Legislation may help protect digital assets in estate planning.
Most people think of their tangible assets when they prepare to create an estate plan.
They know they must make plans for their cars, homes, and family heirlooms.
What often gets overlooked are digital assets.
According to a recent Kiplinger article titled “How to Tackle Digital Estate Planning in Four Easy Steps” the importance of this planning has grown in recent years.
With the creation and growth of the internet, social media, digital photos and video, and cryptocurrencies, most Americas have a digital footprint of some size.
This shift has made necessary legislation like the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA).
This law and several state laws help protect digital assets and grant access to online accounts to executors and power of attorney agents after the incapacity or death of an individual.
For digital assets to be protected, individuals must still include them in their estate planning.
How does RUFADAA work?
The legislation has a three-tier process for accessing digital assets.
What is included in each tier?
The first tier involves those platforms with means provided for granting access to a chosen representative.
Some platforms have directions for outlining your desires for the accounts should something happen to you.
For example, Yahoo allows users to designate friends as inactive account managers.
When a platform does not have its own means of outlining what will happen to the digital assets, the owner must provide directions in their estate planning documents.
Should neither of the above two tiers apply, the platform Terms of Service Agreement (TOSA) may provide instructions for how an executor might gain access to the account.
Digital assets cover a broad spectrum of digital and online content and services, including blogs, cell phones, cell phone apps, cryptocurrency and related keys and wallets, domain accounts, e-commerce accounts, emails, gaming, photos saved in cloud-bases storage, text files, graphic files, audio files, intellectual property, loyalty benefits for credit cards or travel, online banking accounts, online shopping accounts, social media, and utility accounts for electric, television, or internet.
Although electronic bank accounts are considered digital assets, the money held in these accounts is not.
The platforms for accessing cryptocurrency are considered digital assets, but the cryptocurrency is not.
How can one create an estate plan for digital assets?
The process mirrors traditional estate planning.
Inventory digital assets.
You should create a comprehensive list of accounts, including the names of the accounts, usernames, passwords, and the address or URL for the asset.
Decide on the fate of the digital assets.
It would help if you outlined your intentions for each account.
Many platforms will require this directive for your executor to take action on your behalf.
Some platform companies have conditions for final wishes in their Terms of Services Agreements.
For example, Facebook allows loved ones to memorialize an account, while Google and Twitter have legacy policies.
Designate a digital executor.
While this executor could be the same person for your estate, you can select a different person.
Your executor for your digital assets should have computer literacy and be fairly tech savvy.
Store your digital estate plan in a secure place.
Some platforms have now arisen to organize digital estate plans should an emergency arise.
These platforms are different from password managers and should include your directives for your wishes regarding your digital assets.
Your estate planning attorney will be able to provide information on whether RUFADAA has been passed in your state of residence and whether you should formalize your digital estate plan by making it a codicil to your will.
Reference: Kiplinger (May 16, 2023) “How to Tackle Digital Estate Planning in Four Easy Steps”