Many small businesses think about what’s on their radar today, not what’s on the horizon tomorrow. But what happens if your business leaders become incapacitated and cannot lead the company? Do you have a plan in place? And if you do, do you have a digital estate plan?

What is Digital Estate Planning?

A digital estate plan explains how a company’s digital assets and online presence will be managed, transferred, or handled in the event of key events such as incapacitation, death, or a change in ownership.

What is Part of a Digital Estate?

Small businesses maintain a variety of information and assets online to support their operations, engage with customers, and stay competitive. Here is a brief checklist of items to include in your business’s digital estate.

• Domain name
• Company website, including blogs and articles
• Email accounts
• Collaboration platforms, such as Slack and Microsoft Teams
• Social media accounts
• E-commerce platforms
• Customer databases and online customer accounts
• Email marketing lists
• Online ad campaigns
• Online bank accounts and credit card accounts
• Accounting software
• Digital intellectual property, including copyrighted material, trademarks, and other digital assets
• Human resources systems that store employee information and payroll and benefits data
• Cloud storage for documents, presentations, and other data

Keep in mind that your business may include other valuable digital assets.

How Can Small Businesses Create a Digital Estate Plan?

Here are the steps a small business should take to ensure a smooth transition of digital assets and preserve the continuity of the business in the face of unforeseen events.

• Take an inventory of digital assets. Create a comprehensive list of all digital assets that your business owns, including login credentials, access codes, and other relevant information.
• Designate digital executors: Assign and document individuals who will be responsible for managing and overseeing the digital assets in the event of the owner’s absence, incapacity, or death. Ensure these executors have power of attorney to act on the owner’s behalf.
• Explain how to access each digital asset: Document all usernames, passwords, recovery codes, and two-factor authentication details for all assets and online accounts.
• Document, document, document: Include provisions related to digital assets in legal documents such as business succession plans and the owner’s wills and/or trusts. Clearly outline how the digital assets will be transferred, sold, or managed.
• Set a communication plan: Explain how the business’s stakeholders, employees, and clients will be informed about changes in ownership or management related to the digital assets.
• Review the plan annually: Assets and their associated digital accounts often change over time. Regularly review and update the digital estate plan to ensure that it reflects the current state of the business’s online presence. Also, ensure that relevant personnel are aware of the digital estate plan and understand their roles and responsibilities. Training may be necessary to familiarize individuals with the processes involved.

Consulting with attorneys experienced in digital assets can be beneficial in developing a comprehensive, legally sound plan.

How can an Estate Planning Attorney Help Develop and Implement a Digital Estate Plan for a Business?

An attorney with expertise in digital estate planning can provide insight into the legal requirements and regulations governing digital assets, privacy, and data protection. This support ensures that the digital estate plan complies with relevant laws.

For instance, attorneys can draft or review legal documents such as wills, trusts, and business succession plans to include provisions for managing and transferring digital assets. If the business has specific agreements related to digital assets (e.g., licensing agreements), a lawyer can review and draft contracts to address the handling of these assets.

A trusts and estates attorney with business experience can customize the digital estate plan to meet the specific needs and structure of the business, considering factors such as size, industry, and ownership structure. They can also offer guidance on potential tax implications associated with transferring or selling digital assets and help digital executors define and understand their roles and responsibilities. Lawyers experienced in estate planning can also help establish powers of attorney related to digital assets, enabling designated individuals to act on behalf of the business owner.

Some property transfers may implicate data privacy laws and data protection regulations. Working with an experienced attorney can help ensure that the digital estate plan aligns with these legal frameworks and has all necessary consents and authorizations, especially when transferring digital assets that include personally identifiable information.

Finally, clear, unambiguous language in legal documents can reduce the risk of disputes over business asset ownership. Of course, if a legal challenge arises, you’ll need to engage an attorney experienced in estate planning, business law, and digital asset management.

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