Estate Planning: What to Know About Digital Assets
Estate planning has evolved significantly with the advent of digital technology. Nowadays, your digital footprint may be just as valuable and complicated as your tangible assets. Digital assets can range from social media accounts and digital photographs to online bank accounts and cryptocurrency. Here's what you should know about incorporating digital assets into your estate plan:
What Constitutes a Digital Asset
A digital asset is anything that is stored digitally and has or provides value. These could include data, images, videos, and written content because they have ownership rights. Such digital items might have value only for the creator or a family member. While other digital assets could be valuable to multiple people. Digital assets have morphed into more than words and pictures. Over time, they have become more valuable and more common. The most common types are:
- Financial assets: online banking, trading, investment accounts, and digital wallets like PayPal
- Intellectual property: copyrighted material, domains, and digital portfolios
- Personal assets: social media profiles, email accounts, blogs, and digital photos and videos
- Digital business assets: e-commerce sites you own, client lists, and digital products
- Digital collectibles: any collectible items in a digital form, such as NFTs
Importance of Digital Assets
Once you see a list of the digital items that are considered assets, it is clear that our lives are more reliant on the digital world than ever. Our photos, important documents, and entertainment have moved to mostly digital form. Digital assets are easily accessible from anywhere, making them convenient for remote or international dealings. Many people store important documents, like contracts or wills, in digital formats. Digital files can be easily copied, transferred, and shared, making many tasks quicker and more efficient. Online banking and digital wallets like PayPal, Venmo, or cryptocurrency wallets contain funds or assets that have real-world financial value. Email accounts and social networks often contain irreplaceable contact information and relationships. Digital assets have increasingly become a critical component of both personal and business life, and their importance cannot be overstated.
Creating Your Digital Estate Plan
As technology has increasingly played a part in our everyday lives, it feels like second nature to store information online. Cell phones contain our photos, computers save our passwords, and more. Follow these steps to ensure that your digital assets are kept safe and distributed accordingly:
- Take inventory: create a thorough list of everything you have stored online from social media accounts to online banking information. Include the username and password associated with each account.
- Allocate access: Determine how those assets will be distributed and handled.
- Appoint an executor: A digital executor is the person you entrust to carry out your wishes for your digital assets. This person can be anyone, although it is recommended to appoint an attorney or a family member.
- Make it legal: Since some states don’t acknowledge a digital estate plan, formalize it by making a note in your will. Your digital executor should know where you store your digital estate plan.
Is an Estate Planning Attorney Needed
Hiring an estate planning attorney is not legally required, but it is often recommended for several reasons. Estate planning can be a complex process, involving the coordination of various legal documents and procedures to ensure your assets are managed and distributed according to your wishes. There are a lot of nuances involved in digital assets, such as logins, authentication questions or apps, and data privacy laws. An estate planning attorney has the experience needed to ensure your wishes are upheld.
Given their financial, sentimental, operational, and legal significance, it's vital to include digital assets in estate planning, data security measures, and business continuity plans. As they continue to play an ever-increasing role in modern life, the importance of safeguarding these assets can't be ignored.
To speak directly with an estate planning attorney, call or text 833-MIKE-247!
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