Power of attorney is a legal document that gives one person, known as the agent, the authority to make decisions on behalf of another, known as the principal. Decisions can include anything from healthcare to finances to legal issues.
You can create a power of attorney form yourself, using free power of attorney forms online, or you can work with a local solicitor for a small fee.
In this article, we’re going to look at how power of attorney translates into the digital world. How can a power of attorney be beneficial for your digital assets, and how do you implement it? Find out more below.
What Are Digital Assets?
Digital assets can be split into two types: tangible and intangible.
Tangible assets:
- Digital documents (PDFs, Word files, spreadsheets)
- Multimedia files
- Software and applications
- Ebooks and digital publications
Intangible assets:
- Cryptocurrencies
- Domain names
- Digital licenses
- Online accounts
- Digital currencies in virtual worlds
Digital assets have a lot of variety and are increasingly significant in the digital age.
Challenges in Managing Digital Assets
Digital assets come with their own management challenges, which need to be navigated to protect your assets and ensure you don’t lose them in nefarious ways. Challenges that may occur include the following.
- Security concerns: Digital assets are vulnerable to threats like hacking, phishing, malware, and data breaches. To protect yourself from these, you will need cybersecurity and other measures in place.
- Accessibility issues: Everything from forgotten passwords, encryption keys, and account recovery procedures can have a negative impact on your digital assets.
- Regulatory issues: As digital assets are so new, compliance and legal issues are still evolving. Everything from ownership rights, taxation, inheritance laws, and jurisdiction issues can complicate the management of your digital assets.
- Risk of loss and corruption: Digital assets can be lost or corrupted in ways that physical assets can’t be. This might be an accident or due to malicious intent, so regular backups and data integrity checks are needed.
- Evolution of technology: As technology evolves, older assets might not be compatible with newer ones.
- Digital inheritance and estate planning: Due to the newness of digital assets, traditional estate planning might not account for the transfer of digital assets upon death. Clear procedures need to be put in place to ensure these assets are managed and distributed properly.
Power of Attorney and Digital Assets: Implementation and Best Practices
For your digital assets, having a power of attorney in place can be incredibly beneficial. Having a specific set of instructions for your digital assets can ensure that they are passed on properly and remain intact and uncorrupted.
Below are the steps you should take to implement power of attorney to benefit your digital assets.
- Legal consultation: As digital assets are unprecedented in estate planning, legal consultation can be incredibly helpful. They can help you understand the current regulations on how digital assets are passed on, how power of attorney fits in, and ensure that you are compliant.
- Identify your digital assets: Just like with your physical and traditional assets, you will need to compile a list of all your digital assets. This includes cryptocurrencies, digital files, and intellectual property.
- Specify powers and limitations: As with any kind of power of attorney, you need to be clear about the powers granted to the agent in charge of your digital assets. This will include which assets the agent can access, how they can access them, and the restrictions on their authority.
- Choose someone you trust: Your agent is in charge of your assets when you are incapacitated or no longer here. This means you need to trust that they will do what you wish with them. Consider choosing an agent with an understanding of the digital world.
- Information: Make sure that your attorney has all the information that your agent will need to access your assets, including passwords, credentials, and encryption keys. Keep this information as up-to-date as you can.
- Secure storage of documents: Once your power of attorney has been created, it is important that it is kept secure and safe. You can even store it digitally so that should anything happen to you, your relatives will know what to do with your digital assets.
- Educating agents and executors: You may find that your agent and executors aren’t as up-to-date with digital assets as you are. For this reason, you will need to consider the unique challenges they will face. While not a brand new concept, many people will not have considered the impact of digital assets on estate planning. Ensure you provide these people with guidance, resources, and support to fulfill their roles effectively.
Final Thoughts
A power of attorney means proper instructions for your digital assets. It can give you peace of mind that your digital assets will be managed properly when you are incapacitated or have passed on. Due to the relative newness of digital assets, it might be best to consult a solicitor for advice and to ensure that your documents are all compliant.
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