When Virtual is Valuable: Planning for Your Digital Assets
Even in our technology-centric world, people’s estate plans often only account for “traditional” assets, like a car, checking account, house, etc., for example. More and more, however, an individual owns digital assets as well. With this in mind, a reasonable person would then ask: how do you build a strategy for your legacy that ensures your “virtual”—but still very real—assets are also protected?
Just as with more tangible, traditional assets, there are many types of digital assets. These include digital financial holdings like cryptocurrency, non-fungible tokens (NFTs), credit card benefits, frequent flyer miles, as well as digital revenue streams or intellectual properties like domain names, video channels, blogs, etc. Additionally, online shopping, betting, subscription, gaming, email, and utility accounts are also important digital assets. Finally, don’t forget about digital assets with sentimental value, such as photos and videos in cloud storage accounts. If a digital property has value—monetary or sentimental—or contains important information, then it should be included in your estate plan.
For any digital asset, you must plan how to allow others access when you are no longer able to grant it. After you have made a list of all of your digital assets, the first step is to record all passwords and other necessary login information and store it in a safe place. While there are apps designed for this purpose, keep in mind that those will also require a login, potentially creating a vicious circle of access problems. Further, if storing this information as a hard copy, be sure to keep it secure, and near your estate planning documents, like your power of attorney or will, so your loved ones can find it after your death or upon your incapacity.
Granted, having the password is not the only requirement for accessing digital assets. Many types of accounts are protected by state and federal laws that prohibit anyone other than the owner from legally accessing them. These laws protect us from identity theft and fraud, but create another hurdle for those trying to access the assets or data of a loved one after death or upon incapacity. To avoid these legal issues, it’s essential to provide consent in any applicable legal documents, like wills, living (revocable) trusts, and powers of attorney. In such documents, you can grant fiduciaries and beneficiaries permission to use your passwords as well as bypass, reset, and recover any and all digital assets that you own. This helps to ensure that the right people can legally access your digital assets when the time comes.
Though digital assets pose some unique challenges for preparing your legacy, ultimately, they are just like traditional assets in that the best thing to do is plan ahead and to do so carefully. For assistance with any of your estate planning needs, contact McBrayer today.
Phillip A. Pearson is an Associate of McBrayer Law. His practice focuses primarily on estate planning and administration in addition to tax planning. He works in the firm's Louisville office and can be reached via email at firstname.lastname@example.org or via phone at (502) 327-5400, ext. 2341.
This article does not constitute legal advice. Services may be performed by others.