. Access to these digital assets often requires a logon and a password that we may or may not have made a note about somewhere or shared with a loved one.  And, sometimes even though we may not be aware ownership of these digital assets may not be completely clear in a legal sense.  

What are digital assets?

·        Hardware devices and the digital files stored on those devices

·        Email accounts including the content and attachments to those emails

·        Domain names and the files that are included in a website

·        Photo libraries, personal information and entertainment files (music downloads)

·        Personal memories (photographs)

·        Personal records (health, financial, insurance records),

·        Career information( resumes, cover letters, email contacts)

·         Personal creative projects and hobby files

Internet security company McAfee did a global study on digital assets that was released towards the end of 2011. The research (provided by MSI International) surveyed more than 3,000 consumers across 10 countries. There were some interesting findings: .

·        Consumers placed an average value of $37,438 on the digital assets they owned across multiple digital devices.

·        Regionally, North Americans had the highest perceived value of their total digital assets with an average value of $52,154 (Canada $47,074)

·        25% of consumer Internet users own at least 5 devices per household

·        60% of consumer Internet users own at least 3 devices per household

·        41% of those surveyed spent more than 20 hours per week using a digital device for personal use

·        27% those digital assets were considered “impossible to restore’ if lost and were valued at $23,938 on average

Despite the evolving threats across all types of devices and and the high value of the files stored that those surveyed put on their digital assets:

·        36% of those surveyed lacked any real protection across all of those devices

·        40% of the those surveyed do not worry much about their protection

How much are your digital assets worth and …have you safeguarded them?

·        How difficult would it be to gain access to your digital assets if your computer or your personal records were lost?

·        What happens to these assets or your life online after you pass away?

Whether they have financial value or are just of sentimental value, estate plans really need to evolve to include these online properties. Indeed, this is one of the fastest growing areas of estate planning.

"Identify, inventory and value your digital assets. This will minimize the burden on your attorney/executor as they may not be aware of the existence of these assets. Doing so will also minimize the risk of losing assets that may have both financial and sentimental value,"  Marlena Pospiech, Senior Manager, Retirement planning strategy, BMO Financial Group.

As is generally the case, Canada is behind the US in terms of ‘trends’ and the law with respect to those trends and protection of digital assets is no exception. The State of Virginia passed related legislation last week. Approximately 6 states now have laws relating to digital assets; whereas in Canada there is neither legislation nor any case law yet on the books; just dialogue. As well, not every professional you deal with will ask you about your digital assets. Therefore, if no instructions are left or alternative arrangements made, a lot of digital assets will be left in ‘limbo’ as a result of privacy legislation which will continue to protect those that have passed away; which can lead to additional grief and stress.

So, it is highly recommended that individuals inventory their digital assets and their digital life online and provide access information and instructions about how they wish those assets to be dealt with.....

Which is why we have a place to do just that in Legacy Tracker

In terms of estate planning the following considerations are some general guidelines:
 

1) Your will should recognize the fact that you have digital assets and the fact that your executor has authority to access and control your digital assets or assign those responsibilities over to someone whom you would designate

2) Provide a written inventory of all your digital assets that includes how you want to deal with each of those assets and how your executor can access those assets (usernames and passwords etc.)

A good resource for learning more about digital assets and your digital existence –now and later is www.thedigitalbeyond.com