Digital wealth is an important currency in the 21st century. Every human who has access to a smartphone will inadvertently have a digital footprint. With online accounts, digital assets, and virtual currencies, we forget that this also requires planning and management. All that we hold dear is no longer tangible, and we store our memories in cloud platforms, which require access. Ever wondered what happens to your data and digital property when you are not around anymore?
As we move into 2025, ensuring that your digital wealth is properly managed and passed on to your loved ones is more important than ever. Learn the process of estate planning for digital assets to protect your digital legacy.
What are ‘Digital Assets’?
Any electronic record or file stored online, on mobile devices, personal laptops, or computers is called a digital asset. It includes, among other things, email accounts, social media accounts, cloud storage accounts, gaming and utility accounts, crypto and NFTs, online banking accounts, subscriptions, marketplace accounts/business accounts, logins for various apps and credit card benefits.
Anything that requires you to set up an account with a user ID and password is a digital asset. As technology continues to evolve, it is necessary to stay aware and take the required steps to manage our digital lives smartly.
What is a Digital Estate Plan?
A digital estate plan is essentially a document or a formal set of instructions that explains how a person wishes their digital assets to be dealt with. It is a plan that outlines how online accounts should be managed/disposed of in case of their death or incapacity. It is important to prioritize the drawing up of a digital estate plan so as to alleviate your family members of the stress that comes along with death. Having a written plan holding details of all your passwords and accounts ensures that your loved ones have an easier task ahead of time and protects your digital interests from online risks. Risks like identity theft, hacking, fraud, insurance scams, and credit card fraud are huge risks that your digital property faces constantly.
Do You Need a Digital Estate Plan?
If you are reading this article using your mobile phone or computer, you probably need a digital estate plan. Our email accounts are connected to multiple accounts and archives of information. Taking stock of your digital assets and creating a digital estate plan ensures that your assets are accessible by your loved ones if you are not around to access them yourself anymore. No one likes to plan for such a situation. Still, it is always recommended to get ahead of some things and ensure that your family does not need to undergo the hassle of managing your digital assets long after you are gone. Your social media accounts and volumes of online content are built over time, and this makes it your digital legacy and your digital estate. And just like physical estate, digital estate also requires a will of sorts.
What Happens if You Don’t Make a Digital Estate Plan?
Yes, you can live your life on the edge and not make a digital estate plan. While this may not be a problem for you, it will most definitely be a problem for your family because even though almost every state has the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), this does not necessarily make things very easy. This act allows the executor to have access to the digital property of the deceased only as long as it directly assists in the wrapping up of your estate. What happens to the rest of it? It continues to float in this vast expanse of the wide web until the domain probably expires.
How You Start: Steps to Estate Planning
Below is a complete guide on estate planning for digital wealth:
Prepare an inventory
The best way to start is to start simple. The first thing to do is to take an inventory of your digital assets. Make a list of everything, all of it. Make a list with details of every account ever made in your name and note down the associated username and password. What helps is to do a deep dive into your cookies and saved passwords to identify all the websites with which you have created accounts. Write down any security questions and answers that may be used or passkeys for accounts with two-step verification security enabled.
Access and authorization
After creating your master index of accounts, check out the ones that require you to provide access to someone else. This is most commonly seen in storage accounts – media or money. Provide access to the person you want to handle your account. Nowadays, accounts require you to keep long and complicated passwords. In addition to this, they also provide two-factor authentication as a second life of defense. Remember to turn this off or provide instructions.
Appoint an executor
In traditional estate planning, a person usually picks a personal representative, an executor of their will. This person is tasked with handling and distributing all properties, assets and debts. However, they will not get access to your digital assets. With your digital property, you can choose a digital executor- someone who will have pre authorized access to your online accounts. Simply making a specific classification deeming someone as your digital executor is a smart move.
Data handover
Now that you have made a list, you need to figure out how this information will be passed on safely at the right time. You can use a password manager, and instructions on how to log in to this account can be left with your digital executor. You could also take the old-fashioned route of writing it down and leaving it in your safe, along with your traditional will. You could create a simple spreadsheet with all of the details. One word of caution: keep in mind that your crucial information will be stored in one document that anyone can read. Any person having random access to this document will then have full access to your digital assets.
Write and explain instructions
Once you are done with these steps, don’t forget to write your instructions. Let there be no confusion in how you want things to be managed when you are not around. Explain to your loved ones and talk to them about how you want things handled. Yes, you can just leave instructions and let things take their natural course, but discussing with them ahead of time allows them the opportunity to ask questions and raise any issues/loopholes you may have missed.
Keep revising it
Our lives are constantly changing, and so is technology. We may change phones, open a new bank account or invest in digital currency for the first time. Remember to update these in your inventory. Every other account has multiple changes in its security and accessibility policies, so remember to revisit these now and then to stay up-to-date.
In the bigger scheme of things, it helps your family a lot if you have a digital estate plan.
Simplify Your Wealth Management With Mucci Law
Start planning today and avoid the risk of losing your important data and assets. With Mucci Law as your trusted advisor, you can rest in peace knowing that your property is well taken care of. Your decision to choose us today will save your family a lot of time, money and stress in the future!
FAQs
Is there a ‘correct’ way to write your digital estate plan?
No! There is no set formula or template for this. You can find what works for you and make it according to that. It could be a simple written letter, a text file, or even a video.
Why do I even need a digital estate plan?
Your digital accounts will hold vital information that your executor will require to settle your estate. You need a digital estate plan to avoid losing your digital property and currency.
Will a traditional will not be enough?
A traditional will does not hold the same value, specifically for your digital assets. In the traditional will, your digital information is accessed only to the extent needed to settle your tangible properties.
Abhishek Shah
