Incorporating Digital Assets into Your Estate Plan
In your estate plan, you’ve made provisions for transferring your house and assets, delegated guardianship for your children, and clarified a healthcare power of attorney. But have you considered what will happen to your social media accounts, downloaded music and movies, website domains, or cryptocurrencies?
If even a fraction of your life has been online, you likely have digital assets to consider. You own digital assets just like property, and you need to determine how your survivors can access and control them. To prevent passwords, precious photos, and other data from being lost forever, learn how to account for digital assets in your estate plan.
Types of Digital Assets to Consider
It’s easy to overlook digital data, but they compromise a significant portion of what we own and use daily. Besides social media profiles, passwords, and online bank accounts, digital assets include:
- Airline miles, hotel points, and other rewards
- Blog content
- Cryptocurrencies like Bitcoin
- Digital videos and photos
- Domain names or URLs for websites
- Non-fungible tokens (NFTs), which reflect ownership of digital items like artwork
- Online betting accounts
- Online gaming avatars that buy or sell goods or services in virtual environments
- Monetized online channels (e.g., YouTube accounts) that produce passive income
- Rights to digital intellectual property, such as music, graphic art, literature, and motion pictures
Owning or using a smartphone, computer, or the cloud means accumulating massive amounts of data, much of it tied to our financial transactions.
What Can Happen If You Don’t Plan for Digital Assets
Most people own various types of digital assets that they store in multiple places. Accessing these pieces of property and information can pose a challenge to spouses, children, or other family members who need access but don’t own them. When individuals don’t include a plan for their digital assets after their passing, survivors can face the following obstacles to accessing the information:
- Data encryption: Being unable to “unscramble” encrypted data without an authorization key or code
- Data privacy laws: Having no access to the decedent’s (i.e., the person who died) accounts because of legal protections of their privacy
- Passwords: Not knowing or losing passwords or credentials to retrieve data on smartphones, computers, or online accounts
Accounting for Digital Assets in Your Estate Plan
With the help of your attorney, you can fully account for your digital assets and provide detailed instructions for accessing them after you’re gone. This planning can save your loved ones from frustration and headaches as they try to settle your affairs and receive the benefits they’re entitled to. Here are four strategies for including digital assets in your estate plan:
- Understand what you own. For example, did you purchase a digital asset or just the license or software to use it?
- Create a list of all your social media accounts, bank accounts, and other online data and indicate where to find them. Include passwords, email addresses, encryption codes, and other credentials and store them on paper. Avoid digitally storing this information to reduce theft or loss.
- Back up all digital data in the cloud. Scan bank statements, investment documents, birth certificates, and other essential documentation into your computer or digital storage device. Consider making hard copies as well.
- Clarify consent in your legal documents. More specifically, indicate who has access to what information in your estate plan, which may include your power of attorney or executor of your Will or Trust.
Protecting Your Digital Assets with Your Estate Plan
Accounting for digital assets in an estate plan is a relatively new concept for most of us. If you have questions or need help figuring out where to start, you can talk with an experienced attorney at Donnellon, Donnellon & Miller. They understand how estate and probate laws apply to digital assets. Contact us today to update your estate plan and make the necessary changes to accommodate your digital property.