Digital Love – Planning for Your Digital Assets

November 10, 2020
Rasti Nikolic West Financial Services Associate Financial Planner
By Rasti Nikolic

In order to develop a digital asset plan, first we need to define digital assets. In general, digital assets are a form of personal property, including emails, social networking sites, digital collections, and cryptocurrencies. However, it is important to note that changes in technology may make defining digital assets more challenging over time. “The development of technology consistently outpaces the laws that attempt to regulate its subjects. What is considered a ‘digital asset’ may evolve to include new and innovative asset classes” (Pedersen, 2019). While digital assets are property, the right to access these assets is often determined through various user agreements, federal, and state laws. Not considering fiduciary access to digital assets could result in loss of digital assets upon the owner’s death, divorce, disability, or other incapacity. Despite this potential, many individuals do not include digital assets in their planning process. A well-drafted plan should address the management and distribution of digital assets with a goal to mitigate administrative and legal burdens on fiduciaries. 

In order to address the legal aspects, we should look at the current laws. The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) provides guidelines for managing fiduciary access to certain digital assets, allowing estate executors the ability to override certain terms-of-service agreements in order to maintain access after the owner’s death. If a written affirmative consent is missing, a fiduciary may not be granted access under the RUFADAA. 

We suggest planning for digital assets by creating an inventory list and becoming more informed around the terms associated with specific service agreements, especially with regard to death or disability. The list can include usernames, passwords, answers to “secret” questions, personal identification numbers (PINs), and whether or not the fiduciary has or can obtain access. Access to this inventory list should be limited during your lifetime and updated regularly (e.g., annually). Once you have created the inventory list, you should be able to determine under state law what estate planning options are available to you. This might include instructions within a will, trust, or power of attorney. Some user accounts may have a set of requirements that determines how a fiduciary or other successor owner can gain access. For example, Google has an inactive account manager that allows users to indicate who may access their information upon Google’s notification of the user’s death. 

To get the best results and ensure that your digital assets are well-protected, work closely with your financial advisor and legal counsel.

Meet Rasti Nikolic »


Sources:

Important Disclosures

West Financial Services, Inc. (“WFS”) offers investment advisory services and is registered with the U.S. Securities and Exchange Commission (“SEC”). SEC registration does not constitute an endorsement of the firm by the SEC nor does it indicate that the firm has attained a particular level of skill or ability. You should carefully read and review all information provided by WFS, including Form ADV Part 1A, Part 2A brochure and all supplements, and Form CRS

This information is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept. Certain information contained herein was derived from third party sources, as indicated, and has not been independently verified. While the information presented herein is believed to be reliable, no representation or warranty is made concerning the accuracy of any information presented. We have not and will not independently verify this information. Where such sources include opinions and projections, such opinions and projections should be ascribed only to the applicable third party source and not to WFS.
 

Categories