The responsibilities of estate planners and finance professionals have deepened. Data is as valuable as physical possessions for many, and they require consideration when organizing inheritances. What does digital asset management look like for those getting their affairs in order?
What Digital Assets Should Finance Experts Consider?
Anything locked behind a username or can be compiled into a file could be a digital possession. Surveys suggest only 29% of Americans think they are knowledgeable about what they have, even though they feel it is important to protect it. These are the most frequent online properties finance advisers need to communicate with clients about:
- Social media accounts
- Credentials
- Digital wallets and cryptocurrencies
- Communication records
- Domains
- Digital media
- Intellectual property
- Non-fungible tokens
These must be included in estate plans alongside properties and other valuables. They all hold monetary or sentimental value — for instance, many families share photos in online albums instead of books. This trend shows how attitudes have shifted regarding the emotional and practical worth of online objects, making them as important as household keepsakes.
Why Is it Important to Catalog Digital Property?
Experts should get a list of everything the estate feels vital to include in its plan. The details will navigate potential disputes because each item will be tied to a specific action. Advisers should let clients know what they can do with their assets, including mass deletion of social media profiles or handing off the ownership of a blog to a family member.
Many challenges arise when laying claim over digital spaces, including privacy concerns and sparse legal precedence. If a person does not detail how to access their digital estate, then after-death administrative tasks are cumbersome to facilitate. Additionally, internet natives have accumulated their entire lives in online environments, making the scope of these files astronomical. Of people between the ages of 18 and 34, only 26% had wills in place. Money experts should start normalizing early planning because of this fact.
Cataloging everything early is crucial for ensuring all parties cover their bases. It also increases the chances posthumous access is granted to the right people with the most up-to-date information.
For example, an individual might have specified an heir for external hard drives, but multiple people could know the passwords to social media accounts, muddying who has ownership. How is it distributed based on this information, unless it is qualified as clearly as physical possessions? Some websites have internal settings to assign legacy users to validate if someone has passed. For properties without these considerations, alternative rules need establishing.
How Do Finance Professionals Support Digital Estate Management?
Everything must happen in accordance with the owner’s wishes. After making an inventory, financial experts should have clients assign a digital executor, especially if it is different from the traditional heir. Regardless of asset distribution, each recipient will understand their responsibilities and the tools they need to navigate acquisition and legacy preservation.
Professionals must start by educating executors on terminology surrounding digital assets. For example, around $87.5 billion in cryptocurrency assets are locked in smart contracts. How do these ecosystems authorize or deny access to inherited funds? Consulting with managing third parties will help inheritors and advisers fill knowledge gaps.
Finally, everyone must approve the plan and know its conditions to finalize it. People need to know where to find them when it is time. Important documents should be backed up regularly in safe spaces. Financial professionals should also recommend the industry’s best cybersecurity practices to make sure everything is protected.
What Should Finance Experts Know About Legalities?
Regulations vary by jurisdiction, but processes follow similar legal considerations as standard real estate plans, like:
- Contacting notaries
- Establishing powers of attorney
- Consulting digital real estate legal experts
- Seeking third-party cybersecurity solutions for protection
- Researching when digital estate plans require updates
In the U.S., most states have created some guidance through the Revised Uniform Fiduciary Access to Digital Assets Act in 2015. This and other rules explain what proof is necessary. For example, in Connecticut, individuals need to provide a death certificate and documentation of their appointment as an administrator over electronic mail accounts. States like Kansas specified four types of fiduciaries that could receive digital assets in 2017, making ownership more comprehensive.
Many companies housing digital information have privacy policies that prohibit them from relinquishing information per their terms of service agreements or privacy policies. It is critical to know beforehand what entities have these obstacles.
Securing Online Legacies
Many people carry a significant portion of their lives online, and those memories and objects have worth. When estate planning, everyone should take responsibility by including digital property. The forethought makes after-death care accessible for loved ones to manage while grieving. Finance professionals will guide them through the most productive strategies as they inventory their life’s journey.
