Your “digital assets” require estate planning, too.
Traditionally, estate planning has involved the transfer of property like real estate, collections, bank accounts, and investments to the next generation.
Although this is still accurate, your property likely includes digital assets now.
According to a recent Tech Crunch article titled “What happens to your NFTs and crypto assets after you die?,” your digital assets need to be included in your estate planning.
What is a “digital asset”?
The term digital asset encompasses a variety of accounts and valuables.
Common digital assets include social media accounts like Facebook, Twitter, Instagram, and TikTok.
If social media is not in your wheelhouse, you probably still have an email account.
If you own a business, your web domain is an important asset.
Other assets include cryptocurrency and Non-Fungible Tokens.
Although these assets are important, only about 25 percent of people surveyed had shared the details of these accounts and passwords with a trusted individual.
This means many people leave their digital assets vulnerable in the event of death or incapacity.
Stories abound about people who purchased Bitcoin, lost their passwords, and no longer had access on their computers.
Even a cryptocurrency exchanger was not immune to this issues.
After the exchanger died, more than $250 million in client assets disappeared when the private keys could not be located.
The use of two-factor authentication or biometrics to gain access are examples of other complications common to digital assets.
What can you do to prevent these issues?
Include your digital assets in your estate plan.
Although a last will and testament is used to designate who inherits your assets, account details should not be included in this common legal document.
When your last will is probated, it becomes a public document.
This means anyone could view it and see the information regarding your accounts.
Instead, you should create a separate complete list of digital accounts and assets and then share the list with a trusted person.
Often this trusted person is the executor for your estate.
You need to gather account names, private keys, and passwords.
One tool you can use to store account information is a digital wallet.
In your estate planning, you will need to be explicit when it comes to instructions for your digital assets should you become incapacitated and following your death.
Research the specific guidelines required by your digital asset platforms for handling accounts after the death of an owner.
Facebook and LinkedIn for example have created a means of designating an individual to be in charge of your account.
Some exchanges also have death-management procedures.
In many instances, a copy of your last will is requested to release funds to an estate.
This means you will need to name the asset in your last will without indicating the account number.
Estate planning for your digital assets will take time and will require updates as passwords change and accounts are added.
Reference: Tech Crunch (April 5, 2021) “What happens to your NFTs and crypto assets after you die?”