Why Digital Assets Are a Must in Your Estate Plan: A Guide to Proper Treatment

As an estate planning lawyer, I’ve seen firsthand how our lives are increasingly intertwined with the digital world. From online banking to cherished family photos stored in the cloud, digital assets are a significant part of our personal and financial lives. Yet, many people overlook these assets when creating their estate plans, potentially leaving loved ones locked out of valuable accounts or sentimental treasures, sometimes with tragic consequences.  

The law governing digital assets, such as the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), is complex due to its three-tier hierarchy for access—online tools, legal documents, and terms-of-service agreements—and custodians’ discretion to limit disclosure or require court orders. This complexity often makes it difficult for fiduciaries, your trustees and agents, to access accounts without proper planning, which is why professional guidance is essential.  I've written two specific articles regarding the law governing  digital assets in estate planning, one applicable to Ohio, the other to Missouri.  The law is not simple to understand or easy for a layperson to follow in order to protect digital assets.  

I’ll explain in this article why digital assets deserve a central place in your estate plan, provide practical, actionable steps you should take to protect them.  I have prepared Digital Assets Inventory Worksheets and an explanatory Cover Sheet, and  in the article immediately following this article, I offer detailed instructions to help you get started protecting your digital world.

Why Digital Assets Matter in Estate Planning

Digital assets encompass a wide range of items, including email accounts, social media profiles,  cryptocurrency, loyalty program rewards, online businesses, and digitally stored photos or documents. According to NordPass, the average person manages 168 online accounts, with an estimated average value of $191,516 for Americans’ digital assets, per a Bryn Mawr Trust survey. 

Despite their prevalence and value, 76% of Americans have little to no knowledge of digital estate planning, often leaving these assets unaddressed in their plans. This oversight can lead to significant challenges for your heirs, such as:

• Financial Loss: Valuable assets like cryptocurrency or online business accounts may become inaccessible without proper access instructions.

• Sentimental Loss: Family photos, videos, social media memories, or digital content, e.g., recipes, workout videos, and stories, may be lost if no one can access them.

• Cybersecurity Risks: Unmanaged accounts could expose personal information, increasing the risk of identity theft, and expose vulnerable family members to exploitation.

• Aging in Place Planning: For clients focused on aging in place, digital assets like Smart Home and IoT Accounts (e.g., Vivent, ADT, Amazon Alexa, Ring) and Health & Fitness Accounts (e.g., Fitbit, Apple Watch) are critical, supporting independent living by managing home security (e.g., locking doors remotely), temperature, active and passive emergency notifications (e.g., triggered alerts or automatic fall detection), daily routines (e.g., medication reminders), and health monitoring. Ensuring your trustee can access and manage these accounts, as documented in your Digital Assets Inventory Worksheet, helps maintain your home environment during incapacity, aligning with your goal to remain in your home as long as possible, with legal authority under RUFADAA.

• Time: Loved ones may spend countless hours  trying to gain access to accounts, adding stress during an already difficult time.

• Cost:  Subscription services often auto-renew and drain estate funds if not canceled or managed after death. 

• Legal Peril: The digital world is a world of information, and this information can be legally significant in real life. Consider the following example: A stepchild contested a stepmother’s will disinheriting them, alleging incompetence and undue influence, ten years after the will was drafted. The executor, a daughter, preserved her mother’s digital footprint, which included text messages discussing the decision, GPS data showing independent activities, game logs (e.g., solitaire, sudoku) demonstrating cognitive ability, and videos sent to a grandchild. This evidence of a grandmother—vibrant, capable, independent, and resolute—proved the deceased’s competence, leading to a nuisance settlement. Without this digital evidence, the outcome might have been different.

• Health Information: Digital health data may be vital in legal contexts, such as wrongful death claims or guardianship disputes over competency.

• Financial Information: Evidence of gambling, scams, or financial support may be exculpatory in civil or criminal cases involving allegations of elder exploitation, or necessary to prove such exploitation.

Imagine a family unable to access a $50,000 Bitcoin wallet because the private key was not documented, or a widow losing access to a Google Photos account containing decades of family memories because no one was designated to manage it. These scenarios highlight the real consequences of neglecting digital assets in your estate plan.

