What to Know About Estate Planning for Digital Assets

People planning for disposition of their property after their deaths must now account not just for their physical and financial assets but also their digital assets. These assets are created and stored electronically. They are more difficult to account for and to transfer due to their technical aspects and their custodial and security considerations.

Digital assets can contribute substantially to the overall value of the estate a person leaves behind. An individual’s portfolio of digital assets will often include the following:

• Online banking and investment accounts — There may be no physical location for the bank or brokerage. Without precise instructions and documentation, their personal representatives or executors may have difficulty identifying or accessing those accounts. 
• Cryptocurrency — Bitcoin, Ethereum and other electronic currencies can add substantially to the overall value of an estate. These assets are transferred by a change in recorded ownership on a distributed ledger. However, they may be inaccessible to transferees without information about digital wallets, cryptographic signatures and blockchain verification. 
• Non-fungible tokens (NFTs) — An NFT is a certificate of ownership for a unique digital or physical item, such as art, music, collectibles, real estate interests and utility-based assets. An item is minted into an NFT on a blockchain and ownership can be transferred by sending the NFT to another wallet. 
• Digital intellectual property — This may include websites, domain names, blogs and online brands. Those assets require inclusion in an estate plan to ensure that estate beneficiaries can locate and assume control of those resources. Estate planning documents can provide direction on whether accounts should be memorialized, transferred or closed.
• Digital storage services — Photographs, personal documents and other media that have been stored online, including in social media accounts, may have minor financial value but may have significant emotional importance to survivors. Identifying them and providing login credentials in an estate plan can ensure that family members can access them in the future.

Estate planners need to identify their digital assets and to give information about how to access them. They may also need to provide clear instructions regarding the descent of ownership and practical control of those resources. Some digital resources require inclusion in a will. Other times, it may make more sense to transfer resources intended as long-term investments or business holdings to a trust. Certain digital financial resources may be able to bypass probate proceedings if holders execute transfer-on-death designation documents.

Creating a comprehensive digital asset plan is a key aspect of modern estate planning. A qualified attorney can help you identify and catalog your digital assets in an inventory; include specific instructions for digital assets in your will; and ensure that your executor has clear legal authority to manage and transfer digital property.

Jeffrey P. Hall, PLLC helps people in Chandler, Peoria, Phoenix and throughout Arizona with estate planning for their digital assets and other holdings. Arrange a free initial consultation by calling 480-409-5174 or contacting us online.