It used to be that most assets that people owned were physical. You bought a DVD or a VHS tape. You purchased a CD or cassette tape. Many people invested thousands of dollars creating large multimedia collections, and then they passed these valuable assets on to their children.
But technology always keeps progressing, and now a lot of people buy digital copies of these same products. They just download a movie on a streaming service or they download an album on their phone. If you have invested the same amount of money in these assets, you may be interested in putting them in your estate plan. But this can get very complicated.
Do you own the assets?
What you need to find out is if you actually own the products themselves. Most people feel like they own digital products, but a close look at the small print from the purchase agreement shows that they didn’t buy the assets at all. Instead, the company sold them a license to use the asset.
This license does last forever, or at least for the rest of your life. So the experience seems very similar to actually owning the movie or the album. As long as you’re using those accounts, you’re not going to lose your ability to enjoy that media.
In other words, you may just own a license to watch your favorite movie, but you don’t own that movie and you can’t pass the digital files on in your estate plan. You’re just paying for a license that expires when you pass away, and many companies also prohibit passing accounts or licenses onto another party. You cannot put that license in an estate plan.
This will become more common
Another thing to consider is that digital assets are only going to become more common in the future. There are already people paying millions of dollars to buy land and other assets in virtual reality – the metaverse. The projection is that virtual reality will be much more common in the future and so these digital goods will change hands. We’re not at that point yet, but this heavy level of investment shows that it will come eventually. And it will be much more expensive than just buying a movie or a CD.
This doesn’t mean no digital assets can be added to an estate plan, but it does mean that you need to carefully look into the legal steps that will be required.