Traditional estate planning encompasses a full spectrum of strategies and solutions to protect, manage, and distribute your financial and tangible assets.
But have you considered what will happen to your digital assets, such as your online banking and brokerage accounts, digital wallets, social media profiles, digital photos, online subscriptions, and even personal data stored in cloud services? Your digital footprint and assets are expanding every day – and it is essential that your estate plan includes provisions to ensure that they are handled according to your wishes.
Here’s what you need to know about including digital assets in your estate plan, including how to use trusts for an added layer of security.
Understand the Challenge
If your estate plan doesn’t properly account for your digital assets, your loved ones may not know what they are, where and how they can be accessed, or how you want them handled. This can cause added stress and leave important accounts, documents, and other digital properties vulnerable to loss, hacking and or theft.
Additionally, strict password protection measures, terms-of-service agreements, and evolving data and privacy laws can make it challenging for your family to legally access your assets when the time comes.
Currently, the majority of states in the U.S. have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which stipulates:
- If a digital service provider offers a tool to outline what happens to assets after you die, this guides the outcome. For example, you can add a legacy contact to your Apple ID to receive data stored in your account after your death.
- If no tool exists, your will, trust, or other legal document determines how the asset or account is treated. If you want your beneficiaries to access the content of your digital communications included in email or other accounts, you must provide specific permission.1
- Barring the first and second tiers scenarios, the terms-of-service agreement (which often restricts permissions to the original owner) will apply.2
Inventory ALL Digital Assets
A digital asset is anything you own that is created or stored digitally—and has or provides value. This may include:
- Financial: Online banking, brokerage, cryptocurrency, and other online financial accounts and platforms; note, the funds themselves are not digital assets
- Social Media: Facebook, LinkedIn, Instagram and other platforms
- Business: Domain names, websites or profiles (including their content and revenue streams), digital client lists, cloud storage, Outlook accounts
- Intellectual Property: Literary, musical, motion picture, or other digital rights or content
- Loyalty Programs: Airline, hotel, or other transferrable rewards
- Digital Payment: PayPal, Venmo, Apple Pay, and Google Wallet accounts and balances
- Personal: Digital photos/videos, electronic health and insurance data, and e-commerce, streaming and utility accounts, Google or Apple accounts
- Devices: Tablets, smartphones, computers, and hard drives (including the data saved on each)
It’s also critical to document usernames, passwords, pins, answers to security questions, and other information required to access your accounts, websites, and devices. You can use a password manager for added security—and to make it easier for your digital executor or trustee.
Document Your Wishes
Your financial advisor and attorney can help you design a complete estate plan with essential documents, such as a Will and/or Trust, to protect your digital assets.
Your plan should specify who is permitted to access and manage your digital accounts, provide password instructions, and direct how you want each asset to be treated (for example, you can close, memorialize, or transfer assets to a beneficiary).
Online tools, such as Google’s “Inactive Account Manager” feature, can be helpful if you would like to give someone access to account data (including Google Drive, Mail, and Blogger) after you pass. You can also designate a legacy contact to manage your memorialized Facebook profile or terminate your account.
A Will is a simple legal document which can be established to direct the distribution of your digital assets upon death. However, it is subject to probate which can be expensive and time consuming – and your information becomes part of the public record after you die.
A Trust is a more complex legal agreement to hold, manage and distribute your property—during your lifetime and after death—as directed on behalf of your beneficiaries. It is not subject to probate and can provide enhanced protection for your digital assets:
- Legal ownership and protection: When you place digital assets in a Trust, you transfer ownership from yourself to the Trust. This can help shield digital assets from unauthorized access or legal disputes after your death.
- Faster distribution: Digital assets held in a Trust are not subject to probate and can be efficiently transferred to your beneficiaries without delay or court involvement.
- Privacy and secure access: A Trust can be a safe repository for sensitive information, including passwords, encryption keys, and access credentials. By avoiding probate, trusts can also shield your digital assets from unwanted exposure.
- Greater control: With a Revocable Trust, you retain control over your digital estate during your lifetime. This means you can add or remove assets as needed. If you become physically or mentally incapacitated, your successor Trustee will take over administration and distribute these assets according to your trust agreement when you pass.
When creating a Trust, choose a Trustee with experience to ensure effective management of your assets and administration of your trust. It can be beneficial to embrace the value of a corporate trustee like National Advisors Trust Company with a proven track record who understands trust accounting rather than place this burden on a friend or family member.
Act Today
Your digital footprint grows every day. Incorporating your digital assets into your estate plan can help protect your loved ones, deter cybercriminals, and secure your digital legacy.
Speak with your financial advisor and attorney to ensure a complete and integrated approach, including the use of a Trust for added protection and benefits. If you don’t have an advisor, connect with one in our growing national network of 6,000+ professionals.
Sources
1 https://bequest.com/blog/ufadaa-revised-what-is-rufadaa
Sources for Compliance
https://www.facebook.com/help/1568013990080948
https://support.apple.com/en-us/102631#
https://support.google.com/accounts/answer/3036546?hl=en
