When we think about estate planning, traditional assets like homes, bank accounts, and family heirlooms typically come to mind. But many of us have built substantial online lives that include valuable and sentimental digital possessions. From cryptocurrency worth thousands of dollars to irreplaceable family photos stored in the cloud, these digital assets have become an essential part of our estates that require specific planning and protection.
Yet most estate plans remain woefully outdated when it comes to digital assets. Without proper documentation and access instructions, grieving families may find themselves locked out of important accounts, unable to access financial assets, or losing precious memories forever. The legal system is still catching up to this new reality, making thoughtful planning around your digital footprint more important than ever for a complete and effective estate plan.
What Counts as a Digital Asset?
Digital assets encompass a wide range of online possessions, accounts, and information. Understanding what qualifies helps you create a comprehensive inventory for your estate plan.
Financial Digital Assets
These assets have clear monetary value and may represent significant portions of your wealth:
- Cryptocurrency holdings (Bitcoin, Ethereum, etc.)
- Online payment accounts (PayPal, Venmo)
- Loyalty program points and miles
- Digital marketplace accounts (Amazon, eBay)
- Online gambling or gaming accounts with monetary balances
- Digital collectibles or NFTs (Non-Fungible Tokens)
The financial stakes can be substantial. Stories abound of cryptocurrency fortunes lost forever because heirs had no way to access digital wallets after the owner’s death. Without proper planning, these valuable assets could vanish instead of passing to your beneficiaries.
Personal Digital Assets
While these may not have obvious financial value, they often hold immense sentimental importance:
- Social media accounts
- Email accounts
- Digital photos and videos
- Personal blogs or websites
- Digital music, book, and movie collections
- Cloud storage accounts
These assets represent your digital legacy – the memories, thoughts, and personal history you’ve created online. For many families, accessing a loved one’s digital photos or final messages brings comfort during grieving, making preservation of these assets emotionally significant.
Business Digital Assets
For entrepreneurs and business owners, digital assets may also include:
- Business social media accounts
- Customer databases
- Digital intellectual property
- Website domains and hosting accounts
- Digital business documents and records
These assets may be crucial for business continuity or represent significant value that should be properly transferred as part of your estate.
The Unique Challenges of Digital Estate Planning
Digital assets present specific challenges that traditional assets don’t share, requiring special attention in your estate planning.
Access Barriers
Perhaps the biggest challenge is simply gaining access. Digital assets are typically protected by:
- Passwords and login credentials
- Two-factor authentication linked to personal devices
- Encryption
- Terms of service agreements that prohibit account transfers
Without proper planning, these security measures – designed to protect you during life – become barriers that prevent your executor from carrying out your wishes after death.
Legal Complications
The legal landscape for digital assets remains complex and evolving:
- Most states have now adopted some version of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which provides a legal framework for fiduciary access to digital assets
- However, service provider terms of service often still take precedence
- International holdings may fall under different jurisdictions
- Privacy laws may restrict access even for executors
These complications make explicit instructions and authorizations in your estate documents especially important for digital assets.
Creating Your Digital Estate Plan
Developing a comprehensive approach to your digital assets requires attention to documentation, access, and legal directives.
Inventory Your Digital Assets
Start by creating a thorough inventory of your digital footprint:
- List all online accounts, subscriptions, and digital properties
- Document the type and location of digital assets (financial, personal, business)
- Note which assets have financial value and which have sentimental importance
- Include information about how each asset is stored or accessed
This inventory should be comprehensive but shouldn’t include actual passwords in the document itself for security reasons.
Establish Access Methods
Create a secure system for providing necessary access to your executor or digital fiduciary:
- Consider using a password manager with emergency access features
- Create a separate document with access instructions stored in a secure location known to your executor
- For cryptocurrency, document wallet locations and consider creating protected key shares
- Update your access methods regularly as accounts change
Some people choose to provide immediate family members with limited access to certain accounts during their lifetime, while keeping sensitive financial access restricted to executor instructions only.
Update Legal Documents
Work with an estate planning attorney to update your formal documents:
- Include specific language authorizing access to digital accounts
- Name a digital executor or specify digital responsibilities for your primary executor
- Create specific instructions for different types of digital assets
- Include provisions addressing new digital assets acquired after your documents are signed
Some people choose to name a separate digital executor who has specific technical knowledge, while others prefer keeping all executor duties unified under one person with authorization to hire technical help as needed.
Asset-Specific Considerations
Different types of digital assets require different planning approaches based on their unique characteristics.
Cryptocurrency Planning
For cryptocurrency holdings, consider these specialized approaches:
- Document wallet locations, types, and general holdings
- Create a secured method for passing private keys to heirs
- Consider multi-signature wallets that require multiple approvals
- Investigate “dead man’s switch” services designed specifically for crypto inheritance
Given the irreversible nature of most cryptocurrency transactions, extra caution in planning access is warranted to prevent both accidental loss and unauthorized access.
Social Media and Email
For personal accounts focused on communications and connections:
- Research platform-specific legacy options (like Facebook’s Legacy Contact or Google’s Inactive Account Manager)
- Provide clear instructions about whether accounts should be memorialized, downloaded, or deleted
- Consider emotional impact on survivors when they access private messages
- Specify which content has historical or sentimental value worth preserving
These accounts often contain highly personal information that requires thoughtful consideration about what you want shared with family members after your death.
Digital Collections
For purchased digital media (music, books, movies, games):
- Understand that many digital purchases are technically licenses rather than owned property
- Research whether your services allow account transfers
- Consider maintaining local backups of important collections
- Document where family members can find downloaded content
The legal right to transfer these assets varies widely between providers, making specific documentation particularly important.
Ongoing Maintenance
Unlike traditional estate planning that might be updated every few years, digital asset planning requires more frequent attention.
Regular Updates
Digital assets change rapidly, requiring periodic reviews:
- Update your inventory at least annually
- Review when you create new accounts or close old ones
- Reassess when you make significant digital purchases or investments
- Keep access methods current as passwords change
Some people find that quarterly reviews work well, perhaps timed with regular password updates.
Communications with Fiduciaries
Keep your chosen representatives informed about your digital estate:
- Make sure they know where to find your inventory and access instructions
- Confirm they understand their responsibilities for digital assets
- Update them about significant changes to your digital holdings
- Consider walking them through the most important access procedures before they’re needed
These conversations, while sometimes uncomfortable, help prepare your representatives for their future responsibilities.
Work With Us
The digital dimension of your estate requires specialized planning that integrates with your overall financial strategy. Without proper attention to online accounts, digital assets, and access instructions, parts of your legacy could be lost forever or become needlessly complicated for your loved ones. By taking simple steps now – creating a thorough inventory, establishing secure access methods, and updating your legal documents – you can protect both the financial and sentimental value of your digital life.
At Brogan Financial, we recognize that comprehensive estate planning must address both traditional and digital assets to truly protect what matters most to you. Our team works closely with clients to develop customized strategies that fit your unique digital footprint while harmonizing with your broader financial goals. We’ll help you identify digital assets you might have overlooked and create practical solutions for passing them to the next generation. For more insights on modern estate planning approaches and other financial topics, tune in to “More Living with Jim Brogan” every Saturday morning at 9 on NewsTalk 98.7. Reach out today to start building an estate plan that fully protects your legacy – both online and off.
