In the last decade, the need for establishing a digital estate plan has increased significantly, as technology has continued to permeate our daily lives in the form of social media accounts, NFT holdings, crypto and other blockchain accounts, and more.
Thus, the question arises as to who will have access to your clients’ account information and how those accounts would be maintained and dispersed if somebody becomes unable to take care of themselves or passes. Advisors may use the conversation points below to initiate this important conversation with clients.
What are Digital Assets?
Any number of electronic data and files that are saved digitally, on mobile devices or home computers can be classified as a “digital asset.” Put another way, practically anything you save digitally is considered a digital asset, and it is important to include this information in your digital Estate Plan.
Digital assets come in many forms such as:
- Online banking accounts
- Saved passwords
- Social media accounts
- Essential personal information (i.e. medical history, family background, and insurance details)
- Bank account and credit card statements of all varieties
Even though this is a very comprehensive list, there are some products that, contrary to common belief, do not qualify as digital assets. A digital asset might be the underlying financial assets, such as computerized bank account statements, but not the actual liquid funds held in the bank account. Another example is the ownership of bitcoin. While the account access platform (i.e. Coinbase) is considered a digital asset, the asset itself (i.e. Bitcoin, Ethereum, and so on) is included in the estate and is subject to a separate set of restrictions.
Protecting your assets and digital history is vital, and there has never been a better time to tighten up your account security and avoid data breaches caused by weak or abused passwords.
Why It’s Important to Understand Your Digital Assets
In today’s digitalized society, almost everything we do is conducted via the internet. The information each of us stores digitally is increasingly becoming more important as it can fetch us a more comfortable life. As a result, we feel a greater urge to ensure that our power to control our digital lives is not circumvented. Used correctly, this data can also be used to claim certain rights in the future.
It is critical to prioritize the drafting of your digital estate plan (also known as a digital will) so that your family and loved ones are not burdened with additional worry following a passing. If your family has a recorded plan that specifies the credentials for your digital assets and how those resources should be managed, they won’t have to deal with the challenge of dealing with a more extensive probate court process.
You may protect your online assets from threats such as identity theft, hacking, and fraudulent activities by creating a digital Estate Plan. Furthermore, you are giving your family member or family members peace of mind (as well as access to important information like financial documents and insurance paperwork).
How to Create Your Digital Estate Plan
Customize your digital estate plan based on the needs of your specific situation. Here’s a quick guide on how you can create an effective digital estate plan:
- Start with Your Inventory
The first step of a digital estate plan is to create a list of all your digital assets. Ideally, this list should include any networks, platforms, and sites that you frequently use. This includes email addresses, social media accounts, and messenger apps, as well as websites or online portals that store your information.
- Allocate Access
The next step is to establish the identity of people who will hold this access or be given your access credentials in the case of your death or incapacity.
- Choose an Executor
If you want someone to oversee your digital assets, you may want to choose an executor. This is a person who will be responsible for managing your estate and will help ensure that all of the terms of your digital plan are carried out appropriately.
- Turn it into a Legally Binding Document
Once you have compiled a list of your digital assets, written down the names of the people who will inherit your accounts, and designated which person will oversee it all, you may want to file your digital estate plan in a safe location where it can be easily accessed.
Additionally, with the help of an attorney or digital estate planning services company, you may be able to make your digital estate plan legally binding.
If you have not done so already, consider setting up a digital estate plan as a top priority. The sooner you complete one, the more you can be rest assured that your loved ones will be able to access what they need in the event of the worst, along with providing easy access to your executor it in case of an emergency.