In today’s increasingly digital world, more and more of our personal and financial lives exist online. From social media accounts and cloud storage to cryptocurrency and online banking, our digital footprint is larger than ever. Yet, when it comes to estate planning, many people overlook these valuable digital assets.
Properly planning for your digital assets can save your loved ones from unnecessary stress, prevent potential financial losses, and ensure that your digital legacy is handled according to your wishes. This blog focuses on Digital Assets in Estate Planning and What You Need to Know.
What Are Digital Assets?
Digital assets are any accounts or information you store online or on electronic devices. They can include:
- Financial accounts: Cryptocurrency (e.g., Bitcoin, Ethereum), online banking accounts, investment platforms like Robinhood or E-Trade, and PayPal balances.
- Social media: Facebook, Instagram, LinkedIn, Twitter, and other social media profiles.
- Email accounts: Personal and business email accounts often contain important communications and records.
- Cloud storage: Files stored on platforms like Google Drive, Dropbox, or iCloud.
- Digital subscriptions: Netflix, Amazon Prime, Spotify, and other subscription services.
- Digital photos and videos: Photos and media stored on platforms like Flickr, Google Photos, or your personal devices.
Why Digital Assets Need to Be Part of Your Estate Plan
In traditional estate planning, physical assets such as homes, vehicles, and financial accounts are the primary focus. However, without a plan for your digital assets, your loved ones may face significant challenges, including:
- Access issues: Many digital platforms have strict security protocols that make it difficult for anyone other than the account holder to gain access. Without your passwords or explicit instructions in your estate plan, your executor or loved ones might not be able to retrieve or manage these assets.
- Loss of value: Cryptocurrencies or online financial accounts that hold value could become inaccessible, leading to potential financial losses.
- Unwanted consequences: Social media accounts left active could be vulnerable to hacking or misuse, while digital content that you intended to be private could be exposed.
- Legal complications: Laws governing digital assets vary by jurisdiction, and many platforms have their own terms of service that restrict access to others after your death.
How to Include Digital Assets in Your Estate Plan
To ensure your digital assets are handled according to your wishes, you’ll need to take a few key steps in your estate planning process:
- Create an Inventory of Digital Assets
The first step is to make a comprehensive list of your digital assets. This inventory should include:- Account names and URLs
- Usernames and passwords (you can use a password manager for secure storage)
- Details about the asset’s value or significance (financial or sentimental)
- Instructions on how you want each account or asset to be handled (e.g., closed, memorialized, or transferred)
- Appoint a Digital Executor
In many states, you can appoint a digital executor, a person specifically responsible for managing your digital assets after you pass. The digital executor can be the same as your general executor or a different person who is more knowledgeable about digital matters.Make sure to give this person legal authority to access your digital accounts by clearly stating this in your will. - Provide Legal Authorization
Many online platforms have policies that limit who can access an account after the original owner’s death. In the U.S., the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) allows users to designate who can access their digital assets. Be sure to include clear legal authorization in your will or trust, granting your executor access to these accounts.Additionally, some online services, such as Google and Facebook, offer legacy planning tools. For instance, Facebook allows you to appoint a “legacy contact” who can manage your profile after you pass, and Google’s Inactive Account Manager can share your data with a designated person if your account becomes inactive. - Consider Using a Trust
For digital assets with significant financial value, such as cryptocurrency or digital intellectual property, you may want to consider placing them in a trust. A trust can help ensure that these assets are properly managed and distributed according to your wishes, and it can provide tax advantages as well. - Regularly Update Your Digital Estate Plan
As technology evolves and your digital footprint changes, it’s essential to review and update your digital estate plan regularly. Accounts you’ve forgotten about or new assets you’ve acquired should be added to your inventory, and any outdated information should be updated to avoid confusion.
Special Considerations for Cryptocurrencies
Cryptocurrencies like Bitcoin, Ethereum, or NFTs (non-fungible tokens) require special attention in estate planning due to their decentralized nature. Because these assets are stored on blockchain technology and secured with private keys, they are not accessible without the correct key or password.
If your private keys are lost, your cryptocurrency may be irretrievable. It’s critical to securely store your private keys and ensure your digital executor or beneficiaries know how to access them. Consider using a secure hardware wallet or a cold storage method to protect these valuable assets.
As digital assets become an increasingly important part of our lives, they must be considered in any comprehensive estate plan. By creating an inventory, appointing a digital executor, and providing legal authorization, you can ensure that your digital assets are managed according to your wishes and that your loved ones are not left dealing with unnecessary complications.
Including your digital legacy in your estate plan not only safeguards your financial and sentimental assets but also offers peace of mind that your online presence will be handled with care and respect.
Let Jacobson Family Law be the attorneys you trust with your estate planning needs. Contact Jacobson Family Law to schedule your consultation with one of our Maryland estate planning attorneys today at 443-741-1147 or at by scheduling a consultation online.
