What Are Digital Assets And Why They Are Essential For Proper Estate Planning?

In today’s digital age, we have more than just physical possessions to consider when planning for the future. Digital assets are electronic records that hold monetary value or sentimental importance, such as cryptocurrencies, online accounts, photos, videos, and documents. These assets are acquired throughout one’s life and are often irreplaceable.

Why Digital Assets Matter for Estate Planning

Cryptocurrency and Digital Currencies

Digital currencies that operate independently of central authorities, like cryptocurrency, may have significant monetary value. They are stored in digital wallets that require keys, passwords, or codes to access. They should be included in your estate plans, and your executors or trustees should be provided with the necessary information to access them. Otherwise, they may be lost forever or inaccessible to your heirs. These assets are more difficult to track than standard currencies because they are not stored in a traditional bank.

Security and Data Breaches

Digital assets are vulnerable to data breaches, hacking, and theft. Without proper planning, you may lose access to valuable or sensitive digital assets, such as bank accounts, investments, or personal information. Ensure secure storage and documentation of digital assets and provide executors with the means to access them. Review the terms of service and privacy policies of custodians of digital assets, such as online platforms, cloud services, or apps, to understand rights and obligations.

Digital Photos and Personal Documents

In our interconnected world, most cherished memories are captured digitally. This includes family photos, videos, and personal documents. You may want to preserve them for posterity, share them with loved ones, or delete them for privacy reasons. These photos can be on many platforms or cloud devices, such as Facebook or Google Drive. Include them in your estate plans and provide executors or trustees with instructions and access to them.

How to Plan for Digital Assets in Your Estate Plans

To ensure that your digital assets are properly handled and distributed according to your wishes, follow these steps.

Declare Digital Assets in Your Will or Trust

The first step is to explicitly list the digital assets that you own and want to include in your estate plans. This ensures that your heirs are aware of their existence and can take the necessary steps to access them. It also avoids confusion or disputes among heirs or with the custodians of the digital assets.

Provide Detailed Information

The second step is to provide essential details about the digital assets.

Digital keys and account information: for cryptocurrencies, share all the relevant crypto keys, account credentials, and security codes that are required to access digital wallets. The value and location of cryptocurrencies should also be detailed.

Safe storage: for all digital assets, consider maintaining a secure document in a safe deposit box that contains this information. This document should be accessible only to executors, trustees, or other trusted persons. Alternatively, use a digital asset management service or platform that allows you to store and share digital assets securely and conveniently. These services can maintain records of important accounts and passwords (email, social media, online banking, shopping, gaming, streaming, or subscription services) as well as any digital files to include in estate plans.

Specific instructions: the third step is to clearly outline how the digital assets should be distributed among heirs or beneficiaries. Specify any wishes or preferences regarding digital assets, such as who should inherit them, how they should be used, or whether they should be deleted or destroyed. Indicate any special instructions for social media accounts, such as whether you want them memorialized, deactivated, or deleted.

Conclusion

Digital assets are among the most forgotten, but often most valued. These assets have the advantage that they can last as long as technology allows them to. The downside is they are often forgotten about or are a burden to recover. Planning ahead allows your heirs to manage and enjoy your digital assets. Almost everybody today has some form of digital assets, so planning for this is essential.