Digital Assets and Estate Planning: 4 Steps to Take Today

Have you taken your digital assets into account with your estate plan? Since our lives are increasingly stored online, digital assets estate planning has become essential.

Yet our Denver-area fiduciary financial planning firm has found that many people don’t create a digital estate plan. Perhaps they think their family can easily access their online accounts to download photos or transfer savings—but this is an assumption you don’t want to make.

Failing to include your digital property in your estate plan could mean your loved ones lose access to any photos, videos, currency, purchases, and investments that lack a physical presence.

To protect your privacy, companies that hold the assets may have terms of service that prevent your family from gaining access. And any court involvement would likely be cost-prohibitive.

Do your loved ones and yourself a favor, and create a digital assets estate plan. Here are four steps to get started:

1. Inventory Your Digital Assets

You’ll want to make it easy for your family to know what you have online and how to access it. So the inventory of your digital assets should be as complete as possible, including such items as:

• Social media accounts (e.g., LinkedIn and Facebook)

• The location of online photographs

• Document storage sites (e.g., Dropbox)

• Email accounts

• Credit card rewards

• Cryptocurrency

• Nonfungible tokens (NFTs)

• Website domains and providers

The list can get lengthy because we keep so much online nowadays! You might use a digital assets inventory, such as this document from the STEP Digital Assets Special Interest Group, to help ensure you are thorough. Alternatively, you can use an online password management system, such as LastPass.

Whichever route you choose, include login information, including usernames, passwords, cellphone PINs, and security-question answers, to help ensure your executor can gain access.

You also want to indicate what you want to be done with each asset, such as passing it on to family members, deleting the information, or closing the account. You can indicate your wishes in the inventory or, as NerdWallet suggests, in the “notes” field of your online password manager. You can also write a separate letter instructing how you want each of your assets handled.

Keep this information in a secure location, such as a safe or with your attorney or financial advisor.

2. Appoint a Representative

Check with your state laws covering digital property. For Colorado residents, a 2016 law gave your appointed fiduciary the same legal authority in managing digital assets that they would have with your tangible assets. It also gave the companies holding the assets the authority to work with your fiduciary.

You will want to appoint a representative who is tech-savvy to manage your online presence. To help keep the process objective, it may be best to avoid selecting a family member. Regardless of whom you choose, your digital executor should be someone you trust with your personal information and assets. And make sure they know how to access your inventory so they can start the process.

3. Work with an Estate Planning Attorney

If you don’t already have an estate planning attorney, now is a great time to get one. You can work with them to create a comprehensive estate plan that includes your digital assets.

Though many things in life can be DIY, we don’t recommend your estate plan be one of them. Mistakes are easy to make, and they can cost your family and other beneficiaries.

Your attorney should know which assets can be passed through the will and which cannot. They may recommend that you formalize your digital assets plan as a codicil or note to your will. This is because your will is a public document. To avoid identity theft, passwords and other personal information should not be a part of it.

4. Keep Your Inventory Updated

Passwords change often, and your inventory can quickly become outdated if you don’t update it. We recommend you update it whenever you make changes, such as new passwords, to your digital accounts.

The ongoing effort requires a bit of work, but it will help make the process smoother for your executor and, ultimately, the people you want to inherit your online assets.

As questions arise, talk to your attorney or financial advisor. Your financial advisor can play a key role in integrating both physical and digital property into your comprehensive financial plan, incorporating tax strategies, retirement, and investments.

They can also collaborate with your attorney to help ensure the lawyer has updated numbers and other financial data and help make sure no action steps fall through the cracks.

Our Greenwood Village, CO fiduciary financial advisory firm offers a complimentary 15-minute call. We can briefly discuss your financial situation and concerns and share how we may be able to help.

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