Managing Digital Assets in Estate Planning
Estate planning is a critical part of securing your financial future, and while most people focus on their physical and financial assets, digital assets are often overlooked. In today’s connected world, our digital footprint is more significant than ever—ranging from online bank accounts and investments to social media profiles and digital subscriptions. So, how can you ensure your digital life is managed correctly when you’re no longer around?
Let’s dive into why digital assets are important, what they include, and how to incorporate them into your estate plan.
What Are Digital Assets?
Digital assets refer to any online account, file, or resource that holds value or personal significance. This could be financial, sentimental, or even legal in nature. Some common digital assets include:
- Bank accounts, investment platforms, and cryptocurrency wallets
- Social media profiles (Facebook, Instagram, LinkedIn, etc.)
- Online storage accounts (Google Drive, Dropbox, iCloud)
- Subscription services (Netflix, Spotify, Apple Music)
- Email accounts
- Websites or blogs
- Photos, videos, and documents stored digitally
- Loyalty programs or travel rewards
Just like your physical assets, these can hold value—whether that’s financial, emotional, or both.
Why Include Digital Assets in Your Estate Plan?
Without proper planning, your loved ones may face hurdles accessing or managing your digital assets after you pass away. In some cases, accounts could be locked permanently, or valuable assets like cryptocurrency might go unrecovered. Beyond financial implications, your digital legacy—such as family photos, personal emails, and even social media profiles—may need to be managed, closed, or preserved.
Incorporating your digital assets into your estate plan ensures that your online accounts and information are dealt with according to your wishes. It also spares your family and executors the headache of dealing with the complex and sometimes unclear rules governing digital accounts.
Steps to Manage Digital Assets in Your Estate Plan
Here’s a straightforward guide to getting started with managing your digital assets in your estate planning process:
1. Take Inventory of Your Digital Assets
Make a list of all your online accounts, subscriptions, and any other digital properties. Be as thorough as possible. This could range from your primary banking app to your social media profiles or even an old PayPal account you rarely use. Don’t forget any digital financial assets, like cryptocurrency or online brokerage accounts.
2. Document Access Details
Once you have a list of digital assets, document the necessary access details for each. This includes usernames, passwords, and answers to security questions. You could store this information in a secure password manager or offline in a document stored with your other estate planning papers. However, make sure this information is secure and only accessible by your executor or other trusted individuals.
3. Appoint a Digital Executor
In some jurisdictions, you can appoint a “digital executor” who will be responsible for managing your digital assets after your death. This person could be the same as your general executor, or you could choose someone who is more tech-savvy. Ensure they have clear instructions on what to do with your digital accounts, whether that’s closing them, memorializing them (in the case of social media accounts), or passing on the digital assets to your beneficiaries.
4. Leave Instructions for Specific Accounts
For accounts with significant financial value—like cryptocurrency wallets or investment platforms—provide detailed instructions on how these assets should be handled. This can prevent potential losses due to inaccessibility or lack of technical knowledge. Some platforms allow you to designate a beneficiary directly, which is another way to simplify the process.
5. Update Your Will and Legal Documents
Be sure to mention digital assets explicitly in your will or any trust agreements you set up. A blanket statement covering “all assets” may not be enough to include digital property, so it’s a good idea to be specific about what you want done with your digital accounts. You can outline whether you want them closed, transferred, or archived.
6. Regularly Review Your Plan
Just like your physical and financial assets, your digital assets will change over time. Set aside time once a year to review and update your list of digital assets, access information, and any instructions in your will or estate plan.
Common Pitfalls to Avoid
Neglecting your digital legacy: Social media profiles, blogs, and email accounts may not have a financial value, but they could have immense sentimental value. Decide what should happen to these accounts and leave clear instructions.
Lack of access information: If your family doesn’t have the necessary usernames and passwords to access your accounts, they may never be able to recover important digital assets.
Not naming a digital executor: Without a dedicated person to manage your digital assets, your family or general executor might struggle to handle technical or security challenges.
Conclusion
As we continue to live more of our lives online, managing digital assets in estate planning has become a crucial step. By taking inventory, securing access, and leaving clear instructions, you can ensure your digital legacy is handled according to your wishes.
If you need help incorporating digital assets into your estate plan, consider consulting with a financial planner or estate lawyer. It’s one more step toward creating a comprehensive estate plan that covers all aspects of your life—both physical and digital.