By Anthony Dragga
Contributing Writer
REGION – So many aspects of our lives are stored behind a screen. Online banking,
digital currency, and cloud-based storage are just a few examples. Preparing for what
happens to these digital assets when we’re gone is an essential part of modern-day
estate planning.
Alongside more traditional property, like a house, car, jewelry, and other tangible
possessions, your “digital property” must also be accounted for in your estate plan to
not only protect these assets but also preserve memories for future generations.
To ensure your digital estate is accounted for, here are four essential steps to walk you
through the planning process.
Compile your digital assets
To start your estate planning process for your digital assets, you first need to identify what they are. Typically, your digital assets will fall into three categories: financial, sentimental, and intellectual. For financial assets, this includes electronic bank and investment account statements or cryptocurrency. Sentimental assets are non-financial digital items with emotional value, such as social media accounts, photos and videos stored on iCloud or Google, or personal emails. Lastly, intellectual assets include domain names, monetized social media accounts, or unfinished manuscripts, to name a few.
Things you buy online, like music or other media content, may be subject to a licensing
agreement and are therefore non-transferable. It’s essential to both identify your digital
assets and know what can be legally transferred to heirs. How can family members and loved ones access your digital assets? Each of your digital assets will have different “access points.” From simply logging into your laptop or phone to two-factor authentication, there are many different steps required to access digital assets. You may think that simply leaving a list of passwords will suffice. But there are specific steps to follow to ensure your loved ones can access these accounts.
In your estate plan, your will, trust, and durable Power of Attorney should contain
specific language authorizing your fiduciaries to access your digital accounts and other
assets. By including this language in your estate plan, this will keep service providers,
such as online banks and social media websites, from denying access to the account
down the road.
It’s important to note that you should never include passwords or digital account access
details in your will, as it becomes a public document after your death. You can physically
list out your passwords on paper and store them in a secure place or with your estate
attorney. There are also digital vault options, and platforms like Google and Apple have
digital legacy tools that will allow you to grant your fiduciaries access to your accounts
ahead of time. If there are specific accounts, for example financial ones, that you want
your children to have access to, you can grant them access in advance.
These are simply just a few of many strategies to stay organized when it comes to loved
ones accessing your digital assets. In the event your passwords are not working or
cannot be recovered, you should make plans to regularly back up your data. Anything
stored online, like photos, videos, and documents, should be saved on a local drive.
Managing cryptocurrencies
Investing in cryptocurrencies, like Bitcoin, has become increasingly popular. Today,
these investments can be managed like a standard investment account through
regulated financial institutions, like Fidelity.
When digital currency is held in custodial accounts, you can designate a beneficiary
directly, commonly known as a “Transfer on Death” designation. This avoids probate, a
lengthy and public court process governing the disposition of assets, and instead grants
your beneficiaries direct access.
Management and disposal instructions
For each digital asset, you must specify “where” it goes or “what” should be done with it.
For example, do you want your Facebook profile to remain up as an archive of memories or permanently deleted? For intellectual property, ranging from a monetized YouTube channel to a manuscript, you will need to decide who inherits them. For your own privacy, you should also identify if there are certain accounts, like personal emails, that you wish to be deleted without heirs reading them.
Digital assets are still a developing phenomenon, and the laws that deal with them are
changing rapidly. Talk with your estate planning attorney about the steps you can take now, and check in regularly to update your estate plan to reflect any changes in the law or in what will become part of your “digital estate.”
Anthony Dragga is a partner at Bowditch & Dewey, working in the firm’s estate, financial and tax planning practice.
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