In addition to traditional assets, people may need to leave digital assets to their beneficiaries after they pass away. According to the White House, 16 percent of American adults own digital assets, and this amount is likely to increase due to the popularity of e-commerce, digital media, and digital currency. For this reason, it is important to develop an effective digital estate plan. To learn more about digital assets and estate planning, consider contacting an experienced estate planning attorney at Von Rock Law by calling (866) 720-0195 to schedule a consultation.
What Are Digital Assets?
Digital assets refer to any digital media or text that provides the owner with value and the right to use the asset. According to the Internal Revenue Service (IRS), digital assets include virtual currencies and cryptocurrencies alongside non-fungible tokens (NFTs). Additionally, they include the following:
- Photo and e-book libraries
- Digital music and movies
- Air miles and hotel points
- Streaming service and digital publication subscriptions
- Online gaming accounts
- Website domains
- Documents stored in the cloud or electronically on physical devices
- Online shops
- Email accounts
- Online banking and other financial accounts, including currencies kept in digital platforms
- Insurance and medical accounts
- Message boards and chatrooms
- Utility accounts
- Computer hardware, including hard or flash drives, computers, smartphones, tablets, e-readers, digital cameras, and digital music devices
- Social media and video- or image-sharing accounts
- Intellectual property, such as trademarks, patents, or copyrighted material
Why Is It Important To Create a Digital Estate Plan?
Creating digital estate plans helps to reduce the uncertainty surrounding what happens to a deceased person’s digital assets once that person dies. This can also reduce stress for anyone involved, as they can easily determine the deceased person’s passwords and find out how the person wanted to distribute his or her digital assets. In addition, it can help to reduce the time spent in court during the probate process, which is often lengthier if the deceased person had no Last Will and Testament (will) concerning these assets.
Additionally, effective digital estate plans prevent a deceased person’s assets from becoming subject to certain risks, including hacking, fraud, and identity theft. Creating these plans also means that family members can gain access to vital insurance and financial documents more quickly after the person’s death. To learn more about digital assets and estate planning and for help developing a digital asset plan, a skilled attorney from Von Rock Law may be able to help.
Understanding Accessibility Challenges
A key issue likely to face beneficiaries when it comes time to access any digital assets left to them is that the vast majority of these assets require a password. Additionally, there might be data privacy and other laws protecting these assets from unauthorized access. Depending on the provider, some online services also have certain terms and conditions as part of the service agreement that include extra access restrictions, meaning that it can be very challenging for loved ones to recover these assets unless the deceased person leaves specific instructions.
To help overcome this issue, the law is evolving to improve the handling of digital assets after a person dies. For instance, several states have implemented the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). This legislation outlines the following three tiers concerning digital asset access:
- Tier 1: If the digital service provider has a tool outlining the management of the asset after the initial owner dies, this determines how to access the asset. Google has a tool known as an inactive account manager for this purpose.
- Tier 2: When there is no such tool, the owner’s instructions via a will or other legal document decide what happens to the digital asset.
- Tier 3: If there is no digital service provider tool or will, the service agreement outlines how to access the digital asset. Often, these agreements state that only the initial owner can gain access.
How To Develop a Digital Estate Plan
The following steps will help in determining how to develop an effective digital estate plan:
List the Assets
When developing a digital estate plan, start by listing the digital assets the person owns. Additionally, be sure to make a note of how to access each of the assets.
Determine How To Handle the Assets
The next step involves deciding how the beneficiaries will manage the digital assets. This involves considering whether to store the asset, destroy it, or transfer it to family members, colleagues, or friends. The decision usually depends on what the particular asset is.
The executor should be informed about how to handle these assets, even if the person’s wishes conflict with service agreement terms. Individuals with high-value digital assets might want to request that the executor transfer those assets to someone with experience managing digital assets to help maintain their value.
Appoint a Digital Executor
After listing the assets and deciding how to manage them, it is time to appoint a digital executor. These individuals help to settle digital estates after a person dies according to his or her instructions. Unlike executors, digital executors are not usually legally binding positions, but naming one can be a good idea since the executor can either assign this role officially or ask the appointed digital executor to assist in managing these assets.
Store the Plan Securely
Next, store the digital estate plan somewhere safe, such as with an attorney, with a secure online storage service, or in a safe or locked drawer. Additionally, tell a few trusted individuals—spouse, partner, close friends, family members, or the appointed digital executor—where to find the plan and how to get it.
Add the Plan to the Will
Finally, think about making the digital estate plan a legal document by including it in a new will or as a codicil to an existing will. To do this, name in the will an individual to act as the digital executor and outline where to find a list of the digital assets. However, avoid including any sensitive information like passwords, as the will is a public document. Instead, consider referencing an external document that contains these details, which also allows for adjustments as needed without updating the entire will.
Contact an Estate Planning Lawyer for Assistance with Digital Assets
Due to technological advancements, more people own digital assets that range from social media accounts and company loyalty points to cryptocurrencies. As the law concerning digital assets is constantly evolving, it can present many challenges, making careful planning in this area essential. If you are ready to learn more about digital assets and estate planning, consider contacting an experienced estate planning lawyer from Von Rock Law by calling (866) 720-0195 to schedule a consultation today.