In the age of technology, our lives are increasingly intertwined with digital assets. From social media profiles to cryptocurrency holdings, these digital assets have financial and sentimental value that should not be overlooked when creating an estate plan. Nevertheless, many people fail to include their digital assets in their estate planning process, potentially leaving their loved ones with challenges and uncertainties in accessing, managing, or transferring these assets. I frequently find myself encouraging clients to remember their digital assets when creating or updating their estate plan. As such, allow me to explain the importance of digital estate planning and offer some guidelines for how to include these assets in your estate plan.
Understanding Digital Assets
Digital assets encompass a wide range of items, including but not limited to, assets such as:
- Financial Assets: Online banking and investment accounts, digital wallets, PayPal accounts, and Cryptocurrencies.
- Intellectual Property: Websites, blogs, digital photos, videos, music, e-books, and other digital content.
- Personal Data: Social media accounts, email accounts, digital subscriptions, and cloud storage.
- Online Business Assets: Domains, online stores, affiliate marketing accounts, and digital business documents.
Why Do I Need to Include Digital Assets in My Estate Plan?
Failing to address digital assets in your estate plan could result in loss, theft, or mismanagement of valuable assets. Conversely, by including your digital assets in your estate plan you help ensure a seamless transition of ownership or access to your heirs or designated beneficiaries after you pass away. You also have the ability to provide clear instructions on how your digital assets should be handled when you are gone, protecting those assets from privacy breaches or unauthorized access after your passing. Finally, by including digital assets in your estate plan you ensure that you and your estate plan remain compliant with applicable laws and regulations.
Digital Estate Planning Steps
- Create an Inventory: Start by creating a comprehensive inventory of all your digital assets, including account information, login credentials, and instructions for accessing each asset. Use a secure password manager to store this information and ensure that your Trustee, Personal Representative or trusted individuals know how to access it in case of emergency.
- Identify Key Assets: Identify which digital assets hold significant financial, sentimental, or business value. Prioritize these assets in your estate plan and determine how you want them to be managed or distributed after your passing.
- Review Terms of Service: Review the terms of service and user agreements of each digital platform or service to understand their policies regarding inheritance or transfer of accounts. Some platforms may have specific procedures or requirements for transferring ownership or accessing accounts after death.
- Choose a Digital Agent: Appoint a digital Personal Representative or Trustee who will be responsible for managing and distributing your digital assets according to your wishes. Ensure that this individual is trustworthy, tech-savvy, and capable of handling digital assets effectively.
- Specify Your Wishes: Clearly express and document your wishes regarding the disposition of your digital assets in your Will, trust, or other estate planning documents. Provide instructions on how each asset should be handled, whether it be transferring ownership, deleting accounts, or preserving digital content for sentimental reasons.
- Update Regularly: Regularly review and update your estate plan to account for any changes in your digital assets, such as acquiring new assets, closing accounts, or changing passwords as well as for any changes in the applicable laws. Keep your fiduciaries informed of any updates to ensure they have the necessary information to carry out your wishes.
- Secure Your Assets: Take steps to secure your digital assets during your lifetime and after your passing. Use strong, unique passwords, enable two-factor authentication where available, and consider encrypting sensitive data. Additionally, provide instructions on how to access encryption keys or passwords needed to unlock encrypted data.
Do You Need Help with Digital Estate Planning?
For more information, please contact our estate planning office in Owings Mills, Maryland by calling 410-654-3850 to schedule an appointment.
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