         

As a trusted advisor, I recognize that managing your digital footprint is non-negotiable for a comprehensive estate plan. Ignoring digital assets risks your legacy and exposes your family to risk or loss. By proactively including digital assets in your estate plan, you can ensure your wishes are honored and your loved ones are spared unnecessary complications.  Your digital assets may also help protect you, financially and legally from exploitation or abuse.

If you have an estate plan drafted by my office within the past ten years, your estate planning documents already address digital assets:

• General Durable Power of Attorney:  Your power of attorney confers authority to your agent to manage digital assets owned by you during your life.

• Revocable Trust:  Your trust document confers to your trustee the authority to manage digital access owned by your trust while you are alive.  Additionally, your trust confers authority to your trustee to manage digital assets after your death. 

Regardless, this is a rapidly evolving area of the law.  Consider simple, inexpensive revisions to your planning document relating to digital assets every three to five years.    
 

Action Items for Including Digital Assets in Your Estate Plan

To bring order to your digital assets and secure your legacy, here are key steps you should take, along with how our firm can assist:

• Create an Inventory of Your Digital Assets: Start by compiling a comprehensive list of your digital assets. This includes accounts, devices, and any digital property with financial or sentimental value. Use the inventory sheet provided below to organize this information. Keep this list in a secure location, such as your LegalVault®, a password manager, or a safe deposit box, and inform your executor or a trusted person where to find it.

• Appoint a Digital Fiduciary:  Designate a tech-savvy individual as your digital trustee/executor to manage your digital assets after your passing. This person should be named in your will or trust, with clear authority to access and distribute your digital property. We can help draft specific provisions to ensure compliance with laws like the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA).  If your successor trustee is not tech-savvy, you can select a specific person to handle only the the tech or digital role.  

• Include Digital Assets in Legal Documents:  Incorporate clear instructions for your digital assets in your will, trust, or power of attorney (POA). For example, a POA can grant an agent authority to manage your online accounts if you become incapacitated. Our firm will work with you to include language that aligns with your wishes and legal requirements.

• Use Online Tools for Account Management:  Take advantage of platform-specific tools like Google’s Inactive Account Manager or Facebook’s Legacy Contact to designate who can access or memorialize your accounts. We can guide you through setting up these tools to complement your estate plan.

• Regularly Update Your Digital Asset Inventory:  Digital assets evolve rapidly, so review and update your inventory annually or when significant changes occur (e.g., new accounts, inactive accounts, sold cryptocurrencies). During our estate plan reviews, we’ll prompt you to provide updates on your digital assets to keep your plan current.

• Secure Access Information:  Store login credentials and two-factor authentication (2FA) details securely, using a password manager or encrypted digital vault. Avoid including passwords directly in your will; it becomes a public document during probate. Our firm can recommend secure storage solutions like LegalVault® and ensure your trustee/executor knows how to access this information legally.

• Check Transferability of Assets:  Not all digital assets are transferable due to terms of service agreements. For example, some loyalty points, memberships, or digital media may not be passed to heirs. We can help you verify which assets can be passed on and structure your plan to maximize their value for your beneficiaries.

Special Considerations

Often, a person is asked to manage digital assets he or she may have little familiarity with, and little appreciation of their significance or worth. The following are special considerations about which you should be aware.

• Messaging Apps: These often contain important communications (e.g., family messages, business discussions) that may be merely sentimental or legally relevant. Separating them from email accounts highlights their distinct nature and ensures fiduciaries address them. Fiduciaries should be aware that these apps may contain legally relevant communications, such as evidence of intent or agreements, which could be critical in disputes over estate administration.

• Blockchain Accounts: Cryptocurrencies and non-fungible tokens (NFTs) are increasingly common digital assets with significant financial value. They often require private keys or seed phrases for access, which fiduciaries need to manage. Attention to this category ensures these high-value assets are not overlooked.

• Music Streaming Accounts: These accounts may contain purchased music, playlists, or subscriptions that the grantor wishes to preserve or transfer. These are distinct from broader entertainment accounts like Amazon Prime.

• Gaming Accounts: These accounts may contain purchased games, in-game assets, or subscriptions.

• Intellectual Property and Creative Accounts: Accounts hosting creative works (e.g., writing, music, photography) may have monetary value (e.g., royalties) or sentimental value (e.g., unpublished works). This category ensures these assets are captured beyond blogs in “Publication Accounts.

