Passing Down Assets You Can’t Touch
The world is becoming increasingly digital as every day passes. More and more people are investing in digital assets such as cryptocurrencies and non-fungible tokens (NFTs) as they are becoming more popular. In addition, others own other types of digital assets such as domain names for websites and monetized YouTube channels.
What happens to these assets, however, when someone dies? How do you pass along an asset that you can’t touch? What complications arise when you try to work through these issues? Consider the following tips to help you as you consider your digital assets in your estate plan.
List Out Your Digital Assets
The first step in including digital assets in an estate plan is to keep a list of what you will be passing down and where they are stored. There are many types of digital assets present that can be passed down to a beneficiary, including the following:
Cryptocurrencies (examples including Bitcoin, Etherium, Litecoin, Dogecoin, etc.)
NFTs (think of these as the “deed” to a piece of digital artwork—because you own the “deed,” you own the artwork)
Website domain names
Digital rights to works such as songs, books, plays, and movies
Monetized accounts in video creation, such as YouTube channels or Twitch channels
This is not an exhaustive list of all digital assets. If you are unsure whether or not something could be passed down to a beneficiary, ask your estate planning attorney.
List Out Accounts and Passwords
It doesn’t do any good to your family to pass down a digital asset that they don’t have the means to access. When considering your assets, not only is it important to list out all that you own, but you should also list any usernames and passwords you use to log in and access those assets. This should also include any passwords you use to log in to electronic devices such as your computer, your tablet, or your phone.
When including this information in your estate plan, one of your main priorities should be to include a line authorizing named individuals to access your online information. Because of rapidly changing online privacy laws, it may be wise to provide someone with permission to access your digital assets in the event the host site raises an objection to you trying to access those assets.
Back-Up Important Data In Multiple Places
Though you may think that your information is securely stored somewhere, something could happen at any time. If a server goes down or a device crashes, that data could be lost forever. It is wiser to have that information backed up in multiple digital storage devices. Many people have multiple storage locations such as hard drives, flash drives, and the cloud and use these to store their information and assets.
Have Your Beneficiaries Create Digital Wallets
Many NFTs and some cryptocurrencies such as Etherium are stored in digital wallets, and these assets can be transferred from wallet to wallet. Something you can have your beneficiaries do ahead of time to plan ahead is to create their own digital wallet to make that transfer easier. As your family moves through the probate process and works through asset distribution, they can gradually transfer these digital assets from your wallet to theirs as your will dictates.
Work With Your Attorney
Many aspects of digital assets in estate planning can be similar to those of physical assets. For example, you may want to name someone as a person who can access your digital assets and has the right to log in and see certain pieces of information. For these complex parts of estate planning, it’s important to work with an attorney who understands estate planning and can help you work through complicated issues related to digital assets.
The attorneys at Schweitzer Law Partners can help you create an estate plan that carries out your wishes and protects your family’s best interests through distribution of your assets, both physical and digital. To learn more about our services or to schedule a consultation, call us at (626) 788-5225 or visit us online.