Today, our lives are so closely linked with technology, which means so are digital assets and estate planning. Digital assets include things from social media accounts to investments in cryptocurrency, among other components, both personal and financial. With so much importance given to this sphere of assets, planning concerning these very assets has become a growing priority. In this in-depth guide, find out all about digital assets and how they intersect with estate planning to give you the security and confidence to protect your online legacy.
Understanding Digital Assets
Digital assets involve all sorts of online possessions and accounts. It includes:
- Social networking sites
- E-mail accounts
- Online banking and investment accounts
- Cryptocurrency held in online accounts
- Digital pictures and videos
- Websites or blogs earning passive income
- Digital intellectual property
- Online cloud storage accounts
- Subscription services like Netflix, Disney+
In proportion to the growth of these footprints is the growing importance of integrating digital assets into our estate plans. If your digital assets are taken care of properly, then your desires will be carried out with efficiency, and your loved ones may use their important information after your eventual passing.
The Importance of Digital Asset and Estate Planning
Preserving Memories and Sentimental Value
Many of these digital assets, such as photos and videos housed online, have a lot of sentimental value. Including these in your estate plan will ensure that those valuable memories are preserved and given to future generations.
Safeguarding Financial Assets
Online banking, investment accounts, and cryptocurrencies are huge financial assets. If not planned for correctly, accessing these assets for your heirs may be challenging; this may lead to lost finances in the process.
Deterring Identity Theft and Fraud
Unattended digital accounts are subjected to identity theft and fraud. In this regard, a comprehensive digital estate plan offers protection against such risks by way of clear instructions for management or closure of accounts.
Ensuring Business Continuity
For those who own an online business or income-generating websites, digital estate planning is important in ensuring business continuity or giving instructions for the sale or closure of the enterprise.
Legal Considerations for Digital Assets and Estate Planning
Terms of Service Agreements
Most online platforms have particular service agreements that outline how to treat one’s account upon his/her demise. It is prudent that the settlor go through them because they may have some impacts on your digital estate plan.
Privacy Laws
Privacy laws control what happens to the digital estate upon death. There are jurisdictions that have already developed laws that deal directly with how digital assets should be used in estate planning.
Intellectual Property Rights
For digital assets that are intellectual property, including copyrighted material or trademarks, additional considerations are involved. Addressing such rights in an estate plan is important.
Steps to Incorporate Digital Assets and Estate Planning
1. Digital Asset Inventory
Take the first step by making a full list of your digital assets, noting account information and access points. Set this inventory aside and update on a regular basis.
2. Appoint Digital Executor
Appoint a trusted individual to manage your digital assets after your passing. This person should be tech-savvy and capable of carrying out your wishes regarding your online presence.
3. Provide Clear Instructions
Outline specific instructions for each digital asset, including whether accounts should be maintained, transferred, or deleted.
4. Address Digital Assets in Your Will or Trust
Name digital assets in your will or trust, or write a separate digital asset addendum. This legally documents your wishes.
5. Password Managers and Digital Vaults
Consider the use of secure password managers or digital vaults for storing login information and important documents. Provide access instructions to your digital executor.
Legal Frameworks for Digital Assets and Estate Planning
The growing importance of digital assets in our lives has resulted in some legal frameworks being developed to meet the unique challenges they pose in estate planning, the most important of which is the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), accepted almost universally across the United States and adopted by Pennsylvania. This act provides a comprehensive legal framework for fiduciaries to manage digital assets after an owner’s death or incapacitation.
RUFADAA establishes a three-tier system for accessing and managing digital assets, giving priority to online tools provided by service providers, followed by instructions in estate planning documents, and finally, the terms of service agreements. This structure ensures that individuals can maintain control over their digital legacy while providing clear guidelines for fiduciaries.
In addition to RUFADAA, many states have enacted their own state-specific laws to address digital assets in estate planning. These state-specific regulations often build upon or modify the RUFADAA framework to suit local needs and preferences. For example, Michigan has adopted the Fiduciary Access to Digital Assets Act, which clearly provides that all digital assets can be devised from one individual to another and permits digital information, including social media and website accounts, to be treated as other assets upon the owner’s death. Similarly, states like Arizona, Arkansas, and California have adopted their own versions of RUFADAA, which grant personal representatives or trustees the powers to access and manage digital assets and electronic communications.
Individuals involved in estate planning should be aware of the particular laws within their states, as these may carry nuances that impact how digital assets are treated. The ever-evolving nature of digital assets, and their burgeoning importance in our lives, implies that legal frameworks will continue to evolve and develop, likely toward more standard practices of service providers and revised probate laws facilitating the handling of digital assets in estate planning.
Issues in Digital Asset Estate Planning
Constantly Changing Technology
With constantly changing technology, there is every possibility that new forms of digital assets will be developed. The estate plan needs to be sufficiently flexible to allow for such changes.
Cross-Border Issues
For individuals with international digital assets, cross-border legal issues may arise. Consulting with legal experts familiar with international digital asset laws is advisable.
Balancing Privacy and Access
Striking the right balance between maintaining privacy and providing necessary access to heirs can be challenging. Clear instructions and careful consideration of privacy settings are essential.
Digital Assets and Estate Planning Go Hand in Hand
Digital assets and estate planning are becoming increasingly interrelated in our modern world. By taking proactive steps to include digital assets in your estate plan, you can ensure that your online legacy is protected and your wishes are carried out. Regular review and updates of your digital estate plan are crucial as technology and your digital portfolio evolve.
Remember, this guide is informative in giving an overview of digital assets and estate planning, but for the exact tailoring of an estate plan to suit your needs and circumstances, it is always advisable to consult with legal and financial professionals. The idea is that addressing your digital assets now can help you and your loved ones have peace of mind in this digital age.
The compassionate team at Antanavage Farbiarz is here to help. Reach out today to learn how our seasoned attorneys can assist you when to comes to digital assets and estate planning. Our family is here for your family – give us a call at (610) 562-2000 or click here to schedule a consultation.
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