Estate planning should include preparations for digital assets.
I know, I know … can I take a break from all of these posts about estate planning for digital assets?
I mean, “Kyle, it seems like you have a post about digital assets every week!”
Well, there is good reason for that.
At its foundation, estate planning allows you to protect your assets and your loved ones should you become incapacitated or die.
By doing so, you can know your medical decisions will be made, your bills paid, and your minor children reared by trusted individuals.
Unfortunately, many people overlook the digital aspects of their lives.
And this oversight, as it turns out, can turn out to be a big mistake.
According to a recent The Seattle Times article titled “Basics of estate planning and your digital assets,” digital assets play a significant role in modern life.
They can hold both significant wealth and priceless memories.
What happens to your online financial accounts, cryptocurrency, photos, videos, or music when you die?
Before that, especially when it comes to managing your online money, if you become incapacitated by a sudden injury or illness?
This depends on what preparations you make.
Before you make a last will and testament or set up a trust, you likely inventoried your assets.
You listed and valued your bank accounts, life insurance policies, motor vehicles (and/or electric vehicles?), real estate, and investments.
After doing so, you decided how you want these assets divided between your loved ones and any charitable organizations.
You will follow a similar process with your digital assets.
Make a list of your digital assets and include usernames and passwords.
Unlike your tangible assets, you must not include these in your last will and testament.
A last will and testament, once filed with the probate court, becomes a public document and available for anyone to see.
As a result, such anyone could have access to your digital assets.
Instead, your digital asset list and instructions regarding how you want each asset administered should be a separate form.
What can you do to protect and preserve your digital assets?
For starters, make a paper record of all of your digital assets by type, with usernames and passwords.
This way, if the vaunted internet should go down for a time, then when it comes back you will be more likely able to pick up where you left off.
In addition, consider using an online service like “LastPass” to secure all of your digital assets behind one password.
If you become incapacitated or upon your death, options for your digital assets may range from closing the accounts to transferring them to another individual of your choosing.
If you own cryptocurrency, you will need to have detailed records regarding what you own and how to access it because this form of currency has no paper trail.
And we have all read the horror stories of people becoming incapacitated or dying with no estate planning for their digital assets.
Take time now to plan for your digital assets with the assistance of an experienced estate planning attorney.
Great care must be taken to ensure that proper legal access is authorized in your legal documents.
This will help your attorneys in fact (under your general durable power of attorney), executor, and trustee follow your instructions to protect and preserve your wealth and memories represented by these non-traditional assets later on.
Reference: Seattle Times (Jan. 31, 2022) “Basics of estate planning and your digital assets”