It’s no secret that our lives are becoming more dependent on technology with each passing year. Whether it’s ordering groceries online and having them shipped to your door or monitoring your vitals on a sports watch, it appears that almost every aspect of our lives, including much of our most precious possessions, has been digitized.
This is why it’s never been more critical to pay attention to your digital assets and consider how they fit into your overall asset management strategy, especially seeing as we all live in a world where cryptocurrencies like Bitcoin and Ethereum exist, as well as websites and domain names valued in the billions. When you have a considerable amount of digital assets, you should consult an estate planning attorney to ensure that your digital assets are properly handled if you become incapacitated or die, so you have peace of mind knowing they will be distributed accordingly to your heirs.
With that said, here is an overview of how to create an online estate plan for your digital assets and what the process entails:
What is a Digital Asset?
If you’re wondering what classified as a digital asset and what doesn’t, here is a list of the most common examples:
- Online bank accounts
- Web wallets (PayPal, Skrill, Neteller)
- Social media accounts
- Websites and domain names
- Cryptocurrency
- Information or documents stored in the cloud
- Intellectual property, including copyrighted materials
- Cloud storage
- Email accounts
In general, just about anything held online or on the cloud that holds value is considered a digital asset. There have even been instances where in-game currency and player accounts on popular games such as World of Warcraft have counted as digital assets.
Why Should Digital Assets Be Addressed in an Estate Plan?
As you might expect, online estate planning is a relatively new concept. So much so that less than half of the US states have laid out specific laws regarding their management. If that is the case, why should you even address them in your estate plan in the first place?
Well, there are a few benefits you need to be aware of. Firstly, the Fiduciary Access to Digital Assets Act of 2015 means that a fiduciary will be allocated to your digital estate in the event of your death and will act on your behalf unless you have an estate plan in place.
Second, where no state regulations exist, the holders of the online properties would usually be whoever is listed in terms of use or privacy policies of the platform managing the digital asset. Of course, this isn’t perfect because there’s a good chance that none of the digital properties in this category will be accessible to your descendants.
Lastly, since state and federal statutes make accessing information systems or private data without consent a felony, having a dedicated online estate plan for handling digital property provides extra legal security for your loved ones.
How to Create an Online Estate Plan for Digital Assets
Finally, let’s take a look at how to create an online estate plan for your digital assets so you can ensure the intended beneficiaries receive what is rightfully theirs.
Take Inventory
You need to take inventory of what assets you have, what type of assets they are, what the state classifies them as, and their value. It would be best if you also detailed where the asset is and how it can be accessed, including usernames and passwords.
Allocate Access
For each of your assets, you need to allocate how they will be accessed and who by. This could mean deciding who gets access to your cryptocurrency portfolio, things like who will inherit your online business, and what you want them to do with it.
Appoint an Executor
You need to name a digital executor. This is the person that will oversee the distribution of your online assets as part of your estate plan. This is also the person that will have access to all of your online accounts upon your death.
Make it Legal and Secure
Finally, you need to put your plan in writing and secure its legal status. It’s crucial to be as precise as possible when expressing your desires for your digital assets. If you need assistance with this, an estate planning attorney can help you draft the document and assist with formatting your digital estate plan. Once you have finished preparing the letter, make sure to send it to your digital executor, solicitor, and family members, so everyone is aware of your wishes.
