How to Transfer Ownership in a Digital Business and Digital Assets
Provided by HG.org
In the electronic age, there are many businesses upgrading to the digital and buying and selling digital assets. However, there are not as many that know how to transfer the ownership of a company primarily running on online products and services.
For those that are looking to sell and retire or get out of business, transferring ownership through a deal or with children may be complicated when there is so much online and internet data to retain, understand and access. A business lawyer is helpful in these matters when he or she has extensive experience and knowledge of the digital world. Without knowing how to navigate the interconnected networking waters, an owner is lost with these types of companies.
There are several tools that someone may take advantage of when running an online business. Once it is clear that the ownership of the company must exchange hands, it is usually only when the deal is close to finalizing that certain items such as passwords to the most critical systems are shared or given so that new ones may be created. If there is the possibility that the owner may die before he or she passes on the digital data necessary to run the business, it is imperative that there is an estate plan already in effect to take care of these concerns. This means for an online company that passwords, usernames and all manner of internet access to the digital organization is provided in some way to the new owner.
Digital Assets Explained
When a digital asset is considered part of the value of a company, it must be explained so that any person of interest knows how to handle the item. A digital asset may be detailed as any portion of online account sites, access and files that could be stored on a computer, server or in the cloud. This means that the data used to compile customer and client profiles, setting up paperwork for inventory lists or taxes and numerous other matters are all just digital pieces of information stored in redundant locations to prevent a total loss. Multiple computers are used to hold this data, and there are often technicians hired to protect and safeguard the assets from hacking, destruction and corruption.
Assets assigned to digital ownership include anything that may be saved online or to a physical disc to include flash drives. These usually consist of email, videos, images, social networking data, domain names and associated accounts, games, backup information and all the work employees complete on a computer. All this is often stored at the site and through a backup facility so there is redundancy. This means if there is some type of disaster where the copy at the main branch is corrupted or destroyed, the other location may provide the files so that work is not stopped. This may take some time due to backups being stored in remote areas to protect the assets, but it is more efficient than only keeping the main copy.
Why Utilize Digital Asset Planning?
When the owner of a company is aware he or she may eventually sell or transfer the ownership to another, he or she usually drafts a plan that provides for these situations. Because laws change, taxes may rise and other concerns might transpire, it is essential to plan ahead. With a legal document in place, these transfers are easier and take less time. Clear laws regarding digital company transfers are not in place in the United States due to the rapid progress the electronic age has increased to since 2000. This has led to uncertainty in legal matters with a digital business. In the event of the owner’s death, if there is no estate plan already in place, the transfer to his or her surviving family or other loved ones may not occur.
There are certain policies in place with websites, domain companies and similar businesses when the owner of the information dies. This may require the use of a lawyer to prove the death and next of kin, documentation being faxed to the business and other procedural processes completed before someone may take control. This often takes time. This means that digital asset planning should be accomplished long before any owner passes away. The primary reason why this ownership transfer is difficult in the event of a death is due to the loss of passwords, website domain knowledge and what email accounts may exist.
Some of these items may have been purchased or reside with multiple companies. Without being a experienced in these matters, it is possible these digital assets may be lost. A lawyer versed in these issues should be retained to assist in the transfer along with contact with all organizations where digital assets reside.
Read more on this legal issueKeeping Digital Data Safe
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.