If you were to take a moment to do some “back of the napkin” math and do an accounting of your assets, what would you come up with? House, cars, personal property, investment and bank accounts, insurance policies? Most people have a good sense of where the majority of their wealth is invested and generally have plans on how they’d like it distributed. The legal and financial systems may have their hiccups, but they’re pretty consistent in managing real assets of the deceased. Unfortunately, that’s not the case with digital property, which is why you need to think about digital assets estate planning.
Before we dive into digital assets estate planning, let’s take a moment to explore what actually constitutes a digital asset. Digital assets run the gamut from highly valuable (like large cryptocurrency investments, non-fungible token holdings and intellectual property) or somewhat valuable (like residual payment app balances, web content, or monetized web channels) to only having sentimental value (such as digital photos, personal writings, or a social media presence).
The reason to draw distinctions here is that so much of our lives are lived online that you’ll need to set a threshold for what is worth preserving or handing over and what’s not.
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3 Questions to Ask When Starting Digital Assets Estate Planning
Is it valuable? – Valuable is a relative term so it’s up to you to decide where to draw the line. Large cryptocurrency holdings or intellectual property should obviously be transferred, but whether to worry about small amounts of money in Venmo or PayPal is up to you.
Is it tied to other assets? – A small PayPal balance may not be worth including in your digital assets estate planning, but payment apps are frequently connected to existing bank accounts. This link creates a risk that a compromise of your online account could allow access to your estate. Also, think about automated payments. You could have any number of recurring online payments set up that could accumulate thousands of dollars of charges while your executor takes control of your estate.
Will it help my executor? – The majority of states have enacted legislation permitting designated representatives of an estate to access online accounts of the deceased. (Laws vary by state, so you may want to consult an attorney on how to properly designate a representative.) Giving that representative access to your smartphone and email address can significantly help them manage the entirety of your digital presence.
Those three questions should help give you a broad sense of what’s worth preserving for financial reasons vs. what’s worth preserving for sentimental reasons (or not worrying about preserving at all). Once you’ve established what to protect, it’s time to formalize your digital assets estate planning.
Work with an attorney – The legislation granting digital access to representatives is usually the Uniform Fiduciary Access to Digital Assets Act, or a revised version of it (depending on the state), and it’s been in place for over five years. That means that a good estate planning attorney is likely familiar with it and should be able to include digital assets as part of your overall estate plan. However, if your digital assets are highly complicated or of significant value, you may want to look for a specialist.
Work with a specialty service – Online services such as Everplans can help you make a consolidated record of all your holdings, real and digital, in one place. These services are not a substitute for a proper estate plan; rather, they facilitate a surviving partner or executor’s ability to implement your estate plan.
Work with your executor or trustee – If you don’t do much online banking or hold digital assets of real value, you may want to simply work directly with whomever will be in charge of managing your estate. You can provide login credentials (especially for email and your phone, which facilitate almost every type of digital access) in a physical document or stored in a safety deposit box and advise your representative where you have assets that you’d like preserved or where you have regular debits. Do not include passwords in a will or trust document as those become public records.
Digital assets estate planning doesn’t necessarily need to be a focal point of your estate plan (that will depend on your individual holdings), but it certainly needs to be part of the discussion. Taking a few minutes to think about it in advance can help you avoid disputes and make things easier on your surviving friends and family.
Are your digital assets a part of your estate plan yet?