Digital assets are relatively easy to accumulate and overlook.
With the rise of technology, people do not have to plan in advance like they once did!
Forgot to defrost chicken for dinner?
You can order a meal on your phone and pick it up in minutes (or have it delivered to your door)!
Although the convenience certainly has its benefits, some things still require advance planning.
In fact, the prevalence of technology and digital assets makes preparing for the future even more important and multifaceted.
According to a recent CNBC article titled “What happens to your digital assets and cryptocurrency when you die? Even with a will, they may be overlooked,” fewer than half of Americans have a formal estate plan in place.
Failing to create an estate plan has had detrimental consequences throughout history.
Improper planning for bank accounts, IRAs, 401(k)s, family businesses, and houses has led to family fights and avoidable taxes or legal fees.
In a time when technology is widely available and relied on for commerce and connection, estate planning for digital assets is essential.
How does one plan for their digital assets?
First you will need to inventory what you own.
This can include cryptocurrency, credit card points, airline miles, social media accounts, websites, photos, videos, software, hardware, and devices.
Once you have the list, you should review your login credentials to ensure you have updated them.
Someone you trust should have the code to unlock your desktop, laptop, and your phone.
Consider storing other passwords in a notebook or a password manager.
Access to this also should be shared with a trusted person.
Once you have secured the access information for your digital assets, you should decide and communicate what you would like done with each after you have died.
Some platforms allow for a “legacy” contact to be named to handle the account and to follow the instructions of the owner regarding what should happen to photos, videos, and other data.
This is not true for all platforms.
Do you own an online business?
If yes, then what will happen to the company without you?
You will need to communicate whether the business should continue and who should run it and receive the income after you have died.
These decisions should be clearly communicated and documented.
For those with cryptocurrency and nonfungible tokens (NFTs), not including these valuable digital assets in estate planning places them at risk of loss.
No paper documents exist for them and the executor will not be able to reach out to the institution with a death certificate and your estate planning documents to transfer the funds.
In addition to estate planning for digital assets, you should also remember to create a plan for your pets and for valuable or sentimental assets.
For your pets, you should consider a “pet trust” as this allows you to have more control over their care when you die.
Family members also can argue over valuable or sentimental possessions.
To avoid arguments over the jewelry, art, baseball cards, or ceramic bullfrogs, distribute these through specific instructions in your last will and testament, trust, or simply gift them to family with warm hands while you are alive.
Before you die, you should also make your own burial and funeral arrangements.
Indicating whether you want to buried or cremated and where you would like the service can save your loved ones much stress after you die.
If you already have an estate plan in place, review it every few years and after major life events to ensure it still accomplishes your wishes for your traditional and digital assets.
Reference: CNBC (Jan. 18, 2022) “What happens to your digital assets and cryptocurrency when you die? Even with a will, they may be overlooked”