Life can be unpredictable. As such, it is important to plan and prepare for life’s unforeseen events such as incapacity and death.
Estate planning is not just about the distribution of one’s assets when one passes on. It is also about planning for untoward mental incapacity such as dementia, Alzheimer’s and coma.
In Singapore, advanced planning for mental incapacity is possible with an LPA (Lasting Power of Attorney). For specific instructions involving the management of digital assets on one’s mental incapacity, the LPA Form 2 is the relevant document.
What are digital assets?
Digital assets include electronic devices, online accounts and password-protected websites. They can also include files stored on your mobile phone, such as photos and text messages.
Other common digital assets are email accounts, payment accounts such as GrabPay, financial accounts like bank and brokerage accounts, and cryptocurrencies. Accounts related to interests, such as iTunes and social media are also part of one’s digital assets.
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Social media accounts such as LinkedIn and Instagram, websites and blogs created using third-party providers and hosting platforms are considered digital assets. Your personal computer, if it is password-protected, is also a digital asset.
Why should your estate planning include digital assets?
It is essential to ensure someone manages your physical assets after you are not around or unable to do so. This is also true for your digital assets. So you need to include digital assets in your estate plan to be sure someone can access and manage them on your behalf.
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If your estate plan does not account for digital assets accurately, your Will or Trust beneficiaries may not gain access to them. This means that you may lose your family videos forever. Also, your social media accounts may stay online long after you have passed, and your heirs may not receive all the money that you intended to leave to them.
When you include digital assets in your estate planning, you not only make it easier for your executor and loved ones to manage your estate but you also protect your privacy, even after death. It is therefore vital to plan for your digital assets the same way you would for any other valuable tangible asset.
What are some of these estate planning strategies?
Some possible ways to plan for digital assets in your estate planning:
1) Create an inventory
a) Prepare a list of all your digital accounts, assets, automatic payment plans and subscriptions. The list should include the name, digital address, or alternative way to access it and the access information such as username, password, and security questions.
b) Include digital liabilities. Examples include automatic payment plans, renewal programmes, and other arrangements under which your bank account(s) or credit card(s) is automatically charged on a recurring basis.
Without an inventory, it would be very challenging for your executor and heirs. And your executor may have to hire computer experts to crack passwords to computers and accounts. Or worse, your executor may not even know of your digital assets.
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2) Decide what you want to get done and who should do it
a) If you want a family member (instead of an executor) to access your email accounts, specify this in your Will. You may specify that only family members are authorised to handle social media accounts, such as LinkedIn. Note that the major digital providers have adopted policies that allow heirs some access to digital accounts. Although such guidelines are in place for Google, for example, your expressed intention in an estate document will override limitations in a provider’s service agreement.
b) State your decisions in your Will or your Trust document. Instructions in your Will or living trust, control who has access to your digital assets. Note that some digital accounts are not assets. For example, when you purchase and download an e-book from Amazon’s Kindle service, you have only a personal-use license under its service agreement. You do not own the asset to be able to give it to someone. The rights are supposed to end with your passing.
c) Keep details of digital assets in a sealed letter stored with your Will.
Do this, instead of placing the information in the Will, since certain digital assets are potentially sensitive and personal. Once you pass on, your Will becomes a public document. When you keep such information in a sealed letter, together with your Will, you will maintain more privacy.
Conclusion
Digital asset ownership has increased significantly as more people spend more time online. Yet many people are unaware of this change and have not considered it in their estate planning. This article aims for you to learn and plan how to better manage your digital assets in the event of mental incapacity and death. Including digital assets in your estate planning will minimise any potential mess or confusion regarding your digital assets.
Irene Yee Khor Quin is a certified financial planner with Phillip Securities. A similar version of this article was originally published in the FPAS Financial Planning magazine — November 2021 issue
Photo: Stock photo
