Should You Include Digital Assets in Your Estate Plan?
Some of your most valuable assets may be stored online, protected by passwords, or maintained through digital platforms.
These digital assets can include cryptocurrency, online investment accounts, digital photographs and videos, email accounts, domain names, online businesses, cloud storage accounts, and rewards programs.
Although they may not have a physical form, digital assets can carry significant financial or sentimental value and require special planning to ensure loved ones can access them when needed.
Digital assets are an increasingly important part of personal wealth, but without proper planning, they can be difficult for family members and fiduciaries to locate, access, and manage. Incorporating digital assets into your estate plan helps safeguard their value, streamline estate administration, and ensure they are handled according to your wishes.
The Challenges of Digital Assets
Unlike traditional assets, digital assets can be difficult for family members and fiduciaries to locate and access after a person's incapacity or death. Even when a fiduciary has been properly appointed under a will, trust, or power of attorney, practical obstacles may still prevent access.
One of the most common issues is simply identifying what digital assets exist. Family members may know that a loved one maintained online accounts, but do not know where those accounts are located or what information is stored there.
Passwords and security measures present another challenge. Many online accounts are protected by multi-factor authentication, encryption, and other security protocols that can make access difficult or impossible without the appropriate credentials. This concern is particularly significant for cryptocurrency. If a private key or wallet password is lost, the underlying asset may become permanently inaccessible.
Privacy laws and service-provider agreements can create additional complications. Some online platforms prohibit unauthorized access to accounts and may refuse to provide information to family members unless express consent has been provided by the account owner. As a result, even a properly appointed personal representative or trustee may encounter delays and legal hurdles when attempting to access digital information.
Steps to Protect Your Digital Assets
Fortunately, there are proactive planning measures you can take to help ensure that your digital assets are preserved and accessible when needed.
1. Create an Inventory
Start by preparing a comprehensive list of your digital assets. Include online financial accounts (e.g., bank, credit card, digital wallet, cryptocurrency), personal accounts (e.g., email, social media, cloud storage, subscription services), business accounts (e.g., domain names, tax-related records), and any other valuable digital property.
The inventory should identify the asset, where it is located, and how it can be accessed. For security reasons, many individuals maintain this information in a secure password manager or another protected location rather than directly within their estate planning documents.
2. Safeguard Access Information
An inventory is only useful if your fiduciaries can access it. Consider how your personal representative, trustee, or agent under a power of attorney will obtain passwords, authentication codes, or other login credentials when needed.
For individuals who hold cryptocurrency or other blockchain-based assets, safeguarding wallet information and private keys is particularly important. Without those credentials, the assets may be effectively lost forever.
3. Review Ownership and Beneficiary Designations
Not all digital assets pass to beneficiaries in the same manner. Some digital assets function like traditional financial accounts and may permit transfer-on-death ("TOD") or beneficiary designations. Others are governed by terms of service that provide only a limited right to use the asset and may restrict or prohibit transfer upon death.
Understanding whether you own a transferable asset or merely a license to use a service can help avoid unintended complications during estate administration. Accordingly, it is important to review significant digital assets and their governing agreements as part of the estate planning process.
4. Include Digital Asset Authorization in Estate Planning Documents
Modern estate planning documents should specifically address digital assets. Your will, revocable trust, durable power of attorney, and other planning documents can provide fiduciaries with the authority necessary to access, manage, transfer, or terminate digital accounts and assets.
Many states have enacted laws governing fiduciary access to digital assets, but these laws often require clear authorization from the account owner. Proper drafting can help reduce delays and increase the likelihood that fiduciaries will be able to obtain access when necessary.