Digital Asset Planning 101: What Are Digital Assets?
With the majority of our lives increasingly spent online, it becomes essential not to overlook your digital assets when preparing your estate plan. In my almost two decades as an estate planning attorney, I have experienced firsthand the importance of accounting for your digital assets before you die.
From my experience in dealing with digital assets for my clients, I have developed a fool-proof three-part digital asset planning process we call Paperless Estate Planning Solutions at Rilus Law. We prescribe this process for our clients to plan ahead for their digital assets and ensure digital asset protection before and after death.
In this article, I will further discuss what digital assets are and the types and forms they can take. I will also recommend the steps to get started on your digital asset planning.
An Intro to Digital Assets
In the digital age, many of us accumulate digital assets without even realizing it. Digital assets can be defined as any electronic record that holds value or significance to an individual. These assets include items such as social media accounts, online banking information, email accounts, and even the photos and videos stored on our phones and computers. It is essential to understand the importance of digital assets and the steps we can take to ensure their proper management.
In recognition of the importance of digital assets, the Revised Uniform Fiduciary Access to Digital Asset Act (RUFADAA) was enacted in many states. This law outlines the procedures for managing digital assets after the owner has passed away or become incapacitated. The RUFADAA allows for the appointment of a digital executor to manage and distribute digital assets in accordance with the owner's wishes. This law is particularly important for seniors who may have accumulated a significant amount of digital assets over the years.
What Happens to Digital Photos and Videos When You Pass Away?
One crucial aspect of digital assets is the photos and videos stored on our phones and computers that backup to the cloud. These items often hold sentimental value and can be a significant part of our legacy. However, without proper planning, these digital assets can be lost or inaccessible to loved ones after you pass away.
Another important consideration for digital photos and videos is to specify how they should be managed after the owner has passed away. Without proper planning, digital photos and videos may be lost forever, taking with them a part of our personal history and legacy.
The RUFADAA also recognizes the importance of digital assets and outlines the procedures for managing them after the owner has passed away. You can ensure that digital assets are properly managed by including instructions in your estate planning documents.
Backup Your Digital Memories
Furthermore, it's important to understand the risks associated with storing digital photos and videos on our devices and in the cloud. While cloud storage can provide easy access to these assets from anywhere in the world, it also poses a risk of loss or deletion if proper backup measures are not in place. You should consider backing up your digital assets to multiple locations, such as an external hard drive or a physical backup stored in a safe location. By doing so, you can ensure that the digital photos and videos will be preserved for future generations.
The Value of Digital Assets
In addition to the importance of managing digital photos and videos, it's essential to recognize the value of other digital assets. For example, online banking information can be vital in managing an individual's financial affairs after they have passed away or become incapacitated. Social media accounts may also hold sentimental value for loved ones and should be properly managed in accordance with the owner's wishes.
It is essential to be aware of the digital assets we have accumulated over the years and to take steps to ensure their proper management. This includes creating an inventory of digital assets, specifying how they should be managed after we pass away, and considering the appointment of a digital executor. By taking these steps, we can ensure that our digital legacy is preserved for future generations.
Digital Asset Planning Steps
Now that you have an idea of the forms that your digital assets can take, you can get started on Digital Asset Planning to ensure your digital legacy is preserved.
1. List Your Digital Assets
Start by making a list of all your digital assets. Which of the items in the above lists do you own? You may miss some of them, so take your time going through every item. What worked for me was making a list of what app or website I used every time I opened my phone or computer.
2. Decide on Actions for Your Assets
Go over the list of your digital assets and decide what to do with them. This step should help you determine which assets to include in your plan, which have their own online tool to legally transfer ownership, and which you are not concerned with. Some assets can also be sent to your family, colleagues, or friends. If you own a business, this is the part where you organize and separate your personal and business assets.
Decide also on what you want to do with your assets with monetary value. Do you want them to be redeemed into cash or continue earning dividends or revenue? Do you want them transferred to your beneficiary or managed for them by an expert? Do you want your online store to operate even after you’re gone? If yes, who will manage it? If not, what are your instructions regarding its assets?
3. Work with an Experienced Digital Asset Planning Attorney
Although digital asset planning is crucial in today's world, it’s still a relatively new concept. This can feel like an overwhelming step to navigate on your own, but not all estate planning attorneys offer digital asset planning. So, if you want expert advice and guidance on how best to handle your digital assets, you have to find an estate planning attorney experienced with digital asset planning.
Working with an experienced digital asset planning attorney will ensure that your estate plan is more effective for all of your assets, both physical and digital. Here at Rilus Law, we believe a digital estate plan is crucial for every client. We include a Digital Asset Trust with all of our trust packages and general digital asset language in all of our estate planning documents.
By developing a comprehensive digital asset plan, you can ensure that your digital assets are protected and transferred appropriately after your passing. Properly planning for digital assets can preserve memories and prevent unauthorized access while also ensuring that your loved ones have access to your digital assets. Rilus Law's experienced team can provide expert guidance on digital asset planning and help you protect your digital assets before and after your death.