How to Incorporate Digital Assets into Your Estate Planning

How Can I Make Sure My Digital Assets Are Included in My Estate Plan?

In today’s world of technology, estate planning has taken a step beyond the physical into the fourth dimension of the online world. Many people store a significant portion of their net worth in digital servers or “the cloud.” The Revised Uniform Fiduciary Access to Digital Assets Act, adopted in California in 2016, covers important considerations regarding online access after someone has passed away. By working with the meticulous estate planning lawyers at Cava & Faulkner, you can rest assured that all areas and dimensions of your legacy will be cared for.

What Are Digital Assets and Where Are They Stored?

Computers store information using numbers, specifically the digits “0” and “1.” A “digital asset” is any asset that is stored using digits or “digitally.” Such assets can hold financial worth or be solely of emotional value to the owner; these can include the following:

Bank accounts
Cryptocurrencies
Digital wallets
Brokerage accounts
Subscriptions (such as Netflix or Amazon Prime)
Photos
Cooking recipes
Online or PDF documents
Music
Email accounts
Social media accounts
Rewards programs
Videos
Digital Art

In some cases, assets may have more than one component. For example, an online bank account where you review and access your money is a digital asset. Still, funds are considered physical assets if the bank maintains physical locations where tangible money can be withdrawn. In the case of cryptocurrency, this is solely a digital asset, as it can never be physically touched or held; it only exists in the world of computers.

How Can I Include Digital Assets in My Estate Plan?

By following these steps, you can ensure all your digital assets are securely included in your estate plan and will pass smoothly to your beneficiaries.

Make a list: Review all the important online accounts you manage and list them out, including their usernames and passwords. Make sure you keep this document in a secure location.
Consult a lawyer: Discuss your options with the experienced estate planning attorneys at Cava & Faulkner. They can help you decide how you would like to pass on your legacy, whether in a trust or your will.
Choose a digital executor: This person will act to carry out your wishes as they relate to your online assets. The executor should be someone you trust and, ideally, someone adept at computers. It may or may not be the same person assigned to handle your general affairs.
Complete your documents: With the help of your California estate planning lawyer, have the documents drawn up and officially signed by witnesses so they are legally sound.
Store your documents safely: Place your estate planning documents and account information in a secure location. Make sure your digital executor knows where they are and has access.
Talk to your family: Inform the key family members named in the will of your estate plan and where it is being securely stored so they can access it in a time of need.
Regularly review your plan: Digital assets change fast. Estate planning is typically reviewed every three to five years. You may wish to monitor your digital assets more regularly as they are prone to rapid change. As needed, get your plan updated to reflect new changes.

What Can Happen to My Digital Assets If I Don’t Include Them in My Will?

If you fail to mention your digital assets in your will, you open your family to legal disputes and potentially problematic court processes. Without a will, your assets must be investigated, listed by the court, and assigned a beneficiary according to the legal priority of heirs, covered in California Probate Code § 6401–6402. When there are no clear instructions on accessing your accounts, some social media platforms will not allow access to individuals other than the owner, potentially causing money and memories to be lost forever.

How Can I Avoid Complications When Bequeathing Digital Assets?

Many people are unaware that due to the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), the settings regarding legacy account ownership on the online service or tool take precedence over your will. For example, Facebook offers the option of entering a “Legacy Contact” to manage your account after death. If you designate your daughter in your Facebook account and designate your son in your will by mistake, your daughter will be the one legally granted access, according to RUFADAA. To keep questions or disputes out of the picture, ensuring your estate planning documents align with your online account preferences is a good idea. This organization mimics how trust documents are followed. If a trust document specifies beneficiaries and a trustee and the will does not name the same individuals, the trust is taken as the senior document and considered valid within itself.

Should I Include My Passwords in My Will?

No. A will becomes a public document and should not include sensitive information that unauthorized persons could use to access your accounts. Instead, create a separate document or use a password manager to store all your information privately.

Will My Digital Executor Be Able to Access All My Accounts?

Your digital executor can access your accounts if you leave all the information they need. The information they need includes the following:

User IDs
Passwords
The email address and phone number used for 2-factor authentication
Security questions and answers

If you do not leave all the information, your executor could face technical issues, including privacy laws, encryption, or platform terms of service. Platform terms of service are upheld by RUFADAA.

Make Your Digital Assets Part of Your Legacy with Cava & Faulkner

Your legacy, memories, art, and creativity deserve to be passed down, not forgotten. In a fast-paced world, the expert team at Cava & Faulkner stays on top of current laws affecting your digital assets and estate planning. With our Family Wealth VIP Membership Program, your documents will be updated annually to remain on the cutting edge of digital law and give you peace of mind that no matter what happens, your loved ones will be cared for. If you have questions or want to learn more about including digital assets in your estate plan, contact us for a free consultation. Call us at 916-831-7565 today to schedule.