Planning for Digital Assets in Your Estate Plan: What You Need to Know
As our lives become increasingly digital, planning for digital assets is becoming an essential part of estate planning. If you don't plan ahead, your loved ones could face significant challenges when trying to access or manage these digital assets after your death.
Serving Overland Park, Kansas, our attorneys at Heartland Estate Law, LLC are here to help. With our estate planning experience, we understand how overwhelming it can be to think about all the details that go into creating an estate plan.
It’s important to realize that digital assets are part of your legacy and play an increasingly important role in our daily lives. We’ll break down what digital assets are, why they matter, and how to properly plan for them.
What Are Digital Assets?
Digital assets are anything you own that exists online or in digital form. These can range from things that have monetary value to those that are purely personal. Some common types of digital assets include:
Online accounts: Social media profiles (like Facebook, Instagram, and Twitter), email accounts, and even shopping accounts (Amazon, eBay)
Digital files: Photos, videos, music files, or documents stored in cloud services (Google Drive, Dropbox, etc.)
Cryptocurrencies: Digital currencies like Bitcoin, Ethereum, and others that are stored in online wallets or exchanges
Website domains: Any domain names you own, including blogs, personal websites, and business sites
Digital subscriptions: Streaming services (Netflix, Hulu), cloud storage services, or online memberships
While digital assets may not always have a physical form, they can hold significant value—whether in terms of sentimental worth, financial value, or personal information. For an estate planning lawyer, recognizing the importance of these assets in modern estate planning is crucial for creating a comprehensive estate plan.
Why You Need to Include Digital Assets in Your Estate Plan
Digital assets are often left out of traditional estate plans, but that’s a mistake. Here are a few reasons why it’s important to think about your digital assets:
Accessing digital assets: Without clear instructions, your loved ones may not be able to access important online accounts or files after your death. For instance, if you have valuable photos or videos stored on a cloud service, your family may not be able to view them without the correct login information.
Managing online accounts: Some online accounts may require your loved ones to take action to either shut down or transfer ownership. Social media accounts like Facebook, Twitter, and Instagram, for example, allow for a legacy contact to manage the account after you pass away, but they require prior setup. Without designating this, your accounts may remain open indefinitely or be permanently deleted.
Cryptocurrency: With cryptocurrencies becoming a common investment, it’s critical to understand how to transfer or access these assets after death. If your loved ones don’t have access to your wallet or login credentials, the assets could be lost forever.
Preventing identity theft: Your digital identity can be at risk after your death if your online accounts aren’t properly managed. For example, if your email account is left open without closure, someone may attempt to access personal information or commit fraud using your name.
Including instructions for digital assets in your estate plan will help avoid these issues and give your family the guidance they need.
Steps for Planning for Digital Assets in Your Estate Plan
Planning for digital assets requires a bit more work than just listing them in your will. As an estate planning lawyer, we recommend taking a few important steps to make sure your digital legacy is well taken care of.
1. Make a List of Your Digital Assets
The first step is to create a detailed inventory of all your digital assets. You might be surprised at how many things fall under this category. This list can include:
Online accounts, usernames, and passwords
Cryptocurrencies and digital wallets
Cloud storage accounts with important files or media
Domain names or websites you own
Digital subscriptions and memberships
Be sure to update this list regularly as your online presence changes. Having an up-to-date inventory will save your loved ones a great deal of time and effort when they need to access or manage these assets.
2. Decide Who Will Handle Your Digital Assets
Once you have a list of digital assets, it’s time to decide who will handle them when you’re gone. This person is often called a digital executor. A digital executor can be a trusted family member, friend, or professional who is responsible for managing your digital legacy.
Make sure the person you choose is tech-savvy enough to handle digital accounts and understand the importance of protecting your assets. This person should have access to the list of your digital assets, along with any instructions you provide for how they should be handled.
3. Provide Clear Instructions for Each Asset
When it comes to your online accounts, it’s important to include specific instructions on how you want them handled. These instructions can be included in a separate document or your will. Here are a few examples of what you should consider:
Social media accounts: Do you want your accounts to be deleted, memorialized, or transferred to someone else? Many social media platforms, like Facebook, allow users to designate a legacy contact who can manage their account after death.
Email accounts: Do you want your email accounts closed, forwarded to someone, or preserved for reference?
Cryptocurrencies: Make sure to include clear instructions on how to access your cryptocurrency wallets, including any passwords or private keys. Since cryptocurrencies are often stored in a digital wallet, failing to plan for this can result in the loss of these assets.
4. Use a Password Manager
Password managers are a great way to securely store the login credentials for your digital assets. These tools can safely keep track of usernames, passwords, and other sensitive information, and many of them allow you to share this information with trusted individuals upon your death. Incorporating one into your estate plan allows your digital executor access.
5. Consider Using a Digital Asset Trust
A digital asset trust is a legal arrangement where you can place control of your digital assets in the hands of a trusted individual or entity. This can be a helpful option for those with valuable digital assets, such as digital currencies or websites, as it can provide more detailed and flexible instructions for managing these assets.
Including digital assets in a trust can also provide a level of privacy that a will doesn’t. While a will is a public document, a trust can allow you to keep the distribution of your digital assets private.
6. Update Your Estate Plan Regularly
Just like your physical assets, your digital assets can change over time. As you open new accounts, start new subscriptions, or invest in different cryptocurrencies, it’s important to keep your estate plan up to date. Review your digital asset inventory periodically and make sure it’s accurate. This will save your loved ones from confusion and delays.
Legal Considerations for Digital Assets in Estate Planning
While digital assets are crucial to include in your estate plan, it’s also important to consider the legal challenges they present. There are a few key legal considerations that can affect how your digital assets are handled after your death:
Terms of service agreements: Many online platforms have terms of service that limit the transfer of accounts or assets after death. These terms often prohibit sharing login credentials with others, which may impact how your digital assets are transferred. As an estate planning lawyer, we recommend reviewing the terms of service for each platform to understand what’s allowed.
Privacy and data protection laws: Privacy laws, such as the Stored Communications Act and others, govern how companies can share digital information with family members or executors. These laws vary from state to state, so it’s important to be familiar with how these regulations affect your digital estate in Kansas.
State law: Kansas may have specific laws that impact the distribution of digital assets. While the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) is now adopted in many states, it’s important to work with an estate planning lawyer who understands Kansas law and can help you address any specific requirements.
Reach Out Today
In today’s digital age, planning for digital assets is no longer optional. By properly including your digital legacy in your estate plan, you’re making sure your loved ones can access and manage your digital possessions with ease.
As estate planning lawyers in Kansas, we can help you create a comprehensive estate plan that includes all your digital assets. We serve clients in Kansas, including Overland Park, Phillipsburg, and the Kansas City area. Contact us at Heartland Estate Law, LLC today.