• Health and Fitness Accounts: Health and fitness accounts may contain valuable data (e.g., genetic information, fitness history) that the grantor wishes to share with family or delete for privacy reasons. Genetic accounts like 23andMe also have privacy implications that fiduciaries should address. This information may also be legally relevant, for example, if there is a wrongful death claim, or a claim of incompetency or incapacity (guardianship or conservatorship). Additionally, Health & Fitness Accounts can monitor vital health metrics and share data with caregivers, further supporting your independence.

• Smart Home and IoT Accounts: Smart home devices often have associated accounts that control access to data (e.g., Ring camera footage) or settings (e.g., thermostat schedules). These may need to be managed or transferred to ensure home security or functionality.

• Wearable Device Accounts: Wearable devices, while related to “Electronic Devices,” often have separate accounts for data storage (e.g., fitness tracking) that may not be captured under the device itself. These accounts may contain health data relevant to the grantor’s estate plan. These have privacy implications that fiduciaries should address. This information may also be legally relevant in the same way as health and fitness accounts. 

• IoT- Internet of Things: IoT stands for Internet of Things. It refers to a network of physical devices, vehicles, appliances, and other objects embedded with sensors, software, and connectivity, allowing them to collect, exchange, and act on data over the internet. In the context of the Digital Assets Inventory Worksheet, IoT accounts (e.g., Amazon Alexa, Google Nest, Ring) are included as an asset type because these devices often have associated online accounts that store data (e.g., camera footage, voice recordings) or control settings (e.g., thermostat schedules), which fiduciaries may need to manage. Immediate access may be necessary to maintain home security (e.g., Ring camera footage) or functionality (e.g., thermostat settings), especially for aging-in-place clients who rely on these devices for independent living. Examples of IoT devices include smart home systems, wearable tech like smartwatches, and connected vehicles.

• Password Manager Accounts: While the worksheet includes a “Password Manager” column, treating password managers as a distinct asset type ensures they are inventoried as a critical access point for other accounts. These accounts often centralize credentials, making them a priority for fiduciaries. These accounts centralize access to other assets, but their credentials must be stored securely to prevent unauthorized access, as they can unlock your entire digital estate.

How Our Firm Protects Your Digital Asset Wishes

At Monty L. Donohew, LPA, we take a proactive, client-centered approach to digital estate planning. Here’s how we ensure your digital assets are protected:

Customized Legal Documents: We draft trusts, wills, and Powers of Attorney with specific provisions for digital assets, ensuring compliance with RUFADAA and platform terms of service.

Final Instructions and Forms: We provide every trust client with a set of Final Instructions and Forms, empowering your trustees and agents with the knowledge, tools, and forms, to administer or settle your trust with confidence, significantly minimizing future legal expenses. 

Education and Guidance: We educate you on the importance of digital assets and guide you through creating and maintaining your inventory.

Secure Planning: We recommend secure methods for storing access information and work with you to appoint a capable digital fiduciary.

Secured Planning Documents: We encourage and work with you to set up secure storage of your estate planning documents, introducing, employing, and deploying for you such third party services as LegalVault®.

Ongoing Support: During periodic estate plan reviews, we’ll revisit your digital asset inventory to help keep it up to date and aligned with your goals.

Collaboration with Experts: If your digital assets include complex items like cryptocurrency or online businesses, we collaborate with financial and tech experts necessary to ensure proper management.

Take the Next Step Today

Your digital assets are a vital part of your legacy, and neglecting them could leave your loved ones grappling with chaos. By taking the steps outlined above, you can bring order to your digital life and provide peace of mind for yourself and your family. Start by completing the digital asset inventory sheet and scheduling a consultation. We’ll work together to integrate your digital assets into a comprehensive estate plan tailored to your aging-in-place goals.

I understand you might be concerned about the time, cost, or privacy implications of managing your digital assets. Rest assured, updating your estate plan to include digital assets is a straightforward process that typically takes just a few hours and offers significant long-term value by avoiding costly legal disputes. Our firm prioritizes your privacy, recommending secure storage solutions like LegalVault® to protect sensitive information while ensuring your fiduciaries can access what they need.

Ready to secure your digital legacy? Contact us to book an appointment. Let’s ensure your digital assets are as protected as your physical ones.