Estate Planning for Digital Assets
Technology has taken over our lives. It is an inescapable fact that we now rely on computer technology for just about everything, such as communicating with friends, sending mail, listening and buying music, taking and storing pictures, shopping, banking, and investing. Without knowing it, all of us have likely amassed a wealth of digital assets which require planning.
So, what exactly are digital assets? The California Probate code defines digital assets as an “electronic record in which an individual has a right or interest.” Some common forms of digital assets are social networking accounts (i.e. Facebook, Instagram, Twitter), email accounts, bank accounts, cloud-based storage accounts, digital photos, digital music, e-books, cryptocurrencies (i.e. Bitcoin) and websites. To ensure your digital assets can be easily and readily accessed and transferred to your heirs upon your demise requires planning.
Traditionally, when administrating an estate, an executor or trustee could search a person’s home to locate and marshal property for distribution to beneficiaries. However, in the digital world, these items are no longer in one’s home, rather they are intangible and stored on internet servers around the world. To ensure your digital photos, books, music and movies are easily accessible and transferrable to your beneficiaries, you need to be proactive and have some planning in place.
It is now common place to include language in estate planning documents to grant fiduciaries authority over digital assets. In 2017, California enacted the Revised Uniform Fiduciary Access to Digital Assets Act granting an executor and trustee the authority to access, modify and delete digital assets upon death. Some online platforms, such as Google or Facebook, allow a user to name an authorized person to manage their account upon death. If this designation is made, then it will override a grant of authority to a fiduciary. In the event no such designation is made, and a user’s estate plan or other documents do not contain grants of authority to a fiduciary to manage digital assets, then the terms-of-service agreement of each individual online platform will ultimately determine who has this right. To make sure your digital assets do not fall into the wrong hands, it is smart to be proactive and have a plan in place.
If you own digital currencies, also known as cryptocurrencies, such as Bitcoin, Ethereum or Ripple, then you should make sure you have a plan for these assets should you become incapacitated or die. As of today, there are roughly 2,500 different cryptocurrencies in circulation totaling roughly 180 billion dollars. These types of currencies are purchased and traded using secured, encryption devices. Cryptocurrencies are generally held in one’s virtual wallet, and to access, transact, and trade digital currencies you need the user’s private key. Without this unique private key, the cryptocurrency cannot be accessed. Therefore, it is paramount that a person with cryptocurrencies takes measures to ensure their accounts and private keys can be located and accessed upon incapacity or death, otherwise, these assets will likely be lost forever in virtual outer-space.
Cryptocurrencies, therefore, should be addressed in one’s estate plan so your fiduciary is able to transfer the assets to your beneficiaries and to make sure you do not inadvertently trigger the need for probate action to administer the transfer of these assets.
Finding a skilled estate planning attorney can ensure your digital assets are included in your estate plan.