Why Your Estate Plan Needs to Include Digital Assets Like Passwords and Cryptocurrency
What comes to mind when you think of estate planning? You may picture a house and a will outlining who it will be passed down to. While physical property is definitely part of it, you'll also need a plan for your digital assets.
If you don’t know what a digital estate plan is, you’re not alone — they’re just becoming more common. But as technology infiltrates more and more of our lives, you’re definitely going to need one. “Today, so much of our lives happen online, and a lot of your life, whether it’s your financial life or your personal life, is handled in these online accounts,” says Abby Schneiderman, co-founder and co-CEO of Everplans, an end-of-life digital planning app. “And if your family doesn’t know what to do with those things, it just becomes a huge mess.”
Here’s the broad view of what a digital estate plan is and how you can go about creating one.
What are digital assets?
Digital assets include everything from your movies or books you bought that are stored on a Kindle or on your iTunes account, to log-in credentials for your dating profiles and even cryptocurrency. “You have [digital] photographs, you have videos,” Schneiderman says.
Then there all your online accounts to consider, like email accounts, social media accounts, online shopping accounts and those that may have multiple uses, like Amazon, for example. Even gaming accounts should be included as part of your digital estate plan, she says.
If you have any inactive accounts, still include them in your estate plan. That said, if you know you'll never use them again, "It's best to just delete the account and any related data now," says Catherine Ullman, senior information security forensic analyst at the University at Buffalo.
Truthfully, many of these are easy to forget about. “Domain names — I have probably 150 domain names. My husband probably has zero idea that I own those,” Schneiderman, also one of the authors of In Case You Get Hit by a Bus: How to Organize Your Life Now for When You're Not Around Later, adds.
Be aware that digital assets function differently than many physical assets. You may have a license to use your email account, for example, but that doesn’t mean you can necessarily pass the account along for someone else to send emails from after you die.
Why should you have a plan for your digital estate?
Creating an estate plan can be a demonstration of love and care toward the family and friends we leave behind, while not having one can cause confusion.
That’s not far off from what happened when a photographer friend of Ullman’s died suddenly years ago. “[He] had no will because he was young, he was in his 40s,” she says. As a result, "neither his girlfriend nor his friends had a claim to anything in the estate, including his digital assets." Her friend's brother – who she says he had a "tenuous" relationship with – ended up inheriting everything. Ullman was already aware of the importance of estate planning, but she says this experience "brought it closer to home."
As an expert in information security, Ullman is also keenly aware of what can go wrong online.
One of the big reasons to create a digital estate plan is that you don’t want personal details ending up with a stranger or someone who, frankly, you hoped would never see it. That’s true even after we die. And if we don’t plan for how to take care of that personal information, there’s no way to know where it will end up. “We’ve all done goofy things where we’ve taken pictures and maybe we don’t want the world to see those,” Ullman says.
Identity theft and fraud could also happen after your death. "Depending on your profession, you may also have digital assets that have substantial intellectual property and monetary value, which could also be stolen or misappropriated," Ullman adds.
How can you protect your digital assets?
First things first: make a list of all your digital assets, Schneiderman says. Or as many of them as you can think of at the moment. You can always add to the list, she says, and in fact should make a habit of reviewing it every year. Ideally, that list should exist in a password manager.
Next, make a plan for each of those accounts. Write down whether you’d like them to be continued, shut down, or if the platform allows, turned into a memorial account. Your will may become public at some point after your death, so be careful that you don’t include any passwords or account details there. Instead, share that information with a lawyer or a trusted friend, Ullman says.
Some platforms, like Facebook and Google, have a system where you can set a plan for what you want to happen with your account when you die. "Those bigger players have largely integrated some sort of... internal system for you to designate either someone to take over your account, or someone who has the authority to dispose of your account, perhaps in a way you choose," says Patrick Hicks, head of legal at Trust and Will, a digital estate planning platform.
You can decide to have your Facebook profile turned into a memorial that a certain family member will control, for example. And you can make that designation right in your Facebook settings by choosing what they refer to as a "legacy contact." "It’s simple, it’s clear. The downside is, it’s asset by asset," says Hicks. "Whatever digital assets you may have, you’d have to do it with each asset."
It gets more complicated with assets like cryptocurrency, where many owners don't have a paper trail of their assets. That could make it hard for your friends and family to access your crypto. "If you don't include some documentation, some record keeping just to say 'I own these assets in this place, they can simply evaporate at death," says Hicks. "So you need to first have a record of what you own for crypto. But then you also need to ensure that you provide everything that's necessary for someone to actually access those assets." He says these days, that means the private key — or password — for your assets, but that could change in the future.
If you have a non fungible token (NFT), you'll want to include that in your estate plan, but be aware that there's not a standard way that those are passed down yet. "They’re so new, they’re so novel, and anything that’s new and novel there’s typically not an existing legal solution," says Hicks. For now, he thinks they will be treated similarly to cryptocurrency, in that there's a digital coin or token that has to be passed to someone after your death.
The last big step you'll want to take to protect your digital estate is to pick someone who can carry out the wishes you outlined. Not every online account you have will allow you to do this internally, and as long as that's the case, you need to designate someone in your will. That person, known as your digital executor, could be the same person as the executor you’ve chosen to carry out your other wishes, or it could be someone else. Regardless, pick someone who’s tech savvy enough that they won’t get too overwhelmed by the task.
Name that person in your will. “It’s important for your estate planning docs to give your [digital] executor authority to access your digital assets,” says Neeli Shah, an estate planning lawyer who has her own practice in Atlanta.
Laws around digital estate planning are still developing. “Planning for [your digital estate] is very similar to planning for physical and monetary assets,” says Shah. “It’s the access to it that’s very restrictive that’s causing problems. That’s slowly changing,” she says, thankfully.
As tech companies and lawmakers catch up on how to best protect your digital assets after death, the best thing you can do is get started thinking about your own digital estate. Shah says her clients, who are mostly in their 50s and 60s, have mostly never even thought about digital estate planning. “So when I talk about it, there’s this lightbulb moment,” she says. “To me, that’s a win.”
Correction: A previous version of this story misstated the name of the university where Catherine Ullman works. It is University at Buffalo, not University of Buffalo. The previous version also misstated Ullman's advice regarding the inclusion of digital assets in an estate plan: inactive and active accounts should be included regardless of whether they contain personal information like credit card numbers.
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