How to Account for Digital Assets in Your Estate Plan

Rachael E. Bator, CFP® BY: Rachael E. Bator, CFP® 02.06.18

6 Tips for Helping High Net Worth Clients with Digital Asset Estate Planning

Tangible items like bank and investment accounts, a home, valuable jewelry, and art likely come to mind when thinking about the assets an estate plan should govern. However, if you’ve ever sent someone money using Venmo or PayPal, saved photos or other valuable documents in the cloud, or logged into Instagram or Twitter, you probably have digital assets that should be accounted for in your estate plan.

What Constitutes a Digital Asset?

Almost any type of online activity can generate valuable digital assets. Along with the accounts associated with the activities listed above, digital assets may also include (but certainly aren’t limited to):

Online banking accounts should still be considered as a digital asset; however, a personal representative, beneficiary, or Trustee will usually be able to gain access to the bank account itself without specific language regarding digital assets, whether it be at a physical branch or over the phone. However, it is a best practice to err on the side of caution and authorize access to your online banking accounts through your estate plan, in the event the login information cannot be furnished or the online account cannot be changed or deleted (even after the account has been closed).


Updating Your Estate Plan to Account for Digital Assets

Given the relatively new concept of digital assets, along with little to no legislation governing the topic until recently, the majority of estate plans don’t include appropriate language to protect them. Without this language and an actual inventory of these digital assets, personal representatives, Trustees, and beneficiaries can encounter privacy policies and legislation that may prevent access, and subsequently prevent your estate plan from being carried out as you intended.

Digital assets do function like other, tangible property in that they can be passed on to heirs through an estate plan. If your plan doesn’t include protection for these assets, there are a couple of items to keep in mind should you choose to update it accordingly.


Digital Asset Planning and the Law – The Revised Uniform Fiduciary Access to Digital Assets Act ( RUFADAA)

The federal government, as well as many states, have laws in place prohibiting unauthorized access to private personal information and computer systems (which are expanding to include cell phones, tablets, and other tech devices storing sensitive data.) While these laws were designed with the intention of protecting consumers from identity theft and fraud, they may also prevent a deceased person’s family from accessing their digital assets after they’ve passed away. In addition, online service providers are prohibited from granting access to account information and any stored content to anyone other than the account owner – unless the account owner has deliberately granted consent.

As technology continues to evolve at a rapid place, government legislative measures haven’t always kept up. There has been a marked absence of all-encompassing legal framework around digital assets, preventing trusted agents from accessing a deceased loved one’s digital assets or information. The Revised Uniform Fiduciary Access to Digital Assets Act, which extends the traditional power of a fiduciary to include management of an individual’s digital assets, has already been enacted by 38 states since it was passed in 2015.

Under the law, fiduciaries can access and manage digital property, including computer files and cryptocurrency. However, it still restricts access to electronic communications like emails or social media unless otherwise dictated by the individual – highlighting the importance of including digital asset planning in your estate plan. This legislation does provide slightly more guidance and flexibility for financial advisors and administrators in managing the digital assets of a deceased client.

Digital asset management is still a relatively new yet already complex estate planning concept. While current legislation may be on the right track, it certainly isn’t all-encompassing and will continue to change as the digital world does. Incorporating digital assets into an overall estate plan should absolutely be considered if the goal of the estate plan is to govern and distribute all assets efficiently and completely. Without it, heirs could face challenges that their deceased loved one assumed their estate planning documents would help them to avoid.

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