When drafting their estate plan, most people think of traditional assets such as homes, trusts, and retirement plans. In an increasingly online world, however, it’s worth taking digital assets into account as well. If any of your digital assets would have financial, practical, or sentimental value for your loved ones after you pass, you should consider including them in your estate.
That said, you can’t just incorporate digital assets into your estate plan as you would physical assets. To protect your assets and ensure they get distributed the way you want, you’ll need to take some additional steps.
Before we dive into the best way to preserve and pass on your digital legacy, you should do an inventory of important considerations and essential estate planning documents, regardless of your age, marital status, or whether you have children.
Read More: Estate Planning for Young Adults: Must-Have Documents
What are Digital Assets in a Will?
Before we go into the “how” of digital estate planning, though, let’s go over the “what.” When we say digital assets, we’re talking about online accounts, files, and all other types of digital property.
A few types of digital assets that may be in a will include:
- Social media accounts (e.g. Facebook, LinkedIn, YouTube)
- Email accounts
- Websites and blogs, both personal and professional
- Photos, videos, and other media
- Cryptocurrency
- NFTs
- Rewards points
- Holdings in online payment apps (e.g. Venmo, PayPal, Zelle)
Of course, this is far from a comprehensive list — most people have an extensive and unique set of digital assets.
Read More: 5 Estate Planning Strategies for High Net-Worth Individuals
Digital Assets and Estate Planning: 4 Essential Steps
1. Take stock of your digital assets
A good way to start taking inventory of your digital assets is to go through your devices and storage (e.g. external hard drives, cloud storage platforms). Then, think about which apps and websites you interact with most frequently.
You might be surprised by how many of your digital assets you can bequeath. Websites, blogs, and domain names are all forms of intellectual property that can be left to heirs. Venmo and PayPal accounts with money in them are also transferrable. Sometimes, you can even bequeath frequent flyer points or cash-back from your credit card to a beneficiary upon your death.
Other times, though, a digital asset you “own” isn’t truly yours. When you download a movie on Amazon or music on iTunes, you usually don’t own the file itself — you own a non-transferable license to use that asset.
Nearly everything we do today has a digital footprint — so it’s understandable if your estate plan doesn’t include every one of your digital assets. Still, it’s better to be thorough. While you may not think your family needs access to your email account, it may contain important emails, documents, and contacts.
For example, if you plan to leave your son a rental property, you’d want to make sure he could access the email detailing the agreement between you and the current tenant. If you don’t proactively hand over the digital keys to your loved ones, they may be unable to access them due to federal privacy laws. Many services also delete inactive accounts.
Read More: How to Avoid Common Estate Planning Mistakes
2. Assign a fiduciary, if possible
Some states have adopted versions of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA).
For example, certain California estate planning provisions for digital assets give fiduciaries access to digital assets. Florida, New York, and Illinois (among others) have passed similar legislation.
If you live in a state that has passed a law similar to RUFADAA, it’s well worth updating your estate plan to reflect it. Under such laws, you can give your express consent to let fiduciaries access and collect your digital property as you would with any other financial property.
Note that you should work with an estate planning attorney to update your estate planning documents rather than try to navigate it on your own. A hastily written digital assets clause in a will may not be enough to grant access to your loved ones. Often, your will, power(s) of attorney, and revocable living trusts need to contain very particular language.
3. Consider a digital executor, too
Beyond designating a digital fiduciary, you may also be able to designate a digital executor in some states. A digital executor is responsible for carrying out your wishes and distributing your non-financial digital assets according to your desires.
For example, a digital executor might delete accounts you will no longer need to help shield your loved ones from security vulnerabilities. In such cases, though, it’s usually a good idea to save any information associated with the accounts and to make copies. This is especially important for accounts that contain content of sentimental value, such as personal writing or photos.
When designating a digital executor, choose someone who is both trustworthy and tech-savvy enough to follow your wishes. If your state doesn’t allow you to designate a digital executor, consult your estate attorney to discuss a plan to carry out your digital wishes upon your death within the scope of the law.
Pro tip: More and more websites and services are allowing users to designate contacts who can archive or manage their accounts. Facebook, for example, allows a “legacy contact” to memorialize someone’s account, post their obituary, and respond to friend requests and messages. Google, on the other hand, has an “inactive account manager” feature that lets you share certain data with trusted contacts.
Read More: National Estate Planning Awareness Week — 7 Big Estate Planning Considerations
4. Securely share your digital logins
Beyond giving a fiduciary permission to access your digital assets, you should also let them know how they can access this information. Keep in mind, though, that you should never include your usernames or passwords in your will as it becomes public upon your death.
A couple of secure ways to share login information include:
- A letter of instruction: You can draft a letter of instruction separately from your will containing all of your login information. If you do so, however, make sure to store it securely (e.g. in a safe deposit box, as an encrypted file, with your attorney).
- Password managers: Many password managers now allow users to designate an emergency contact or securely share their master password.
Pro tip: Those who hold significant amounts of cryptocurrency often store it on secure physical drives called “cold wallets.” While they help shield your crypto holdings from bad actors, they can also be difficult to navigate for non-tech-savvy individuals. If you plan on bequeathing cryptocurrency, make sure to leave detailed instructions for your beneficiaries to access.
Read More: Why Estate Planning and Financial Planning Should Go Hand-in-Hand
Turn to Team Hewins for Your Digital Estate Planning Needs
Planning your estate on your own is no easy feat — and you don’t have to go it alone.
Team Hewins’ knowledgeable, CERTIFIED FINANCIAL PLANNER® professionals can help you navigate the ins and outs of estate planning, digital, or otherwise. Meet our team. We’ll work alongside your estate planning attorney, CPAs, and other professionals to help craft an estate plan that reflects your wishes and preserves your legacy.
Get started today with a free 15-minute consultation.