In the digital age, our lives are increasingly intertwined with technology. From online banking and social media to cryptocurrency and digital photo collections, our digital footprint is vast. Yet, many people overlook these assets when creating an estate plan. Not addressing digital assets leads to complications, confusion, and even loss of valuable or sentimental items. Here, we explore the importance of including digital assets in your estate plan and how to do it effectively.
What Are Digital Assets?
Digital assets encompass a wide range of online or electronic possessions. These include:
- Financial Accounts: Online banking, investment accounts, and digital wallets for cryptocurrency.
- Social Media Accounts: Facebook, Instagram, Twitter, LinkedIn, and other platforms.
- Subscriptions and Services: Streaming services, cloud storage, and e-commerce accounts like Amazon or eBay.
- Digital Collections: Photos, videos, music libraries, eBooks, and other media stored online.
- Intellectual Property: Blogs, websites, and other original online content.
With the increasing prevalence of digital assets in our daily lives, they often hold both monetary and sentimental value, making their proper management essential.
Why Digital Assets Matter in Estate Planning
Neglecting digital assets only creates challenges for your loved ones. Without proper planning, heirs may struggle to access accounts, leading to:
- Loss of Financial Value: For instance, unclaimed cryptocurrency wallets or online business revenues can result in a significant financial loss.
- Missed Sentimental Items: Digital photo albums, personal videos, and other media may be inaccessible if proper access isn’t arranged.
- Identity Theft Risks: If accounts are not closed or secured, they can become targets for hackers or malicious actors.
Including digital assets in your estate plan ensures these important items are preserved, managed, or distributed according to your wishes. It also reduces the administrative burden on your loved ones during a difficult time.
Steps to Include Digital Assets in Your Estate Plan
1. Inventory Your Digital Assets
Begin by creating a comprehensive list of all your digital assets. Include login credentials, account numbers, and any related information. Examples include:
- Email Accounts: Gmail, Yahoo, Outlook, or work-related accounts.
- Social Media Profiles: Facebook, Instagram, TikTok, Twitter, and LinkedIn.
- Online Banking and Investment Accounts: Checking, savings, retirement accounts, or cryptocurrency exchanges.
- Subscriptions and Memberships: Netflix, Amazon Prime, Spotify, and cloud storage services like Google Drive or Dropbox.
- E-Commerce Accounts: Platforms like eBay, Etsy, or Amazon seller accounts.
- Digital Content Libraries: Purchased eBooks, movies, or music stored on platforms like Kindle or iTunes.
- Domain Names and Websites: Blogs, online businesses, or personal websites.
This inventory should also note the estimated value of assets where applicable, such as cryptocurrency holdings or online businesses.
2. Understand Legal Considerations
Digital assets are governed by various terms of service agreements, privacy laws, and in many states, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). This act provides legal clarity regarding how executors or heirs can access digital accounts and assets. Familiarize yourself with the terms of each account or service to understand the restrictions and permissions involved.
3. Name a Digital Executor
Assign a trusted individual as your digital executor. This person will be responsible for managing your digital assets according to your estate plan. Ensure they are tech-savvy enough to navigate digital platforms. Additionally, choose a person who is reliable and capable of handling sensitive information responsibly.
In Texas, the RUFADAA allows individuals to formally designate a digital executor through a will, trust, or power of attorney to manage digital assets. Platforms like Google or Facebook may also allow direct designation via their tools, which can override other instructions.
4. Provide Clear Instructions
Detail how you want each digital asset managed. For example:
- Transfer ownership of your blog or website to a family member.
- Close social media accounts to protect privacy.
- Distribute cryptocurrency or other valuable digital assets to specific beneficiaries.
Clear instructions minimize confusion and help ensure your wishes are carried out accurately.
5. Securely Store Login Information
To facilitate access, use a secure method to store your login credentials, such as:
- Password Managers: Tools like LastPass, 1Password, or Dashlane securely store and share credentials.
- Encrypted Documents: Create a digital file with account details and encrypt it for security.
- Physical Records: Maintain a printed document with login information, stored in a safe or with your attorney.
Share access to this information with your digital executor or include instructions in your estate plan on how to retrieve it.
6. Regularly Update Your Plan
Digital assets evolve rapidly. New accounts are created, and older ones may become obsolete. Review and update your inventory, instructions, and login information regularly to ensure your estate plan remains accurate and comprehensive.
Special Considerations for Cryptocurrencies
Cryptocurrencies like Bitcoin or Ethereum require extra attention in estate planning due to their unique nature. Without proper documentation of private keys or seed phrases, these assets can become inaccessible. Include detailed instructions for accessing and managing these accounts, and work with a knowledgeable attorney to address any legal complexities.
Addressing Digital Assets with an Estate Planning Attorney
As technology continues to advance, addressing digital assets in your estate plan is essential. From safeguarding sentimental photos to protecting financial investments, a well-crafted plan ensures your digital legacy is managed according to your wishes.
If you need assistance incorporating digital assets into your estate plan, contact our office today for expert guidance. With the right planning, you can ensure that your digital and traditional assets are handled with care and precision, providing peace of mind for you and your family.
Navigating digital assets can be complex, but an experienced estate planning attorney will help:
- Ensure compliance with applicable laws and terms of service agreements.
- Draft legal documents that address digital assets explicitly.
- Coordinate with digital executors to implement your wishes effectively.
Reach out today to avoid common pitfalls and create a comprehensive plan that reflects the full scope of your assets.
Bromlow Law, PLLC and Laura L. Bromlow, are dedicated to the practice of Elder Law and Estate Planning. Our practice focuses solely on working with clients in these and closely related legal fields. Laura L. Bromlow is a Certified Elder Law Attorney with the National Elder Law Foundation. Bromlow Law, PLLC strives to enhance communication among family members and loved ones and to keep them all out of conflict so they can stay out of court. We want to help you keep your close circle safe!
Please contact our office today at (281) 665-3807 to schedule a free consultation to discuss your legal matters. We look forward to the opportunity to work with you.