Digital Love – Planning for Your Digital Assets
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.
- LexMundi article “Estate Planning for Cryptocurrency Doesn’t Need to be Cryptic”
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