Today’s article dives into your digital assets and what can be done to protect them during your incapacity and after your death. Continue reading to learn what digital assets are, what you can do to protect them, and how to put a seamless plan in place for your loved ones after you’re gone.
Digital Assets
There are many different digital assets that you need to think of when planning your Estate. You may be wondering what digital assets are and why you would need to protect them. So, let’s look into that a little further.
Digital assets are data created and stored, or used, digitally.
Some digital assets are:
- Email Accounts
- Social media profiles
- Online banking and investment accounts
- Digital videos and photos
- Cryptocurrency
- Personal files or documents stored in a digital file
Many people have their bills sent to them via email, rather than through the US postal service, so you can see why it could be important to create a plan for who can access your digital accounts should you become incapacitated or in the event of your death. You wouldn’t want the electricity to be shut off because a payment a loved one didn’t know about was missed.
Conversely, others may have documents or other assets stored online or digitally that they do not want certain individuals to obtain access to. A good plan can protect your privacy.
These scenarios, along with many other reasons, are why it is important to have a robust estate plan that includes your digit assets.
Power of Attorney for Digital Assets
The first document you may consider to protect your digital assets is a Durable Power of Attorney. Many people have these in place already. This document allows you to name an agent to act on your behalf. You can choose when that agent is allowed to act. You can select that the agent be allowed to act on your behalf immediately— meaning that person can do whatever the document says they can from the moment you sign it, until you revoke it or die. Or you can choose that its effect be springing. This means it springs into place when a certain event takes place, such as incapacitation. Keep in mind, the Power of Attorney is only valid during your lifetime. The document no longer holds value at your death.
Many Power of Attorney documents have provisions for digital assets within them. So, if you already have one review it to make sure it says what you want it to say about your digital assets. If it doesn’t, or if you don’t have a Power of Attorney document in place, this is an excellent tool to have in place in the event you are unable to act on your own behalf.
Digital Asset Clauses in Trusts & Wills
While the Durable Power of Attorney is a great solution for during your lifetime, it does not continue after your death. But don’t worry! There are tools you can put into place that will allow your loved ones to have the access you need or wish them to have—even after you are gone.
Clauses can be written into your Will or Trust giving your executor or trustee access to these digital assets. This will allow those digital institutions to provide them access to your digital assets even if they don’t have your login credentials.
Cryptocurrency
While some of us are verse versed in what cryptocurrency is, others this it’s like Monopoly money—completely valueless. This is not true, and because cryptocurrency is a relatively new type of digital asset the laws surrounding it and the transfer of it after death are also really new.
Cryptocurrency, as defined on dictionary.com, is: “currency that exists only in electronic form, operates on a decentralized system of exchange, and uses advanced cryptography for security.” As you can imagine, a form of currency that only exists electronically may be hard for loved ones to access or even find, if not properly planned for.
One of the first things we need to consider with cryptocurrency and estate planning is how the cryptocurrency is stored. There are two different types of wallets: a hot wallet or a cold wallet. A hot wallet is online stored, while a cold wallet is similar to a USB drive and stores all of the information offline. If you do not put specific provision into your estate plan about your cryptocurrency, it could be viewed as either a tangible or intangible asset. Tangible assets are assets you can view, touch, or hold. Think of all the stuff in your house from your everyday flatware to your great grandmother’s canary diamond. These are tangible assets. And while many people make specific distributions of tangible assets, eventually all are lumped together and left to heirs. Intangible assets are assets that cannot be held or touched. Think of investment accounts and the like. So, if your cryptocurrency is stored in a cold wallet, it could be considered a tangible asset, while if it’s stored in a hot wallet it could be considered an intangible asset. This is why proper estate planning is so important. You may not want a significant asset, like $10,000 in cryptocurrency, to be lumped in with your worn-out recliner and contents of the junk drawer.
The most important part of estate planning for cryptocurrency is having a plan in place. You need to name a beneficiary, or beneficiaries, to receive this asset at the time of your death. Your estate planning attorney should ask if you have digital assets or currency, such as crypto, but make sure you make them aware of it so you can plan for distribution of this asset upon your death.
Just like we mentioned above, making sure your heirs have the access they need, such as the location of the assets (whether hot or cold) and the login key, is important. Storing this information with your estate planning documents or including them in the plan itself is not a bad idea. Just be sure to update the information every time it changes.
Effects On Loved Ones
Without a Power of Attorney and Trust or Will that specifically address these issues, it may be impossible for your Trustee or Beneficiary to retrieve or access your digital assets. With digital planning as part of your estate plan you are ensuring that your wishes protect your privacy, prevent identity theft, and ensure your loved ones can obtain access when needed.
You would not want your identity stolen during a crisis or after you have passed because you did not have a solid digital asset estate plan in place. Speaking with an attorney is an excellent way to ensure everything, and everyone is protected. The reason for an estate plan is for ease and comfort for your loved ones and that you know your estate is protected in all aspects.
Additionally, when you are in a medical emergency, time is of the essence for doctors, medical professionals, and your family. Being able to access and show proof of a Georgia Advance Directive for Healthcare is essential for you to receive the care you want but cannot advocate for on your own due to incapacitation. Being able to get the information digitally immediately is important to you and your family. And, as noted before, having a loved one with the ability to access your digital accounts and assets can ensure no lapses in payments for important services or coverages.
You also want your family to be able to access your accounts after you have passed. So, it is crucial to regularly update and make sure all information is correct on your ledger of digital accounts. Without proper estate planning for your digital assets, even with a Trust in place, your case could end up in Probate Court, which could be a major stress and headache for your loved ones. Taking the time now to create a ledger of your digital information, execute a Durable Power of Attorney, and have the proper clauses in your Will and/or Trust is essential to and provides peace of mind.
What Can I Do?
When creating your Digital Asset estate plan with the use of a Durable Power of Attorney, Will, and/or Trust there is one crucial piece of the puzzle that you can do now to ensure your loved one has everything they need. Create a comprehensive account or ledger of your inventory of these assets. This would also include login credentials, account numbers, and any other relevant access information. Store this list with your estate planning documents so that your loved one will be able to access them should they ever need them. And, as always, revisit the list often to make sure it’s accurate.
While you’re compiling this ledger, give us a call. We’re here to help! The professionals at Siedentopf Law are here to help you determine whether you should execute just a Will, create a Trust, or if other estate planning tools should be implemented.
Call us at (404) 736-6066 or visit our website to schedule a consultation.
