Including Digital Assets in Your Estate Plan: What You Need to Know—Part 2
Recent digital technological advancements have made many areas of our life simpler and more comfortable. Digital technology, on the other hand, has added a layer of complication to estate planning. To put it another way, if you don’t have an estate plan that addresses your digital assets, you run the risk of losing most of your digital assets permanently when you pass away without one.
If you don’t have an estate plan in place, finding and accessing your digital assets after your death or incapacity may be a huge hassle — or perhaps impossible — for your loved ones. Furthermore, even if your loved ones have access to your digital property, doing so may violate privacy laws or the terms of service that govern your accounts. Apart from that, you may have digital assets that should be restricted or limited in access so that your loved ones do not inherit them.
Including digital assets in your estate plan comes with a number of special considerations, and we’ll walk you through each one here. Last week in part one, we discussed some of the most common types of digital assets and the current legal landscape governing what happens to those assets upon your death or incapacity. If you have digital assets, we’ve got some advice on how to make sure they’re appropriately incorporated in your estate plan so that your loved ones may reap the benefits of these assets for many generations.
Include Digital Assets In Your Estate Plan In Five Easy Steps
You most likely have numerous digital assets, some with financial value and others with just sentimental value. You may also have digital assets that are worthless to everyone except you or digital property you don’t want your loved ones to have access to or inherit after your death. Take the following five actions to make sure your digital assets are properly accounted for, managed, and passed on in the way you really want:
Create a detailed inventory with access instructions
To begin, make a list of all of your digital assets. Once you’ve compiled your list of assets, make sure to provide detailed information about where the asset is stored and how it can be accessed, including all necessary login information and passwords. Password management applications like LastPass make it easier to handle different accounts.
Prepare detailed instructions about how to access your cryptocurrency if you own one. Ensure that someone you trust knows where they can locate your instructions if they need them. Guarantee your loved ones can access your cryptocurrency; it may be necessary to leave a comprehensive “How To” instruction. This guide should include usernames, private keys, and knowledge about wallets, digital exchanges, and other storage devices.
Make sure your executor or trustee, as well as your lawyer (if you have an ongoing connection with a trustworthy lawyer), know how to obtain your inventory and access instructions once you’ve prepared them. Store them securely alongside your other estate planning papers. Make it easier to manage your digital assets by copying them from the cloud to a PC, flash drive, or other physical storage devices. Also, don’t forget to keep track of any digital property you acquire or accounts you delete by frequently updating your digital-asset inventory.
Add your digital assets to your estate plan
After creating an inventory of your digital assets, you’ll want to include them in your estate plan. As is the case with any other asset, you’ll usually leave your digital assets to your loved ones through a will or revocable living trust. Following that, designate in your will or trust who you want to inherit each asset and add detailed instructions for how you want the item managed in the future if that is an option. Additionally, certain assets may be worthless to your family or include information you do not want them to inherit or access, in which case you should direct your fiduciary to close or delete those accounts and files.
Since others may readily access this information, do not include specific account information, logins, or passwords in your estate planning papers. This is particularly true for wills, which become public documents after a person’s death. Keep this information in a safe place and teach your fiduciary how to access and use it. Consider using the services of a digital asset management company, such as Directive Communication Systems, to assist you in protecting and managing all of your digital assets.
Additionally, it’s a good idea to include terms in your estate plan authorizing your fiduciary to engage an IT consultant if required, particularly if your fiduciary lacks technical expertise. This will assist them in managing and troubleshooting any technical difficulties that may arise, especially when dealing with extremely complex assets like cryptocurrencies. Alternatively, if your fiduciary is not very tech-savvy, you may choose a second co-fiduciary, referred to as a digital executor, to handle your digital assets. A digital executor is someone who is expressly charged with accessing and administering your digital assets following your death, which may be a smart move if you own a large amount of digital property or highly encrypted digital assets such as Bitcoin.
Meet with us to determine if you should have a digital executor or whether an alternative arrangement is preferable for managing your digital assets.
You should provide instructions in your estate plan for your fiduciary about the amount of access you want. For instance, do you want your executor or trustee to have access to all of your emails, messages, and social media postings before deleting them or forwarding them to your loved ones? If you want to limit or restrict access to any assets, we can assist you with including the appropriate conditions in your estate plan to ensure that your privacy is completely respected.
Include relevant hardware
Your estate plan should also contain provisions for any physical devices—smartphones, laptops, tablets, and flash drives—that are used to hold the digital assets. Having immediate access to this equipment simplifies the process of accessing, managing, and transferring online assets for your fiduciary. Additionally, since the data on these devices may be wiped clean, you can leave them to someone other than the person who inherits the digital property contained in them.
Check service providers’ access-authorization tools
Take a moment to review the terms and conditions associated with each of your online accounts. Certain service providers, such as Google, Facebook, and Instagram, provide features that make it simple to assign access to your accounts to others in the case of your death. If such a feature is available, utilize it to record who you wish to have access to and administer your accounts after your death. Simply ensure that the individuals you choose to inherit your digital assets through the providers’ access-authorization tools correspond to those specified in your estate plan. If not, the provider will very certainly provide priority access to the person identified in the tool, not the person named in your estate plan.
Don’t Forget to Include Your Digital Assets in Your Estate Plan
As our lives become more digital and dependent on technology, keeping your estate planning strategies current is vital. We can assist you in updating your estate plan to include not just your physical assets and property, but also your digital assets.
We are highly aware of the value of your digital property, and our estate planning strategies are designed to ensure that your digital assets are protected and easily transferred to your loved ones in the event of your death or incapacity. All of this is achievable while maintaining your full privacy and adhering to the most up-to-date laws and regulations governing the constantly changing digital world.
This article is a service of Greg Gordillo, Family Business Lawyer™. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death for yourself and the people you love. That’s why we offer a Family Wealth Planning Session™, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. You can begin by scheduling a Family Wealth Planning Session via our online scheduler and mention this article to find out how to get this $750 session at no charge.