In 2024, it’s fair to say that most people have some form of digital assets. This asset type can include digital photos, video and music collections; social media accounts; online banking and brokerage accounts; or cryptocurrency. The question is: How many people have properly accounted for their digital assets in their estate plans?
If you’ve failed to address your digital assets in your plan, your loved ones may not be able to access them without going to court and, in some cases, may not even know the assets exist.
Inventory your digital assets
Begin by compiling a comprehensive list of all your digital assets, together with website addresses, usernames, passwords and account numbers. For those stored on computers, external hard drives, smartphones, tablets or other devices, be sure to provide instructions for accessing them, particularly if they’re password protected. Store the list in a secure location and be sure your family knows where to find it. Consider using an online password management solution to simplify the process.
Keep in mind that many sites use two-factor authentication for added security. To log on to these sites, in addition to username and password, users will need a one-time code sent via text, email or an authentication app. To ensure your representatives have access to these sites, you’ll also need to be sure they have any passwords or personal ID numbers needed to obtain one-time codes.
Provide legal consent
Providing your representatives with login credentials to access your digital assets is critical, but it’s not enough. They’ll also need legal consent to gain entrance to and manage your accounts.
Absent such consent, they may violate federal or state data privacy laws or, in the case of financial accounts, may even be guilty of theft or misappropriation. It’s unlikely that the authorities would prosecute your representatives for unauthorized access to your accounts, but it’s advisable to ensure they have explicit authority rather than rely on their possession of your login credentials.
Understanding the Revised Uniform Fiduciary Access to Digital Assets Act
For digital assets that you own, such as cryptocurrency or bank and investment accounts, your estate plan can provide for the transfer of assets to your heirs. But many types of digital assets — including email and social media accounts, as well as certain music and book collections — are licensed rather than owned. These assets generally are governed by terms of service agreements (TOSAs), which typically provide that the license is nontransferable and terminates on your death.
Fortunately, there are laws that govern access to digital assets in the event of your death or incapacity. Most states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which provides a three-tier framework for accessing and managing your digital assets:
- The act gives priority to providers’ online tools for managing the accounts of customers who die or become incapacitated. For example, Google offers an “inactive account manager,” which allows you to designate someone to access and manage your account. Similarly, Facebook allows users to determine whether their accounts will be deleted or memorialized when they die and to designate a “legacy contact” to maintain their memorial pages.
- If the online provider doesn’t offer such tools, or if you don’t use them, then access to digital assets is governed by provisions in your will, trust, power of attorney or other estate planning document.
- If you don’t grant authority to your representatives in your estate plan, then access to digital assets is governed by the provider’s TOSA.
To ensure that your loved ones have access to your digital assets, use providers’ online tools or include explicit authority in your estate plan.
Addressing who’ll receive the assets
In addition to identifying digital assets and giving family members access to them, your estate plan must address ownership issues involving these assets. Consider working with your estate planning advisor to create a digital asset protection trust (sometimes called a digital asset revocable trust). This trust, which typically is revocable, allows you to transfer ownership of digital assets to the trust or, in the case of licenses, grant authority to the trustee to access and manage the assets.
