How to Include Digital Assets in Your Estate Plan

In an era where our lives are increasingly lived online, have you considered what happens to your digital footprint after you’re gone? According to the Forbes Bryn Mawr Trust 2024 Digital Assets Survey, “fewer than 15% have an estate plan that covers them.” This oversight can create significant challenges for loved ones, leaving valuable and sentimental assets locked away or lost forever.

Estate planning has evolved. It no longer just covers physical property like your house or car. Today, it must also account for the vast and complex world of digital assets. From online bank accounts and cryptocurrency to social media profiles and precious family photos stored in the cloud, these assets hold both financial and emotional value.

Failing to include digital assets in your estate plan can lead to confusion, legal hurdles, and heartache for your family. The estate planning attorneys at The Law Offices of Diron Rutty, LLC will walk you through what digital assets are, why they are crucial to your estate plan, and how you can take steps to protect your digital legacy. By the end, you’ll have a clear roadmap for ensuring your online world is managed according to your wishes.

What Are Digital Assets?

Digital assets are any electronic records you own or control. They encompass a wide range of items that exist only in digital form but can have significant real-world value. These assets are often overlooked in traditional estate planning because they aren’t physical objects you can hold.

We can group digital assets into three main categories:

• Financial Assets: This category encompasses all assets with a direct monetary value. Examples include online bank accounts, investment and brokerage accounts, PayPal or Venmo balances, and cryptocurrency holdings like Bitcoin or Ethereum. It also covers loyalty points, airline miles, and digital intellectual property, such as blog revenue or royalties from creative works.
• Personal Assets: These assets hold sentimental value. Think of your email accounts, social media profiles (Facebook, Instagram, LinkedIn), photo and video galleries stored in the cloud (Google Photos, iCloud), and personal documents saved on services like Dropbox. Your digital music library, e-books, and even gaming accounts also fall into this category.
• Business-Related Assets: For entrepreneurs and business owners, these might include company websites, domain names, client lists, digital marketing accounts, and proprietary software or data. These assets are vital for the continuity or orderly dissolution of a business.

The intangible nature of these assets, combined with password protection and privacy policies, makes them difficult for heirs to access without explicit legal permission. That’s why proactive planning is essential.

Why Include Digital Assets in Your Estate Plan?

Ignoring your digital assets is a risk you can’t afford to take. Without a clear plan, your family could face serious financial and emotional consequences. For example, unclaimed funds in an online bank account or cryptocurrency wallet could be lost forever. Heirs might be unable to access sentimental photos or important documents stored in a locked email account.

The legal landscape surrounding digital assets is complex. Service providers often have strict terms of service that prevent unauthorized access, even by a deceased person’s family. Without specific legal authority granted in your will or trust, your executor may be powerless to manage these accounts. This can lead to your social media profiles remaining active indefinitely, or subscriptions continuing to charge your accounts long after you’re gone.

By including digital assets in your estate plan, you provide clear instructions and legal protection. You empower your chosen representative to access, manage, and distribute or delete your digital property according to your wishes. This foresight saves your loved ones from the stress of navigating a digital maze during an already difficult time.

How to Include Digital Assets in Your Estate Plan

Integrating digital assets into your estate plan is a straightforward process that requires careful organization. Follow these steps to ensure your digital legacy is protected.

Step 1: Create a Digital Asset Inventory

The first step is to list all your digital assets. This inventory is a vital roadmap for your executor.

• List all accounts and assets: Include everything from financial accounts like online banking and cryptocurrency wallets to personal accounts like email, social media, and cloud storage. Don’t forget digital subscriptions.
• Record access information: For each asset, note usernames, account numbers, and the location of your credentials. Do not write down your actual passwords in your will or the inventory itself. Instead, indicate where they can be found, such as in a specific password manager.
• Document security details: Include information needed to bypass security measures, like answers to security questions or instructions for two-factor authentication. For cryptocurrency, detail how to access hardware or software wallets.

Step 2: Designate a Digital Executor

You need to appoint a trusted individual to manage your digital assets. This person can be the same as your primary executor or someone else with more tech-savvy.

• Appoint a trusted person: Choose someone you trust implicitly to handle your online presence respectfully and responsibly.
• Provide clear instructions: Your estate plan should outline their responsibilities, granting them the specific authority to access, manage, transfer, or close your digital accounts. Some states have laws that formally recognize a digital executor, so it’s wise to consult an attorney.

Step 3: Update Your Will and Other Estate Documents

Your legal documents must explicitly address your digital assets to be effective.

• Mention digital assets specifically: Add language to your will or trust that covers your digital property. This makes your intentions legally binding.
• Specify how to handle each asset: Clearly state what you want to happen to each account. For example, you might want your Facebook account memorialized, your cryptocurrency transferred to a specific beneficiary, and your streaming subscriptions canceled.
• Grant necessary permissions: Ensure your legal documents give your executor or trustee the legal authority to bypass terms-of-service agreements and manage your accounts.

Step 4: Securely Manage Your Credentials

Protecting your access information is critical.

• Use a password manager: Services like LastPass or 1Password securely store all your login information and can grant emergency access to a designated person after you pass away.
• Store access information securely: Keep the master password for your password manager in a safe, offline location, like a safe deposit box. Inform your executor where to find it.

Step 5: Review and Update Your Plan Regularly

Your digital life is always changing, so your plan should too.

• Keep it current: Review your digital asset inventory at least once a year or after major life events. Add new accounts and remove old ones.
• Consult a professional: An estate planning attorney can help ensure your digital plan is legally sound and fully integrated with your overall estate strategy.

Secure Your Digital Legacy with the Law Offices of Diron Rutty, LLC

Thinking about the future can be stressful, but leaving your family and assets unprotected is not an option. In our digital world, a comprehensive estate plan must include your online assets. By creating an inventory, appointing a digital executor, and updating your legal documents, you can ensure your digital legacy is handled with care.

The professional estate planning attorneys at The Law Offices of Diron Rutty are here to help. We can guide you through the complexities of digital asset planning to ensure your estate plan is personalized to your needs, your family is provided for, and your assets are protected.

Don’t leave your digital life to chance. Contact us today to schedule a consultation to protect what matters most, both online and off.