Digital Assets in Estate Planning

Our lives are increasingly connected to the online world. We share our business ventures, promote opportunities, use social media as a photo album to track special moments in time, and even purchase valuable cryptocurrency online. We call these “Digital Assets.” Our digital assets can be extensive and extremely valuable, but how do we properly handle them in our estate plan?

The importance of having a digital estate plan has grown exponentially over the past decade as technology continues to occupy our daily lives. This leads to the question: Who has access to my online accounts and how will those accounts be managed and distributed in the event I pass away or become incapacitated.

For those who have gone through the process of setting up an estate plan, it likely includes traditional wealth and assets like bank and investment accounts, real estate, personal property, and family heirlooms. Without a detailed description of your digital assets, however, instructions on how to access to those assets, and a complete set of personal keys or passwords, you could lose those assets forever.

So What Exactly are Digital Assets?

Virginia defines a digital asset as an electronic record in which an individual has a right or interest. Article 3.1 of the Virginia Code is the Uniform Fiduciary Access to Digital Assets Act, which describes how to protect your digital accounts after you pass away. This Article was established in 2017 and provides that your trustee, personal representative, or agent under a power of attorney is allowed to manage your digital assets and can restrict the fiduciary from accessing your electronic communications, including emails and texts, unless otherwise specified in your estate planning documents.

In other words, a digital asset can be a wide variety of electronic records and files that are stored in online, on mobile devices, or on personal computers. Moreover, the definition of a digital asset is continually changing as new digital formats are emerging. That being said, digital assets typically fall into one of two categories: (1) Those with financial value and (2) those with sentimental value.

Both are valuable to families for different reasons.

Digital Assets: Financial and Sentimental Value

Digital assets with financial value typically include online payment accounts like PayPal, cryptocurrency (like Bitcoin, Ethereum, Dogecoin, and more), domain names, websites and blogs generating income, as well as other works like photos, videos, music, and writings that generates royalties. Such assets have real financial value for your children or beneficiaries, not only in the immediate aftermath of your death but potentially for years to come.

Digital assets with sentimental value include email accounts, photos, videos, music, publications, social media accounts, apps, and websites or blogs with no revenue potential. While this type of property typically won’t be of any monetary value, it certainly holds sentimental value and comfort for your family when you’re no longer around and it is important that access to these assets is not lost or restricted.

Including your digital assets in your asset estate plan will relieve your family members and loved ones from the added stress that arises after a death. When your family can rely on a written plan that outlines the passwords for your digital assets as well as how those assets should be managed, they won’t have to worry about navigating a more extensive probate court process.

In this digital age, the legal framework surrounding fiduciary access to digital assets is still in the early stage of development. When we plan for digital assets, we walk a fine line between protecting our privacy and managing our assets. To successfully walk that like, anyone who has digital assets must take the necessary steps to ensure that his or her wishes are carried out.

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