These days, the line between the “real world” and the “digital world” is blurrier than ever. Talking to a friend could mean texting and making a photo album might mean on the cloud. As convenient as this synergy is during everyday affairs, it can add an extra layer of complexity to estate planning. To truly protect your family and prepare for every eventuality, it’s important to incorporate digital assets into your estate plan.
Be intentional about digital assets
We sometimes encounter clients who assume that the digital assets fall under the umbrella of the physical. For instance, you have a physical account with a bank—you know the account numbers, you have the check book, it’s a physical asset, right? But what about your online account? If you create a beneficiary for that physical asset, what happens to your login details like your username and password?
These issues can feel like a grey area, which is why it’s important to spend some time thinking about what happens to your digital footprint. To start, consider just how vast your digital footprint likely is:
- Email address(es)
- Cloud storage (including file sharing services like DropBox)
- Digital photo and video archives
- Social media accounts
- Online shopping accounts
- Digital media subscriptions (newspapers, Netflix, etc.)
- Digital music (mp3s)
- Any websites or domains you may own
- Online banking, brokerage, and credit card accounts
- Electronic tax records (MyTax and state accounts)
- Medical records
- Cryptocurrencies, NFTs, or digital commodities
Once you understand the vastness, it’s easy to understand why a blanket statement in your will may not cover all the items or eventualities associated with these types of digital properties.
What does the law say about digital assets?
In 2018, legal experts drafted a document called the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA); it’s since been adopted by the majority of U.S. states and can be used as a general guideline for dealing with digital assets.
The most important take away from this law is that there’s a difference between accessing digital accounts and reading/using the contents therein. For instance, when you die, you probably want your executor to know about all of your email addresses, but you don’t necessarily want that executor to read all of the emails you sent or received.
An estate planning attorney can use the overarching principles of RUFDAA to create a will that specifies who can:
- Access, manage, and control your digital accounts
- Access, manage, and control digital devices (smartphones, tablets, computers)
- Preserve, copy, or delete electronic records
- Communicate with technology providers (and/or retrieve information)
- Delete accounts
- Take any other relevant actions permissible by law.
In particular, you’ll want to specify that authority granted to the executor (who may be a third party) versus the beneficiary.
What to do about passwords
Generally speaking, don’t put your passwords to online accounts in a will or trust. Instead, create an inventory of all of your digital accounts, their purpose, and what information is relevant to accessing them. For instance, you might list your cloud storage provider and what you store on that account (photos, documents, etc.) You could also note where you keep your passwords or details on how to access a digital password manager.
Keep in mind, many digital service providers have their own rules guarding both ownership and access, and these may need to be taken into account.
To best protect your assets, work with an estate planning attorney who understands the specific laws and regulations in your state. It’s also a good idea to keep a hard (written) list of passwords that’s updated regularly and kept in a secure location (like a safe).
Of course, everyone’s digital footprint is unique, and what’s best for your digital assets may not be the same as your neighbor’s. If you have questions about the best way to go about protecting your digital assets, we may be able to help. Set up a call with a Revo Financial associate today.