What Happens to Digital Assets When You Die?
When it comes to estate planning, digital assets aren’t typically top of mind. As such, it’s common for people to forget to include their digital assets and cloud file storage in their wills, resulting in important assets and information being lost and inaccessible to executors and heirs. In previous articles, we outlined what happens to cryptocurrency when you die and what happens to our social media accounts after we pass away. This week, we’re discussing what you need to know about what happens to digital assets when you die and how to plan accordingly.
What Constitutes a Digital Asset?
Digital assets can take on many different forms, from the obvious to not-so-obvious, including but not limited to the following.
- Cryptocurrency existing in a digital wallet or crypto investments (which we cover in more detail here)
- Non-fungible tokens (NFTs)
- PayPal balance and funds left in other payment platforms
- Unused funds or credits sitting in an online marketplace (e.g., eBay, Amazon, Etsy, Poshmark)
- Airmiles or other points and credits associated with cards, retailers or online subscriptions
- Intellectual property (e.g., design files, music files, photography, research, white papers etc.)
- Online platforms that generate income from ad revenue or subscribers etc.
Other Digital Property to Consider Including
While your email inbox and cloud file storage aren’t technically assets, they may house important information about your assets that your executor and heirs need to know. Common digital property to consider including access to in your Will may include:
- Email accounts, especially those used to manage assets or business dealings
- Google Drive, Microsoft 360, iCloud, DropBox or other cloud file storage platforms that hold potentially important documentation such as bills, receipts, intellectual property, and reports (or even sentimental property like photos).
- Photography, Video, Audio and Design platforms that hold valuable files
- USB thumb drives and hard drives that hold pertinent information and records
The Digital Dilemma
It can be challenging enough for your power of attorney or executor to sort through physical records in their attempts to gather all necessary documentation to fulfill their duties to the estate on time. In addition, unlike traditional assets held in a bank, digital assets aren’t centralized and can’t easily be retrieved by inquiring with financial institutions and brokerages. For this reason, it’s essential to list all digital assets you wish to include in your estate, along with clear instructions on how to access each.
The Two-Factor Authentication Conundrum
One more crucial detail to plan for is the likelihood that your appointed representative will face two-factor authentication requirements during their initial (and even subsequent) attempts to access each online platform. Depending on each platform’s settings, two-factor authentication may require the individual attempting to login to provide a code sent to the email or phone number the platform has on file. For this reason, it’s wise to ensure your power of attorney also has access to your mobile phone and the email accounts associated with your digital assets and online accounts.
If You Use an Encrypted Password Vault:
A trusted and encrypted password vault is only helpful if up-to-date login credentials and instructions are shared with a trusted loved one or included in your Will. It’s also wise to have a hardcopy backup plan in more than one place (stored in a vault, safety deposit box or attached to your Will) in the event the password vault becomes breached and information is lost, or your Executor is inadvertently locked out after failing one too many login attempts.
It’s Important to Know What Happens to Digital Assets When You Die
The governance of many digital assets is decentralized, and each platform will likely have rules, contracts and policies that govern accessibility and entitlement to assets in your absence. Thankfully, laws are being legislated to provide universal standards, but this is a catch-up process that will take time before they come into effect. Nonetheless, it helps to ensure you understand the requirements and limitations of each platform so assets can be managed (or moved) if you become incapacitated or pass away.
Estate planning may not feel like a top priority until you consider that a bit of pre-planning can save your grieving loved ones a lot of trouble if they need to manage your estate in your absence or passing.
If You Have Questions:
Please don’t hesitate to reach out to our Estate Law Specialists at Spraggs Law today.