Estate Planning and Digital Assets: What To Do
Digital assets are more and more common. This guide will explain how to deal with digital assets as part of your estate planning.
If you are one of the 46% of Americans that has a will, have you considered your digital assets in that plan?
While digital property may be an unfamiliar concept, it’s becoming more relevant in our ever-growing digital world. From email accounts and electronically stored photos to cryptocurrency and loyalty programs, digital assets are increasingly common and should be considered in your estate planning process.
Digital assets can hold both monetary and sentimental value and should be included in your estate plan. Keep reading to learn key estate planning tips that will help you organize your digital property.
What Are Digital Assets?
Digital assets encompass a number of things created online. Like the detailed plans you have for your house, car, and furniture, you should have a legally binding document for the ownership, management, or destruction of your online property.
Common types of digital assets include:
- Personal information stored on your computer, tablet, or cell phone;
- Email accounts;
- Photos, videos, and documents stored on the cloud;
- Blog content;
- Social media accounts;
- Domain names for websites;
- Ecommerce accounts like eBay or Etsy;
- Online accounts for chatrooms, gaming, or dating sites
- Cryptocurrency or Digital Currency like Bitcoin;
As you can tell, some of these assets hold sentimental value, some hold potential monetary value (like cryptocurrency), and others may hold sensitive information. All digital property also comes with a number of important decisions that need to be made.
For example, do you want your social media pages to live forever, or would you prefer they be taken down? Would you like your Etsy store to continue operating, and who is granted ownership of that store?
On the other hand, valuable digital assets have obvious monetary value and may require special arrangements. These types of assets include:
Cryptocurrency — It’s important to ensure your fiduciary has the appropriate access to this asset. You also need to fully understand the Terms of Service Agreement and how that impacts transferring your ownership of cryptocurrency.
Loyalty Programs — This encompasses rewards programs with monetary value like airline miles, hotel points, or other credit card perks. Each program has its own rules around transferring credits or naming a beneficiary.
Non-Fungible Tokens (NFTs) — When you purchase an NFT (e.g. ownership of a digital piece of art, song, etc.), it’s important to understand your purchase rights. Some rights only last for your lifetime, while others allow you to pass this digital asset to your beneficiaries.
Once you understand the scope of your digital assets, the next step is to take a comprehensive inventory. Start by listing all of your assets. The list should include online account information, passwords, and digital property.
Make sure to store your list in a secure location and use additional security measures to keep passwords secret. There are a number of websites you can use that will help manage your passwords or create a digital safe.
Most importantly, make sure your executor, beneficiaries, or a third party knows that the list exists and how to access it.
Once you make your list, take a look at the Term of Service Agreement for each item on your inventory list. It’s possible to purchase a non-transferable license to certain assets. This means that you may not be able to transfer your digital asset to someone else.
Back-Up What You Can
With a complete inventory, it’s easy to evaluate what can be saved on a personal storage device. You can use a hard drive or flash drive to back-up files and information stored on your computer or the cloud.
Regularly backing up your hard drives is also an important part of digital housekeeping.
This is a great habit to get into for photos and videos that hold priceless sentimental value. Curating a creative asset portfolio is also something to consider. If you value the information kept on your social media pages, platforms like Facebook allow you to easily download all of your data.
Like your inventory list, someone should be aware of where your back-ups are kept.
Make a Plan For Every Asset
It’s extremely important to include your estate planning attorney in this final step of the process. Because digital assets can include highly personal communications and require some type of digital literacy, there is an extra level of consideration that should go into your planning process.
Providing the proper consent in your legal documents will allow your digital assets to be accessible by your fiduciaries. At the same time, you want to ensure the proper authorization is given to the appropriate people.
There are a number of state and federal laws that protect your data and prevent unauthorized access to your computer systems.
While these laws were created to protect you from fraud, it also means that there are huge barriers preventing your family or loved ones from accessing your digital assets (both sentimental and valuable). Digital privacy laws also prevent beneficiaries from easily accessing online accounts like the cloud or email.
An estate planning attorney will be able to guide you on preparing the right consents and instructions.
Another thing to consider is if you want any digital assets destroyed – like sensitive emails or accounts. Your estate plan is also the place to leave clear instructions about who is responsible for managing those specific requests.
Your digital assets are an extension of your personal property. If you haven’t considered adding your digital property to your will or estate plan, today is a great day to get started.
Citadel Law Firm is a trusted Arizona partner that can assist you with adding digital assets to your existing estate plan or working with you at the start of your estate planning journey.
Contact us today to learn more about how we can put our years of experience to work for you. Schedule your free estate planning consultation today by clicking here, or call (480)565-8020.