Planning for digital assets is more important than ever before.
Technology is fairly unavoidable in the modern world.
On the minimal side of the technological spectrum, people may settle for an email address and a cell phone.
Others, however, live lives so digitized they store all of their information on the cloud and even control multiple features and appliances in their home using accounts on their phones.
According to a recent Westchester & Fairfield County Business Journals article titled “Estate Planning for Digital Assets,” both of groups and everyone in between need to include their digital assets in their estate planning.
What exactly are digital assets?
The most basic definition would be any electronic data a person has a right to access.
These can include airline rewards and miles, cell phone apps, cryptocurrency, email accounts, gaming accounts, e-commerce accounts, loyalty program points, online banking, online subscriptions, photo accounts, and social media accounts.
As individuals amass greater online presences, digital assets have become more prominent in estate planning.
For some people, they are more important than traditional assets because they can have both sentimental and monetary value.
Additionally, they are more vulnerable than many traditional assets because hackers can find their way into financial accounts.
Even if there is no financial benefit to the assets, failing to secure digital assets can be a significant loss.
Consider those who store photos on the cloud.
If these are deleted or access is lost, they may be gone forever.
Money could even be lost in online accounts beyond banking or cryptocurrency.
For example, many gamers have spent traditional money to purchase digital assets with monetary value online.
All of this could be lost without proper planning.
How does one organize and protect digital assets?
Begin by identifying all digital accounts.
You should have urls, usernames, passwords, and notes on whether they require third-part authentication.
These third party identifications often involve verification codes being sent to an email address or a phone.
You can utilize an encrypted spreadsheet or a paper list of your digital assets if you keep it in a secure location.
In many states, like Kansas and Missouri, it is possible to grant access to online accounts to your executor through your last will and testament.
In the event of incapacity, you may even be able to provide an agent authority through a Power of Attorney.
Even with these in place, there may be additional complications.
Certain digital platforms only permit the original user to access the account.
Even with authentication codes and passwords, it may be against the Terms of Service Agreement to allow access to another individual in order to protect both the platform and your privacy.
Some platforms are proactive in allowing a legacy contact to be named to be given access to the digital asset after the death of the owner.
Many of these platforms limit what a legacy contact can do.
In some instances, the contact may only delete or memorialize the account.
Review your list and research the policies of each platform.
Should litigation arise about access to a platform, it is helpful to leave specific instructions for your agent or executor regarding your wishes for your digital assets.
Doing so may give your agent or executor a better chance at accomplishing your wishes.
Working with an experienced estate planning attorney in your state of residence is vital to create a plan for your traditional and digital assets.
Reference: Westchester & Fairfield County Business Journals (July 18, 2022) “Estate Planning for Digital Assets”