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Planning for Your Digital Legacy

by | Oct 20, 2022 | Firm News

An estate plan often focuses on tangible property such as jewelry, artwork, money, and vehicles. However, in this age of technology, it is important to remember to include your digital assets. Digital assets consist of everything we own online. Because we spend more time on computers and smartphones than we ever did before, you may not realize how much digital stuff you own, from photos and videos to online accounts, cryptocurrency (e.g., Bitcoin, Ethereum, and Cardano ADA)., and nonfungible tokens (NFTs).

Why Is It Important to Plan for Digital Assets?

Planning for digital assets is important for several reasons. First, without a plan, digital assets may get lost in the Internet ether and not pass to your loved ones after your death due to the simple fact that their existence is unknown. Second, planning now means your family will not have to worry about hunting for these items upon your death while also grieving a beloved family member. Take a moment to reflect on how easy it would be for your loved ones to discover and access your digital assets if you died today? Is there a chance they might never know you own certain digital assets that you would like them to own? Third, like most adults (roughly 70 percent of them), you probably want certain aspects of your digital life to remain private. If you do not create a plan, your loved ones may learn and share things that you wish to keep secret. Finally, planning now can minimize the risk of identity theft, which happens to nearly 2.5 million deceased Americans each year.

Keep reading to learn more about why it is important to include digital assets in your estate plan and how to account for them.

Digital Assets: What Are They?

Instead of existing in photo albums and on videotapes and DVDs, most of our family photos and videos are now digital. Even if they lack commercial value, they certainly have sentimental value that you want to preserve for your family and friends. Social media accounts containing your photos and videos can also have value to your loved ones when you are gone. For example, a Facebook account can serve as a memorial after you pass away. When you consider all of the other accounts that you log into (more than 130 on average), the list becomes quite lengthy.

Digital assets that you may own include the following:

  • Social media accounts (e.g., Facebook, Twitter, LinkedIn)
  • Financial accounts at brick-and-mortar and online institutions
  • Business documents and other files stored in the cloud
  • Cryptocurrency (e.g., exchanges and wallets)
  • NFTs
  • Databases
  • Device backups
  • Internet domain names and uniform resource locators (URLs)
  • Streaming service accounts (e.g., Netflix, Peacock, Hulu)
  • Merchant accounts (e.g., Amazon, Etsy, eBay)
  • Gaming tokens
  • Virtual avatars
  • Points-based loyalty programs (e.g., for groceries, gas stations, airlines, and hotels)
  • Rights to intellectual property, artwork, and literature
  • Online betting accounts
  • Monetized video content

Including Digital Assets in Your Estate Plan

Taking inventory of your digital assets may take some time, but it is worthwhile. If something were to happen to you, your estate planning attorney or another trusted person should have complete access to your online footprint. This includes usernames and passwords for all accounts. Tools such as the password manager integrated in your browser can be used to simplify the storage of usernames and passwords.

In addition, you may want to consider continuously back up all digital assets, including photos and important documents, to the cloud, and ensure that your attorney and trusted person can easily access them when the time comes.

Because they are not controlled by governments or banks, cybercurrency and NFTs must be handled carefully. You do not have the option of calling customer service to reset your password if you forget or lose access to your cryptocurrency accounts or wallets. Cryptocurrency and NFT passwords should be stored online in a “hot wallet,” or in an offline device known as a “cold wallet.” Either way, someone needs to know how to access your passwords when you cannot so that your precious Bitcoin does not contribute to the estimated 3-4 million bitcoins that have already been lost forever.

Other estate planning considerations for digital assets include the following:

  • Your estate plan can provide that your digital possessions be handled by one or more cyber successors who can distribute your digital assets like tangible property.
  • One cyber successor can control your Instagram account, for example, while another can take possession of your Bitcoin.
  • Keep in mind that passwords should not be memorialized in your will, especially regarding cryptocurrency, as they could be made public if the will is submitted to probate court.
  • Consider how technologically savvy a person is before appointing that person as your cyber successor.
  • When selecting an estate planning attorney to work with, make sure they are familiar with cryptocurrencies and other digital assets.

Next Steps for Your Digital Assets

Talk to your estate planning attorney about your digital assets and cyber successors. Consider having a conversation with potential cyber successors about how they would handle your assets and ask if they would be willing and able to carry out your wishes before appointing them. Digital assets can be placed into a trust or distributed through your will, or you could grant access to them through a power of attorney. With the help of an experienced estate planning attorney, you can feel relieved that your digital assets will be easily located, managed, and passed to your loved ones.

This article was co-authored by WealthCounsel and Lucas Pastuszka.