When you think about estate planning, what comes to mind is a house, family heirlooms and other physical assets. However, with so much of our lives happening online, you may overlook important property: digital assets.
In the current digital world, it’s crucial that you include your digital assets in your estate plan. Without proper planning, digital assets with tremendous economic and sentimental value may be lost forever.
Types of digital assets
You may not realize it, but you create a significant digital footprint by posting photos on social media, sending emails, or even commenting online. Other forms of digital assets include:
- Cloud storage
- Non-fungible tokens (NFTs)
- Bitcoin and other cryptocurrencies
- Domain names
- Digital accounts
- Online gaming avatars
- Digital rights to musical composition, theatrical works or motion picture
While this is not a comprehensive list, some digital assets are treated as personal property but don’t qualify as digital assets. For example, Amazon, PayPal and Twitter accounts are only licenses to use their services. This means they cannot be transferred under a traditional estate plan.
Obstacles to accessing digital assets
Digital properties are similar to physical properties and can be passed on to others through an estate plan. Unfortunately, gaining access to digital assets can present some challenges for designated parties other than the owner.
Some of the main obstacles family members face when trying to access the decedent’s digital assets include
- Passwords: Your family members and personal representatives may be unable to access your data and assets stored on a computer, cloud, smartphone and online accounts if they don’t know your passwords.
- Criminal laws: There are laws that prohibit unauthorized access to private personal data. While these laws protect consumers against identity theft and fraud, they may create obstacles for family members to access data and digital assets.
- Encryption: Digitally stored data is often encrypted as an additional layer of security. Encryption can be in a single file, device or cloud, which makes it practically impossible to decrypt without the proper passcode.
When creating or updating your estate plan, ensure you have a comprehensive list of all your assets, including your digital ones.