As time goes on, technology becomes more and more embedded in our lives. Digital assets may be a significant part of your estate and it can be harder to plan than traditional forms of property. An Orange County estate planning attorney can help you make smart decisions about how to finalize your plans.
Digital assets can include anything from sentimental files like images to digital investments, which are worth large sums of money. Here are some things to keep in mind as you integrate your digital assets into your estate plan.
What are Digital Assets?
The category of digital assets encompasses all of your online accounts and digital files. Here’s a list of some of the things considered digital assets:
- Portable document format (PDF)
- Audio files
- Domain names
- Digital rights
- Funds stored in digital accounts like Paypal
- Non-fungible tokens (NFTs)
If you have files of family photos, videos of loved ones, and even audio files of music that you’d like others to be able to access after your death, you should count those among your significant digital assets.
Some of these may be relatively easy for your family to find, especially if you have them publicly available on a shared or unlocked computer. Others may be stored via private accounts or through social media, requiring a password for access.
More and more frequently, digital assets may also have a monetary value. Cryptocurrency, for example, has no physical counterpart, and there’s no way to cash out your crypto wallet. NFTs are another popular digital investment that can be very valuable.
NFTs and cryptocurrency can easily be lost if you don’t make your loved ones aware of their existence. Crypto in particular is anonymous and may not be something you discuss with family members. Even if they do know you invest in cryptocurrency, they may have no idea how it works or where to find it.
The question of how to process digital property in estate planning is important for both sentimental and financial reasons. Incorporating these assets into your will and trusts is essential for ease of access. Orange County estate planning for your digital assets prevents major losses.
What Obstacles Block Access to Digital Assets?
Without proper planning, there are many potential situations in which your loved ones could face issues when trying to access your digital assets.
Passwords are the first concern here. One simple option is to create a list of your login credentials to include with your estate planning documents. Since wills are included in the public record, you’ll want to include this information in a memorandum or other document that allows for privacy.
Data encryption is another hurdle your loved ones may have to deal with. For example, it can make it nearly impossible to retrieve information from phones and cloud storage.
Privacy laws are another concern. The companies hosting your data, ranging from email accounts to social media to cloud storage, have strict protections to prevent bad actors from accessing private information. Unfortunately, this can also prevent your loved ones from logging into your accounts without your explicit permission.
Your loved ones could lose access to memories and important data if you don’t plan ahead for your digital assets. Adding a line or two to your will giving them legal permission to access your accounts can make a huge difference.
How Can You Plan for Your Digital Assets?
Digital assets are new territory for estate planning and other areas of law. However, an experienced lawyer who stays up to date with new developments can help you create a clear, effective estate plan.
The Revised Uniform Fiduciary Access To Digital Assets Act (RUFADAA) makes it easier than ever before to allow limited access to your digital assets. It’s possible to designate a fiduciary for your virtual properties and to grant that person access to specific accounts.
Your fiduciary will only be able to see your private correspondence, like emails and direct messages, if you specifically give them that authority. This act is designed to protect people’s privacy even after they are deceased.
Your will serves an important purpose in estate planning. Not only does it allow you to leave specific assets to particular people, but you can also leave instructions on how to carry out your wishes.
You can use your will to list all your digital assets so that your loved ones know what they are looking for. In a separate, private document, you can add more sensitive information like a crypto wallet address, usernames, and passwords.
Social media companies are slowly establishing policies on how to manage accounts belonging to deceased people. Some of them allow you to memorialize an account, delete it, or deactivate it.
You can also write instructions into your wills, such as a goodbye message or certain things you want to be deleted.
Trusts are also a great way to transfer digital assets, including cryptocurrency and NFTs. Adding them to a trust ensures that they won’t be lost after your death.
A living trust is specifically designed to make it easier to transfer property after your death, allowing you to avoid probate. Your trustee will manage the trust and carry out the terms outlined within it, including the transfer of assets to beneficiaries.
Trusts include both revocable and irrevocable options. The former allows for changes to the trust contents, beneficiaries, and terms. They also allow you to retain control over the assets they include.
Irrevocable options are not as flexible, and they involve transferring legal ownership to the trustee. This option often has tax benefits to the grantor and beneficiaries. Some people use these trusts to protect their assets from creditors.
Laws vary depending on the specifics of your trust and where you live, so it’s a good idea to get expert legal advice when creating a one. The final result will be tailored to your needs and ensure that your heirs don’t have to deal with the probate court.
Digital assets may be a new consideration when it comes to planning for your estate, but our team has the expertise you need to incorporate them seamlessly into your existing plan.
Our Orange County trust attorney can assess your situation and determine if our services are a good fit for your needs. You may download your complementary asset planning guide on our website or contact us at McKenzie Legal & Financial today!