Digital assets are an important part of our world, and thus, an important part of an estate plan. But how should you plan for them?
Many of us have a love-hate relationship with technology. I adore my programmable coffee maker, but it took me 6 months to learn how to use my new washing machine. So many buttons and options, and what in the world is a “Smartwash?”
Love it or hate it, technology is here to stay, and nowhere is that truer than in the financial sector. Many of us now own digital assets. In addition, we often store our “real life” assets in digital containers, and these can cause problems in an estate plan if we don’t adequately plan for them.
What are Digital Assets?
Digital assets include things like cryptocurrency, online stock accounts, emails, and cloud photo storage. Digital investments (like crypto) often play by completely different rules than other forms of property. Digital accounts often offer different services and require extra steps to access the assets they contain.
For example, online banks have become quite popular in the last few years. They allow you to save, invest, spend, and take out loans, just like a brick-and-mortar bank, but they often have different rules, such as preferring digital transfers over checks, not offering physical locations, and requiring passwords and security questions, instead of a driver’s license and checkbook.
Should I Include Digital Assets in my Estate Plan?
Digital assets can be just as real and valuable as traditional property, and they should absolutely be included in your estate plan.
Without a plan, loved ones may be locked out of important accounts, lose access to financial resources, or miss meaningful keepsakes like photos or messages. This is especially true for assets like cryptocurrency and online investment accounts, which often don’t transfer automatically or come with clear access instructions.
By including digital assets in your estate plan, you reduce the risk of legal complications, ensure your wishes are carried out, and offer your family peace of mind during a difficult time. In this day and age, your digital life is part of your legacy planning.
How Do I Include Digital Assets in My Estate Plan?
To protect your digital assets, your estate plan should:
- Clearly list all digital assets.
Be sure to check for accounts, crypto, photos, and other media, and investments. List everything as clearly and completely as possible, including any web addresses and app names that would be necessary to access your assets.
- Name someone you trust to manage them.
Choose someone you trust and who is capable of managing this unique type of asset.
Consider whether this person “gets” technology and feels comfortable using it. The last thing you want to do is overwhelm a loved one in a moment of crisis because they feel uncomfortable learning a new app or dealing with multiple passwords.
- Provide secure access information, such as passwords.
Make sure you include all possible info—not only passwords, but also usernames, security questions, account numbers, and ID numbers.
Also, consider that access to your email or phone may be required for 2-step authentication. Keep your trusted person up to date on those passwords, as well.
What Else Should I Think About with Digital Assets?
Some digital accounts allow you to name a beneficiary or make your trust the owner, just like a traditional account would. If that’s the case, make sure you take advantage of those features and keep your digital assets in step with your traditional assets!
If you anticipate needing significant care in the next few years, and you’re looking to acquire some digital assets now, make sure you have a Power of Attorney established naming someone you trust to manage assets for you during periods of incapacity. You could also consider co-owning some of these assets with your chosen trusted person. There are risks to this approach – exposing the assets to their creditors, unintentionally leaving more to one beneficiary over another – so you must proceed with caution. Obviously, this approach isn’t right for every situation, but it can drastically simplify the amount of information that will need to be shared in a moment of crisis.
Oh, Technology! We can help…
Technology can be a blessing and a curse . . . sometimes in the same day. Planning for your digital assets can feel overwhelming, but it doesn’t have to.
Our experienced (tech-savvy) team is here to help you understand, catalog, and plan for your digital assets, helping you leave a lasting legacy that’s a credit to the 21st century. The best way to get started creating a 21st-century estate plan is to attend a live workshop or our on-demand workshop – 7 Hazards to Your Estate Plan. Once you attend or watch, you’ll receive a complimentary Vision™ Meeting with an attorney. Check out our workshops today!
