• Legacy & Estate Planning

Have You Included Digital Assets in Your Estate Plan?

August 16, 2018 | Jason Largey

Failure to plan could mean some of your digital assets will be lost.

Have you considered how much of your life is stored in digital accounts? Depending on your age, it’s possible that nearly every memory you have is electronic. For example, it’s not unusual for people to have thousands of pictures documenting nearly everything they do—including what they ate for lunch—but not even one of those memories is a physical asset.

But even beyond sentimental photos and your social media accounts, do you own cryptocurrencies, have a PayPal account or use online banking? What about your email account(s), cloud- based document storage, or an e-commerce shop?

Our immersion in the digital world has created a new estate planning issue: How will your digital assets be handled when you die? Keep in mind that your digital property may include anything from computing hardware (such as computers, phones, tablets, external hard drives, flash drives, and other devices), any information or data that is stored electronically, any online accounts, domain names, intellectual property, online credit card or banking accounts, to cryptocurrency, and more.

The State of the Law

Unfortunately, there are limited laws around the handling of digital assets after death. All your photos on Facebook, your documents on the cloud, and your password-protected iTunes library, to name a few, are in a bit of legal limbo.

Each time you click “agree” to the Terms of Service Agreement you’ve subjected your digital assets to an individualized set of rules specific to that company. In some cases, the companies that store your information can—and do—permanently delete your account upon your death regardless of your wishes. In other cases, another person signing into your account, using your login and password information, could cause the account to be frozen, further complicating asset distribution. In the case of iTunes or other subscription-type services, your ownership might expire when you do, based on the terms of a licensing agreement.

Both state law and federal law are moving to address these issues surrounding digital-asset estate planning, but the legal system is always the tortoise, never the hare, which means clear direction will take some time.

The Uniform Fiduciary Access to Digital Assets Act (UFADAA)

While there is no legal silver bullet that will address these overarching privacy concerns from digital service providers, there has been some movement to create legislation around how digital assets are handled after death.

In 2014, the Uniform Fiduciary Access to Digital Assets Act (UFADAA) was approved by the Uniform Law Commission, and sought to grant fiduciaries access to digital assets that was on par with their access to physical assets. The Uniform Law Commission “is a state-supported organization that takes up matters of importance, and drafts model laws that States can choose to adopt…or not.” Delaware was the only state to officially adopt the act, and big companies like Facebook and Google strongly opposed it due to privacy concerns.

In 2015, a revised version of the act was approved (the RUFADAA), and has seen more widespread adoption and support. The access given to the “digital executor” or fiduciary is far more limited than it’s first iteration, but it does provide a framework for how a person’s digital assets should be handled if a fiduciary seeks access from a service provider (officially called a custodian).

Directing Your Digital Assets

Until the laws have a chance to really catch up with technology, the best approach is to use common sense where you can. For example, consider downloading important pictures and documents to an external hard drive, so that highly sentimental information or important legal documentation is not subject to the vagaries of individual company policies.

If you are a blogger with a following, an e-commerce shopkeeper, a photographer with a treasure trove of valuable work, or a speculator with a stash of cryptocurrency, you’ll need to take a much more proactive approach. We recommend seeking professional advice – a specialized estate planning attorney can help navigate the murkiness surrounding these types of assets and how to account for them in your estate plan.

Smoothing the Transition

Despite the uncertainty surrounding digital assets, here are some steps you can take now to help preserve your legacy and ease the burden on your loved ones.

  1. Include mention of your digital life in your estate planning documents. You’ll want to make your wishes clear in your will. Who will inherit these assets and who will oversee distribution? For example, you may want to designate someone beyond your traditional executor to distribute, close, or preserve digital assets because that designee will need to be somewhat tech savvy.
  2. Create a separate, detailed instruction letter. Your personal representative or executor will need a detailed list of your accounts and all access information for each account, such as usernames and passwords. In addition, you’ll probably want to specify which accounts should be preserved and which can be closed. Never put this information directly in your will. A will is considered a public document, which will be filed with the courts, and you don’t want your passwords exposed in this manner. A “letter of instruction” is a good place to list this type of information.
  3. Give appropriate authority in advance. As the laws governing digital assets evolve, companies are simultaneously updating or enhancing their policies as well. Whenever a company offers the opportunity to assign someone to act on your behalf for a specific account, take advantage of this and assign your personal representative to the role. This is just one more reason why doing estate planning early in your life can be beneficial.
  4. Keep an eye on changes to the law. Try to stay aware of news and updates surrounding the issue of digital asset inheritance and make changes to your estate plan as new laws are passed or updates to policies are made. Unlike traditional estate planning, where the law has been stable for years, this legal arena is likely to change dramatically in a relatively short time frame.
  5. Update, update, update. All of your planning will be for naught, if you put this part of your estate plan on autopilot. Review and update your instructions frequently, ideally every time you open a new account or change your password. Then keep your list in a secure location, such as a safe or safe deposit box. And be sure to let a trusted person, or two, know where your list is located.

Our Take

As technology evolves, people are accumulating more and more digital assets (i.e. email accounts, financial accounts, digital currencies, social media accounts, domain names, blogs, photographs, videos and music, etc.) When you open accounts with service providers, the company may have a policy for maintaining your digital assets after you have passed away. If the company allows you to designate a responsible individual, that may be an option. Otherwise, we recommend asking your attorney to include provisions in your will, trust or power of attorney to deal with digital assets and allow your named fiduciary to have access to such information.

Whether your assets are mostly sentimental or have actual economic worth, good planning can help preserve your digital legacy. While your digital estate may not be the first thing you consider when drafting up your will, your intangible assets can often be highly valuable to your heirs, family members and loved ones.

The first step to a successful estate plan is staying organized. Download our free Financial Life Organizer to record important information on the documents that are important in your life.

Download the Planner

Get Started



Get to Know Your Money

App Store Staff Pick

Share This