One cannot scan a news source these days without seeing a headline about crypto currencies. So, it is understandable that when estate planning advisors raise the topic of digital assets, today’s headlines make you think of Bitcoin. While crypto currencies are a digital asset, there are several others we encourage you to consider as you make plans for your possessions.
A Wikipedia definition of an asset includes “value of ownership that can be converted into cash”, and digital assets as “anything that exists in digital format and comes with the right to use.” Interesting, that last part: “right to use” – clearly not the same as “cash value”. Bitcoin trades in a marketplace, where finding its cash value is possible. But what about those things of yours that come with a right to use but have little or no marketplace? The dining room table, the VHS tape of your child taking her first steps, Grandma’s Hummel collection – each has a right to use, but what’s their cash value?
For purposes of creating your plan of how you will leave your things to others, it’s good to remember that your estate will have assets with different kinds of value. One kind is cash value; what an item is worth to someone who would pay money for it and making a plan for those is relatively easy. The other kind are emotional assets, with no cash value, but whose importance is measured by what it will mean to your loved ones if those assets are lost to them. A plan for the distribution of emotional assets requires more thought.
An emotional asset is something that means a lot to you or your loved ones, but for which no one else would pay money. And, with emotional assets, there are two broad categories – tangible, and digital.
A tangible emotional asset produces enjoyment by being held and touched, has no cash value, but holds a great deal of importance to a family member or friend whose memory of you is embodied in it. Common examples include collections, such as baseball cards, costume jewelry, books and tools. Or one of a kind special items like a wedding dress, a stuffed animal, an antique chair. Tangible emotional assets are items that meant something to you while you lived, thus making them meaningful to those that will miss you when you are gone. To everyone else, these items have little or no cash value.
The other category is digital emotional assets, whose enjoyment comes from experiencing them and the memories they evoke. Common examples include photo and video libraries, collections of music and other entertainment, and email and other digitized messages from long lost loved ones. Enjoyment, though, is limited to only those people whose fondness for you makes a memory possible. To everyone else, those items have no cash value.
With tangible emotional assets, planning for their future distribution to your loved ones is challenged by their uniqueness and their tangibility. If you have more than one heir who loves you enough to cherish the memories contained in that armoire in your hallway, distributing it means choosing who gets it, and how.
The plan for sharing your digital emotional assets with loved ones has its challenges as well, starting with having a plan to begin with. Your photo library – the ones uploaded to “the cloud” that you’ve been taking with your smartphone – its password protected, right? So, your plan needs to include how you will share your password to that photo library, as well as any other digital asset that’s been made secure with passwords. Not having a plan to share your passwords means that those digital emotional assets will be lost forever.
The good news is that sharing your digital emotional assets overcomes the obstacles of choosing who gets them, and how. Those assets are easily accessible to more than one person, and from wherever they are. With digital emotional assets, a plan for sharing the memories they will evoke does not require you to arrange transportation, nor make difficult choices.
Another example of a digital asset that you might want to plan for is your collection of social media profiles. What will happen to them when you are gone?
We will talk about strategies for securely sharing passwords with your survivors in a future article. For now, we recommend that you think about all of the items for which you have a “right to use” and make a plan for what you want to happen to each of them. Make a plan so they will be a source of fond memories to your loved ones.
Profiducia Services Inc.