In addition to traditional assets, such as bank and brokerage accounts, real estate and personal property, your balance sheet should also include your digital assets. The term ‘digital asset’ might conjure thoughts of cryptocurrency, but the scope is much broader. From PayPal and Venmo balances, to photo storage subscriptions, digital wallets, email accounts, and even gaming avatars or NFTs—these assets hold monetary, sentimental, or functional value. In many cases, they are overlooked in estate plans simply because they are intangible and not traditionally inventoried.
Many people assume that a spouse or other family members will be able to access and use these assets when the original owner passes away, but that’s not the case. Legally, digital assets are not treated like traditional property. Even as the rightful heir to a decedent’s estate, you may not have any authority to access their digital presence without prior, explicit authorization.
Are digital assets really that valuable?
Consider the following negative outcomes that can come from incomplete recordkeeping and planning:
- 20% of all Bitcoin is ‘stranded’ due to lost digital keys.
- Airlines can void mileage balances at death.
- Social media platforms often block access unless the original user names a Legacy Contact.
- Hotel and credit card reward points are often tied to the specific card user and non-transferable.
The Consequences of Inaction
Failing to plan for the future of your digital assets can result in several negative outcomes, which can include:
- Permanent Loss of Value: 20% of all Bitcoin is unrecoverable because of lost electronic keys. This represents billions of dollars in lost wealth. Similar losses occur when heirs cannot access reward balances, e-commerce accounts, or travel points/miles.
- Loss of Sentimental Assets: Photo libraries, videos, personal writings, and email histories are often the most emotionally valuable elements of someone’s digital footprint. Without access permissions, these can vanish.
- Identity Theft and Security Risks: Dormant digital accounts are prime targets for hackers. If accounts are not closed or monitored after death, they can be exploited, sometimes even leading to fraud in the deceased’s name.
- Emotional and Legal Burden on Heirs: Your loved ones will already be dealing with grief and logistical burdens. Denying them clear access to your digital estate compounds the stress and may require costly legal intervention.
Proactive Steps to Inventory Assets
To ensure your digital assets are discoverable, accessible, and transferable to your designated heirs, we recommend a structured and proactive approach.
Start by creating an inventory of your digital assets. Your inventory should include usernames and passwords, storage method, and approximate value. Avoid putting sensitive information into your will as this will become public upon probate. Consider a password manager or secure a physical document in an encrypted file. Next, make sure you designate a digital executor in your estate plan, who you’ve granted specific authority to access and manage your digital assets.
Major tech platforms have started offering legacy features. These include:
- Apple: Legacy Contact settings let users designate individuals who can access their iCloud data after death.
- Google: Inactive Account Manager allows users to decide what happens to their Google data and designate access.
- Facebook and Instagram: Offer the ability to appoint a Legacy Contact who can manage memorialized accounts.
- Cryptocurrency platforms: Some exchanges allow transfer-on-death designations or multi-signature wallet setups that include fiduciaries.
Protect Your Digital Estate
Work with your estate attorney to incorporate digital asset provisions in your will or trust, which includes granting your fiduciary the authority to access digital assets under the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). You can even specify how you want assets distributed. For example, who should receive reward points and family photos? You may wish to include a digital assets memorandum as a separate, updateable document outlining your digital inventory and access instructions.
Your fiduciary, whether that’s your spouse, adult child, or professional trustee, needs to understand their role, where to find instructions, and how to access secure credentials. While the topic may feel sensitive or even overly technical, initiating these conversations while you’re able is far preferable to forcing your heirs to navigate the process in a legal vacuum.
We Can Help
As your advisor, our role extends beyond traditional asset management. We coordinate with estate attorneys, tax professionals, and cybersecurity experts to create a comprehensive plan that addresses your entire balance sheet, including digital holdings. Digital estate planning is no longer optional; it is an essential part of your financial legacy. The value may be hidden, but the impact of failing to plan is very real. Just as you wouldn’t leave a safety deposit box unaccounted for, you shouldn’t leave your digital vault sealed indefinitely.
Disclosure: This content is for informational purposes only and not investment advice.
