Does Your Estate Plan Account for Your Digital Assets?
Online services, important documents and family mementos can carry great value.
Unlike tangible items like heirloom jewelry and vacation homes, or intangible but well-established considerations like financial securities and accounts, digital assets aren’t always top of mind when building and maintaining an estate plan. But to neglect those digital assets may lead to difficulty and heartache for family members later – and could lead to the loss of items with incredible value, both sentimental and monetary.
There can be other benefits to organizing your digital assets as well, such as in the case of an emergency. If you became incapacitated, could your loved ones access your important accounts for everything from utility bills to medical clinic portals?
As the number and types of digital assets are continually growing and are locked behind a hodgepodge of companies, usernames and passwords, getting a handle on your digital estate can be tricky. A diligent, steady approach to inventorying your digital life can help bring order to this process.
What’s a digital asset?
While you may not want to bother with a $2.99 crossword puzzle app and may not own a $64 million non-fungible token for a piece of digital art, these two extremes show the scope and evolving nature of digital assets.
More common examples include financial accounts, service accounts, legal and financial documents, cloud storage and health records, as well as online photo, video and music collections. You may also want to make your email and social media accounts accessible to loved ones so when the time comes they can be closed with a graceful denouement or established as a lasting online memorial.
Making an inventory
In short, digital assets are a wide category including things like video game collections worth thousands, digital currency wallets worth hundreds of thousands, and family photos and home movies that are priceless.
Luckily, once introduced to the idea of a digital estate, you’ll likely find it easy to identify and plan for assets and accounts. Puzzle apps? Probably not worth worrying about. Emailed love letters? Absolutely essential. This gradual method will likely be more effective and comprehensive than trying to compile a complete list from the get-go.
For digital assets not tied to specific service accounts, including photos, videos, and PDFs of health records and legal paperwork, you may consider setting up a cloud-based backup system to consolidate disparate devices, accounts and services. Your advisor has access to some of these tools that can help you organize your assets while providing gated access and rigorous cybersecurity.
For online accounts, it’s a good idea to change passwords regularly for security reasons. A secure password manager can make it easier to manage strong, complex passwords and simpler for loved ones to access the accounts if needed.
Like any other asset, more or less
Creating an estate plan is an act of love. By making your intentions clear with a holistic, comprehensive plan, you help reduce additional stress and friction for your loved ones as they grieve. Though the understanding of the value of digital assets is fairly new, accounting for them in an estate plan follows the same foundational principals as with any other asset.
And like with all planning practices, it’s better to have a plan too early than to be in need of one all of a sudden. Talk to your professional team about accounting for digital assets in your holistic long-term plan.