As our lives become increasingly digital, estate planning must evolve to address the unique challenges and opportunities presented by digital assets. Whether it’s social media accounts, online banking, cryptocurrencies, or cloud-based photo storage, digital assets have become a significant part of many estates. In California, proper estate planning for digital assets ensures that your online life is managed according to your wishes after death or incapacitation.
This blog will explain what digital assets are, why they should be included in your California estate plan, and how to create an effective digital asset plan to protect your online legacy.
What Are Digital Assets?
Digital assets encompass a wide range of online accounts, data, and properties that exist in digital form. These assets can be divided into personal, financial, and business categories:
Personal Digital Assets:
Social media accounts (e.g., Facebook, Instagram, LinkedIn)
Email accounts
Cloud storage services (e.g., Google Drive, Dropbox)
Photos, videos, and other personal files stored digitally
Domain names or blogs
Financial Digital Assets:
Online banking accounts and payment services (e.g., PayPal, Venmo)
Investment accounts (e.g., E*TRADE, Robinhood)
Cryptocurrencies (e.g., Bitcoin, Ethereum)
NFTs (Non-Fungible Tokens)
Digital subscriptions (e.g., streaming services, newspapers)
Business Digital Assets:
E-commerce platforms (e.g., Shopify, Etsy)
Intellectual property stored digitally (e.g., trademarks, patents)
Client databases and online business records
Why Digital Assets Matter in Estate Planning
Without a proper estate plan, digital assets can become inaccessible or lost after death. Failing to address digital assets in your estate plan can lead to significant problems, including:
Loss of Valuable Assets: Cryptocurrencies, NFTs, and online investment accounts can represent substantial financial value. Without access, these assets may be lost forever.
Privacy Concerns: Personal files, emails, and social media accounts contain sensitive information. Without clear instructions, they could be mishandled or left vulnerable to identity theft.
Incomplete Estate Administration: Executors and trustees need access to digital assets to properly manage and distribute the estate. Without planning, the process of accessing and managing these assets can be difficult, time-consuming, and may even require court intervention.
Unresolved Online Presence: Social media accounts, blogs, or websites may continue to exist indefinitely without any oversight, which could lead to unwanted messages or online activity after your passing.
California Laws Regarding Digital Assets
In California, the law has recognized the need to address digital assets in estate planning. The California Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), enacted in 2017, provides a legal framework for handling digital assets after death. Under this law, fiduciaries (such as executors or trustees) can gain access to digital assets if the owner has provided clear instructions through their estate planning documents.
However, without specific instructions regarding digital assets, accessing them can be challenging. Many online service providers have strict privacy policies and terms of service agreements that may prevent fiduciaries from managing the deceased person’s accounts without legal authority.
How to Include Digital Assets in Your Estate Plan
Here are steps to ensure your digital assets are properly managed as part of your California estate plan:
1. Create a Digital Asset Inventory
The first step in estate planning for digital assets is to create a digital asset inventory.
This inventory should include:
A list of all your digital assets (e.g., email accounts, social media profiles, cryptocurrency wallets)
Login information, usernames, and passwords (stored securely)
Two-factor authentication information, if applicable
Instructions for how you want these assets managed or distributed after your death
It’s essential to keep this inventory up to date and store it in a secure location, such as a password manager, encrypted file, or with your estate planning attorney.
2. Grant Access to Your Digital Assets
To ensure that your executor, trustee, or other designated person can manage your digital assets, include language in your estate plan that specifically authorizes access to these assets. California’s RUFADAA allows for such authorization, which can be incorporated into your:
Will: Specify who should have access to your digital assets and how you want them managed or distributed.
Trust: If you use a living trust to manage your estate, you can include provisions about how the trustee should handle your digital assets.
Power of Attorney: Grant authority for your agent to manage your digital assets if you become incapacitated.
Without this authorization, your fiduciaries may face significant hurdles when attempting to access your digital property.
3. Use Online Tools Provided by Service Providers
Many online platforms offer legacy or account management tools that allow you to decide what happens to your account after death. These tools operate separately from your will or trust, but they can be used as part of your overall digital asset plan.
For example:
Google offers an Inactive Account Manager feature that allows you to specify who can access your account after a certain period of inactivity.
Facebook allows you to designate a legacy contact to manage your profile after your death or choose to have your account memorialized.
Apple now offers a Digital Legacy program, allowing you to assign up to five people to access your account after you pass away.
Be sure to use these tools in conjunction with your estate plan, as some companies may prioritize these settings over your will or trust.
4. Store Cryptocurrency Safely
Cryptocurrency presents unique challenges because it is decentralized and typically only accessible through private keys. Without those keys, the currency cannot be accessed. To include cryptocurrency in your estate plan:
Make sure your private keys and wallet information are part of your digital asset inventory.
Use a secure storage method, such as a hardware wallet or cold storage, to protect your cryptocurrency assets.
Clearly designate who should inherit your cryptocurrency and provide instructions on how they can access it.
5. Provide Instructions for Handling Social Media and Personal Accounts
Many people wish to have their social media accounts deleted, memorialized, or managed in a specific way after their passing. If you have preferences about your online presence, make those clear in your estate planning documents. For instance:
Specify whether social media accounts should be deactivated or memorialized.
Provide instructions on what should happen to personal photos, emails, or blogs.
Leave guidance on managing your online business accounts or domain names.
6. Consider Professional Help
Given the complexity of digital assets and the legal landscape surrounding them, it’s advisable to consult with an experienced estate planning attorney in California. Your attorney can help you:
Create a legally sound digital asset plan that complies with California’s RUFADAA.
Coordinate your digital asset plan with other estate planning documents like wills, trusts, and powers of attorney.
Update your estate plan regularly to ensure that new digital assets are covered.
Conclusion: Protect Your Digital Legacy
Digital assets are an essential part of modern life, and properly addressing them in your estate plan is crucial to ensuring that they are protected, managed, and distributed according to your wishes. Whether you’re dealing with cryptocurrency, social media accounts, or digital photos, taking the time to create a comprehensive digital asset plan will give you peace of mind and prevent headaches for your loved ones.
In California, incorporating digital assets into your estate planning requires careful attention to detail and compliance with the state’s laws. By creating a digital asset inventory, authorizing access to your accounts, and working with an estate planning attorney, you can ensure that your online life is managed appropriately after your death or incapacity.
If you’re ready to start planning for your digital assets or need to update your existing estate plan, contact the top rated law firm of Moravec, Varga & Mooney because we provide sophisticated cutting edge estate planning. If you would like to schedule a free consultation to see how we can help you, please give us a call at 626-460-1763 or send us an email at LV@MoravecsLaw.com.