Why You Should Include Digital Assets in Your Will

Your Will probably details who gets all your stuff when you die. But have you considered what will happen to all your digital assets? You have more than you realize, and they need to be accounted for.

Estate planning rules have changed several times over the past decade. Examples of changes that may have impacted you include changes to exemption amounts, estate tax rates, and the reduction of the stretch provision for payouts to retirement plan beneficiaries. One of the most significant non-tax developments in estate planning relates to the proliferation of digital assets. In 2015, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) passed, which is the first law to recognize digital assets as property. 

What is a Digital Asset?

A digital asset is an electronic record of which an individual has a right or interest. It includes information stored on a computer or other device, as well as content that has been uploaded to websites. Examples of digital assets include photos, videos, personal email accounts, social media and networking accounts, movies, music, e-books, online purchasing or sales accounts, sports gambling accounts, blogs, and cryptocurrency accounts. More specifically, think of Gmail, Shutterfly, iTunes, Netflix, Amazon, eBay, DraftKings, Facebook, Twitter, and Bitcoin, to name a few. It basically includes everything accessible by a smartphone, computer, tablet, or e-reader.

These assets can be very personal and may have significant financial or sentimental value. As an important part of your legacy, they should be considered when developing your estate plan.

How Do Digital Assets Fit into An Estate Plan?

An estate plan documents your wishes for how you want your assets handled at your death or incapacitation, and names the agents who will implement your wishes. It includes the following documents:

  • Will
  • Revocable Living Trust
  • Power of Attorney
  • Advance Medical Directive (a.k.a., a Living Will)

Before meeting with your financial planner or estate planning attorney, you should take the following steps:

  • First, decide how you want your online life managed after your death. For example, are there digital assets (e.g., photos or music) that you want to leave to someone? Do you have a social media account that is focused on a charitable endeavor or personal passion that you would like to see maintained as part of your legacy?
  • Next, develop and maintain an inventory of your digital assets, including the name of the account, the URL of every website, usernames and passwords, and a description of each asset. A simple spreadsheet may suffice.
  • Finally, backup your data and include instructions for accessing the backups on your inventory sheet.

Similar to how you appoint an executor or trustee, we recommend you formally name a fiduciary who will have access to all your digital assets. Ask your attorney if they recommend naming a separate Digital Agent who is qualified to act as fiduciary in this capacity. The language you include in your estate plan documents should provide a clear set of instructions for the agent to follow to ensure your wishes are met. Updating your estate plan in this manner can reduce administrative costs, allow the estate to maintain full access to all digital property, and ensure no digital property is overlooked.   

We do not recommend listing the digital assets and passwords in your Will, as a Will becomes a public document once probated. You should maintain this information in a separate document, so the Digital Agent has an inventory of your assets. The agent will also be able to deactivate the accounts to protect your family from future identity theft.

Digital assets are a significant part of our lives and should be factored into your financial and estate plans. Your digital property may have more value than you think. Protect them now, while you can.

You May Also Like