Estate planning has long been a regular part of older adults’ financial planning process to protect their assets after they pass. However, many people own more than what was traditionally part of the estate planning process in today’s day and age. Now, a person can own digital assets like domain names, electronically stored photos, email accounts, and social media accounts.
As society relies more heavily on technology, it has become increasingly essential to protect who has access to these electronic assets. Without including digital assets in your estate plan, your loved ones might not be able to access them at all. Losing access to your digital assets can potentially be devastating if it means losing family photos and videos or money you wanted to pass down.
Preparing to Pass Digital Assets to Loved Ones
When you include your digital assets in your estate plan, you will need to remember a few key details. For example, you will need to have a record of digital assets and passwords written down in a place your loved ones can find them. You will also want to back up any data stored in the cloud to a local computer or storage device for easier access.
You might own many digital assets throughout your life that will need to be in your estate planning.
Your digital assets can include cryptocurrencies like Bitcoin or Ethereum or non-fungible tokens (NFTs). Domain names for any websites you own, digital photos and videos, and digital rights to any literary, musical, video, or theatrical works are also digital assets. Lastly, include digital accounts, any blog content you’ve written, and any monetized online video content or online gaming avatars that could be worth real-world money.
Legal Challenges Regarding Digital Assets
Legally, your digital property is like any other kind of property. You can pass it to a designated party through estate planning. However, the laws are not always clear on the topic since it is so new.
“Since the area of digital assets is still relatively new, laws regarding a person’s digital property are still evolving along with the technology itself,” says Attorney Cindy Nelson. “This is why it’s so important to include them in your estate planning.”
There are four significant obstacles that a deceased person’s family members tend to face when trying to access the deceased’s digital assets. These include having the correct passwords, data encryption, criminal laws, and data privacy laws.
Estate Planning for Digital Assets
By working with a professional in your estate planning process, you can make sure you cover all your bases when it comes to passing down digital assets. With the proper planning in place, you’ll help your loved ones avoid headaches when trying to access your digital assets. You’ll also be ensuring they end up in the right hands, and nothing valuable is lost.
You should start the process of digital asset estate planning by listing all your digital assets and how to access them and putting this list in a secure place that your loved ones can get to when they need it. You’ll need to understand what you own versus digital items you may have only purchased a non-transferable license to use.
Lastly, ensure you provide consent to loved ones in legal documents. An estate planning attorney will assist in updating all legal documentation to make sure your loved ones do not face any obstacles in accessing your digital assets.