In its current developmental stage, estate planning for digital assets is being done through wills, trusts, and online digital estate planning services. This section explores these three methods of transferring digital assets and discusses their individual shortcomings.
Through the use of traditional wills, individuals may express their intentions and plan for disposition of their assets. However, disposition and transfer of digital assets through wills can be problematic, as briefly mentioned earlier. Given that the average number of specific digital assets per individual is nearly 3,000 files, providing identification and access to all of these assets can be overwhelming. Due to the continuing growth and the changing nature of the digital assets, the will provisions may become quickly outdated. The speed of the digital world seems to outpace these traditional estate planning tools, as passwords and access information can change daily, requiring constant updates to the will. Although the digital property may belong to the decedent, the third-party user agreements and term-and-condition contracts may limit or completely block a beneficiary’s right of access to the decedent’s digital assets. In addition, wills may become a public document upon the decedent’s death; therefore, security and privacy aspects of the transfer of digital assets may be compromised.
Trusts can alleviate some of the above-described concerns. Trusts provide for a more secure transfer of digital assets than wills because trust documents do not become public. Thus, key private information regarding passwords, accounts, and contents remain out of the public eye. Further, the law permits individuals to transfer digital assets into a trust while maintaining control and use of the assets for the remainder of the individual’s life. Sometimes, the trusts are subject to more relaxed formation requirements than wills, allowing for easier creation and modification. As such, trusts can more easily adapt to the changing nature of digital assets. However, very few people actually set up trusts specifically designed for digital estate planning. Although both wills and trusts can transfer digital assets from the decedent to the beneficiaries, they are becoming a tool of the past due to the speed of today’s technology. In response, several online estate planning services have developed in order to facilitate one’s digital asset planning needs. These services are designed to specifically address the digital management, location, and confidentiality of one’s digital assets during an individual’s lifetime.
As such, these digital estate planning services have latched onto the lucrative digital asset management industry—anticipated to be a $1 billion industry in 2013. While these online digital estate planning services offer a degree of efficiency that is unmatched by traditional estate planning techniques—enabling individuals to update, manage, and track their digital assets on demand—serious concerns exist regarding their reliability and sustainability as estate management tools. For example, while digital estate planning services claim to provide exceptional account security, caution is nonetheless warranted because, not unlike a traditional bank vault, these services create a large repository of wealth and property, rendering them prime targets for cybercrime and theft.
Additionally, these digital estate planning services are not regulated and are often not run by attorneys, creating concern as to who is being entrusted with the individual’s passwords, assets, and information.
Finally, there are serious stability concerns as to the continued existence of online digital estate services, as these services are relatively new and turnover in the industry has been significant. However, digital estate planning services such as Eterniam, a Seattle, Washington-based company, are beginning to realize the importance of establishing trust with clients by stressing their commitment to security, privacy, and long-term stability. Estate planning ultimately should not be a short-term solution, but rather should provide lasting peace of mind and planning options to an individual testator.