We are constantly reminding our clients to plan for the transition of their material wealth, recommending such things as trusts, titling of their assets, gifting, etc. How much attention are we putting toward their digital assets, which can be as important as their physical assets? I attended a session at Princeton University’s reunion weekend on this topic. It was standing room only!
Passwords are one example of digital assets. They are the gateway to our material assets such as bank and brokerage accounts stored on a computer or up in the clouds, to be accessed only through knowing the password. In many cases, you can change your password if you forget it; however, once you are no longer alive or mentally competent, that option may not be available. And if you own BITCOINS, if you forget your password, you lose the investment.
We now have to think about providing for the transfer of digital assets upon death. Typical wills provide for transfer of real and personal property, but are silent about digital property. Other examples of personal digital assets might include photos, letters, files stored on social media sites.
Businesses also need to address the transfer of digital assets when there is a transition such as a sale of the business or a transfer of ownership to the next generation. Passwords have become so vital to the smooth operation of the majority of today’s businesses. They need to be both protected and seamlessly transferred when there is a change of ownership.
Keeping track of passwords requires a lot of due diligence. We are asked to change passwords for security reasons, so the need to update the “inventory” of your passwords is critical. There are programs out there to help organize and protect your passwords. Just google “recover lost passwords” and you will find a number of sites to help you with the recovery process.
— Eugene Fleishman, CPA, Principal