In today's digital age, our lives increasingly exist online. From social media accounts to online banking, digital assets have become a considerable part of our personal and financial lives. However, many people overlook these assets when establishing an estate plan.
Defining Digital Assets and Their Importance
Digital assets encompass any content, accounts, or rights in digital form that you own or control. These include email accounts, social media profiles, online banking information, cloud storage accounts, digital media collections, domain names, and cryptocurrency holdings. These assets often hold significant sentimental, practical, or financial value as digital footprints expand.
Failing to plan for managing digital assets after death can lead to various problems. Loved ones may struggle to access important information or lose cherished memories. Loved ones could lose valuable digital property, or your accounts could fall into the wrong hands. By taking proactive steps to protect and plan for your digital assets, you can ensure your digital legacy remains secure and accessible to your designated beneficiaries.
Types of Digital Assets to Consider
When evaluating your digital estate, consider the following categories of assets:
- Communication accounts: Email, messaging apps, and social media profiles
- Financial accounts: Online banking, investment accounts, and cryptocurrency wallets
- Online shopping and payment accounts: Amazon, PayPal, and other e-commerce platforms
- Digital media: Music, e-books, movies, and photos stored in the cloud or on devices
- Website domains and online businesses
- Loyalty program rewards and points
- Intellectual property: Digital artwork, writing, or other creative works
- Gaming accounts and virtual goods
Each asset type may require different access and transfer approaches after death.
Challenges in Digital Asset Estate Planning
Several factors complicate the process of digital asset estate planning:
- Rapidly evolving technology and platforms
- Varying terms of service agreements across different online services
- Password protection and two-factor authentication
- Legal uncertainties surrounding digital asset ownership and transferability
- Privacy concerns and data protection laws
- The global nature of many digital assets, which may cross jurisdictional boundaries
These challenges underscore the importance of careful planning and regular updates to your digital estate strategy.
Legal Considerations
The legal landscape surrounding digital assets in estate planning continues to evolve. In the United States, many states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which provides a framework for executors to access and manage a deceased person's digital assets. However, the law's application can vary by state and platform.
Some key legal considerations include:
- Terms of service agreements often take precedence over wills in determining asset transferability
- Federal laws like the Electronic Communications Privacy Act can limit access to certain types of digital content
- International laws may apply to assets stored on servers outside your country
- Cryptocurrency and other digital assets may have unique tax implications for your estate
Consult with an estate planning attorney familiar with digital assets to navigate these complex legal issues.
Steps to Protect Your Digital Assets
To safeguard your digital assets, follow these essential steps:
- Create an inventory of your digital assets, including account details and access information
- Determine which assets have monetary or sentimental value
- Decide what should happen to each asset after your death (e.g., transfer to heirs, delete, memorialize, cancel)
- Use strong, unique passwords and enable two-factor authentication where possible
- Back up important data regularly to secure offline storage
- Consider using a password manager to store and share login information securely
- Review and update your digital asset inventory regularly
By taking these steps, you'll create a solid foundation for your digital estate plan.
Including Digital Assets in Your Will and Estate Plan
To ensure your digital assets are handled according to your wishes, incorporate them into your formal estate planning documents:
- Update your will to include specific instructions for digital assets.
- Create a separate "digital asset trust" if you have extensive or complex digital holdings.
- Draft a "digital asset memorandum" to provide detailed instructions for each asset.
- Include provisions for accessing and transferring cryptocurrency and other digital financial assets.
- Address digital intellectual property rights and how they should be managed or transferred.
- Consider creating a "virtual asset instruction letter" (VAIL) to guide your executor through your digital estate.
- If using Elayne to develop your estate plan, update each component of your digital estate online. Use our automated service to find any missing accounts or documents that could assist your loved ones in managing your digital estate.
Remember to keep these documents updated as your digital asset portfolio changes.
Choosing a Digital Executor
Appoint a digital executor to manage your online presence and digital assets after death. This person should be:
- Tech-savvy and comfortable navigating various online platforms
- Trustworthy and capable of handling sensitive information
- Familiar with your digital footprint and overall wishes
- Willing to take on the responsibility and time commitment
- Potentially younger than your primary executor, given the technical nature of the role
Your digital executor can work alongside your primary executor to ensure all aspects of your estate are properly managed.
Best Practices for Ongoing Digital Asset Protection
Maintaining the security and value of your digital assets requires ongoing attention:
- Regularly review and update your digital asset inventory
- Stay informed about changes in digital platforms' terms of service
- Look for new technologies or services and their impact on your digital estate
- Periodically reassess the value of your digital assets and adjust your estate plan accordingly
- Educate your family members about the importance of digital asset planning
- Consider using digital legacy services, like Elayne, to streamline the management of your online accounts
- Regularly backup and encrypt important digital files
- Be cautious about granting access to your digital accounts to others during your lifetime
By following these practices, you'll ensure your digital estate remains secure and up-to-date.
Conclusion
As our lives become increasingly intertwined with the digital world, protecting our digital assets after death has become a crucial aspect of comprehensive estate planning. By understanding the types of digital assets you own and the challenges involved in managing them, you can take proactive steps to secure your digital legacy.
Create a thorough inventory of your digital assets, include them in your formal estate planning documents, and appoint a capable digital executor to manage them. Regularly review and update your digital estate plan for new assets and changing technologies.
Remember, digital asset protection is an ongoing process. Stay informed about evolving laws and technologies, and don't hesitate to seek professional advice when needed. By doing so, you'll ensure that your digital assets are protected, your online accounts are appropriately managed, and your digital legacy is preserved according to your wishes.