Over 21% of Americans say they own digital assets that are maintained on the blockchain, like cryptocurrency or non-fungible tokens (NFTs). But just about every adult alive also has digital property that is stored online, such as Facebook accounts, blogs, email accounts, and other social media accounts. One of the most important questions in estate planning today is how people can pass down their crypto and NFTs to their heirs.
What happens to our Twitter and Facebook accounts when we die? What about the photographs and messages we’ve collected in those places over the years? All of this material can be part of your estate plan.
Naming a Digital Executor
The United States does not have a single uniform law on estates and trusts; each state does its own thing. However, the Uniform Law Commission drafts model legislation and promotes it in the individual states. This group created the Revised Uniform Fiduciary Access to Digital Assets Act in 2015. The RUFADAA is model legislation that is aimed at allowing executors, trustees, or people appointed by the court to have access to the deceased person’s digital access. The RUFADAA “gives internet users the power to plan for the management and disposition of their digital assets-email, social media accounts, etc.-in the same way they can make plans for their tangible property.” Many states have adopted parts of this law, which makes it possible for you to name a digital executor.
A digital executor is a person designated in your estate plan to manage and distribute your digital assets after you pass away. This person is responsible for accessing your digital accounts, handling your online files, and carrying out your wishes with respect to your digital assets. The person’s duties can include:
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Identifying your digital assets, such as online financial accounts, social media accounts, email accounts, digital photos and videos, and any other important files stored online. You can help by maintaining a list of this information and leaving it somewhere safe where the executor will have access to it.
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Managing your digital assets by following your instructions. You might want the person to delete certain accounts, transfer ownership of other accounts to family members, or freeze your account in some other way.
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Protecting the security of your digital assets, such as changing passwords, closing accounts, or encrypting files.
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Complying with legal requirements related to your digital assets, such as data protection laws, privacy laws, and intellectual property laws.
Terms of Service and Beneficiary Designations
Even though there are laws that allow digital executors to take control of your assets, there are still issues that arise with some of the companies we use to store our private information. Many crypto and social media platforms have their own rules and procedures regarding the deletion or transfer of ownership of their accounts. Many companies require you to make a beneficiary designation. Some platforms, like Facebook, now offer ways for you to transfer your account. For example, Facebook lets you name a “Legacy Contact” by clicking on the security menu with your account.
Special Issues for Cryptocurrency
Things are trickier with cryptocurrency because many crypto platforms don’t have beneficiary designations. This is because cryptocurrencies are designed to be anonymous. This means that if you die without letting someone know you have crypto, it’s possible that no one will ever be able to retrieve your account. You need to let your executor or fiduciary know what your password or private key is or else the asset may lose all of its value.
Tips for Ensuring Your Digital Assets Are Protected
Here are some tips to help ensure that your digital assets are protected:
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Take an inventory of your digital assets: Make a list of all your digital assets, including social media accounts, email accounts, online financial accounts, and any other online accounts or files that are important to you. Put them in a secure location or give them to your lawyer, accountant, or other trusted friend.
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Secure your accounts: Use strong passwords, two-factor authentication, and other security measures to protect your online accounts.
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Consider appointing a digital executor. Make sure this person has access to all of your online accounts and passwords, especially if you have cryptocurrencies. If your private key changes, be sure to let this person know right away.
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Decide what to do with your digital assets. You may want to delete certain accounts or transfer ownership of others. Be sure to include instructions for how to handle your digital assets in your will or trust.
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Store your passwords and other important information in a secure location, like a physical safe. You can also use a password manager. As with all of our other tips, you’ll need to make sure that someone you trust has access to this information before you die.
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And always update your estate plan regularly. Your assets will change and grow over time. You should review your estate plan whenever you make a significant change in your digital assets, the same way you reconsider your wishes when there’s a major life event.
When it comes to handling digital assets, planning is the most important thing you can do. Be sure to keep your documents up to date and your executor in the loop.
