Estate planning is a multifaceted process that involves arranging for the management and disposal of everything you own and all of your affairs in the event you become incapacitated or die. It’s not fun to think about, but its necessity is an essential fact of life. There’s a lot to cover in an estate plan, and one growing but often overlooked consideration is digital assets.
If you’re a business owner with an online presence, you may already recognize that your digital property is valuable, needs to be protected, and should be covered by your estate plan. However, most people probably haven’t considered the digital assets they own.
A digital asset is any form of online information or files. It may include your website, social media profiles, music, photographs, emails, NFTs, or cryptocurrency. Some items have direct monetary value, some digital assets provide access to data or physical assets with monetary value, and some are priceless sentimental gems.
Once you understand what a digital asset is, it becomes clearer why you need to include them in your estate plan; here’s how.
Why You Need a Digital Estate Plan
Much of our lives these days involve dealing with digital and physical assets through digital accounts. With a few clicks and taps, we can conduct business, pay bills, communicate with loved ones, find entertainment, share content we’ve created, and so much more. But as easy as it is for us to handle these assets from the palms of our hands, it can become nearly impossible for the people you leave behind to access them when you die.
This means important information can remain locked away, permanently inaccessible, causing difficulties in finalizing your affairs. It may sound grim, but when you take passwords to the grave, it can mean your valuable digital property will remain shut in a vault with legal hurdles blocking heirs from gaining access. Family photos or important documents, for example, could be lost forever.
Not only that, but not having a digital estate plan in place could mean you “live on” in ways you would rather not. Imagine active social media accounts, for example, where people continue to attempt communication with you, unaware that you’ve passed away.
Even more critically, a digital estate plan can protect your estate from fraud. After your death, if digital accounts are left open and unmonitored, it may leave you vulnerable to hackers who can access data that enables them to assume your identity, open new accounts in your name, or run up charges on credit cards that your spouse is still using.
How to Create a Digital Estate Plan
Creating a digital estate plan is a fairly simple process once you know what it entails.
Step 1: Identify Your Digital Assets
Start by making an exhaustive list of every digital asset you own and how to access each one.
Your digital property may include hardware, such as laptops, desktop computers, smartphones, tablets, external hard drives, flash drives, and any other device you use or store data. Don’t forget old devices you no longer use but that contain important files, such as old digital cameras or computers.
Your digital property may also include any information you’ve stored online, such as cloud storage, websites, blogs, social media profiles, shopping sites, and other accounts.
Another kind of digital property you own may be intellectual property, such as code you’ve written, digital photographs you’ve taken, blog posts you’ve written, or trademarks and copyrights you hold.
Step 2: Make a Plan for Managing Your Digital Assets
What do you want to happen to your digital assets in the event of your death?
Are there items or accounts that you want to keep private? For example, you may not want your adult kids to access your dating profiles. Are there assets you would like archived, stored, or transferred to someone else? What would you like to happen to the blog you manage or your social media accounts? What do you want to happen to your credit card points? What if someone needs to access your email?
Think carefully about each digital asset and develop a specific plan for it to be handled how you see fit. Assume nothing can be accessed or shut down without specific instructions from you.
Step 3: Formalize Your Digital Estate Plan
Just as you need an executor for your will, you should also assign a digital executor to your estate. While this designation is not legally binding in every state, it’s important to assign someone to handle the process. This person should be capable of carrying out your wishes and willing to do so.
You should also work with an estate planning attorney to put verbiage in your legal estate plan to protect your digital assets and ensure they do not remain in limbo. Keep in mind that the law does not automatically grant your heir’s rights to your digital assets upon your death; you need to specifically indicate how you want these assets to be distributed or accessed.
Step 4: Store Your Information Carefully
Your digital estate plan is comprised of sensitive data, so you’ll need to be careful about how you store it — in a place that is both secure and accessible. You may choose to lock it away in a file or safe, ask your attorney to keep everything on file, or use a digital storage service created for estate planning, such as Everplans.
Once you’ve decided where your information will be stored, you’ll need to notify the digital executor, executor, and other trusted people in your life, such as your spouse or adult children. Remember, your goal should be to make things easy for them during a difficult time. If you choose to use a tool like Everplans, you can have an email automatically sent to your loved ones with details on accessing your accounts upon your death.
Step 5: Leave Instructions
Whether you choose to use a tool or go the low-tech route of writing a letter of instruction, the key is to leave no loose ends. Walk through the process with your attorney, executor, digital executor, and anyone who needs to know what you want and what to do.
Assume your loved ones will face obstacles in trying to access your accounts and work proactively to make the process as smooth and painless as possible.
The Bottom Line
In the digital era, nearly everyone has digital assets, whether they realize it or not. It can be painful for loved ones to realize they can’t access your digital property that could hold monetary value or sentimental value — from Bitcoin to grandma’s recipes saved on your hard drive.
While developing your estate plan to pass on investments, cash, real estate, and more, don’t forget to plan for your digital valuables too.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
This material was prepared by Crystal Marketing Solutions, LLC, and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate and is intended merely for educational purposes, not as advice.