Estate Planning Strategies for Digital Assets

As digital assets increasingly become an integral part of people's lives, managing these assets in the context of estate planning has become crucial. Digital assets can range from email accounts, social media profiles, and digital photos to cryptocurrencies, websites, and other online services.

In Rocklin, California, the need for robust estate planning strategies for digital assets is becoming more pressing as digital avenues continue to evolve. The estate planning attorney from the Law Office of Geoffrey Fong can help individuals address these challenges and create a plan that reflects their wishes for their digital legacy.

The Growing Importance of Digital Assets

Digital assets can represent a significant portion of an individual's total wealth, both in terms of financial value and personal significance. These assets are often dispersed across various platforms, accounts, and devices, making their management during and after one's lifetime a critical consideration. 

Without proper planning, loved ones may struggle to access and manage digital assets, potentially losing valuable data or encountering legal obstacles when attempting to carry out one's wishes.

The rise of cryptocurrencies, online banking, cloud storage, and virtual media has created a scenario where people own more digital than physical property. As a result, an estate plan that doesn't account for these digital elements risks overlooking important aspects of an individual's legacy.

Legal Considerations for Digital Assets in California

California law offers certain protections for digital assets but also presents challenges for those wishing to pass them on. 

The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which came into effect in California in 2016, grants fiduciaries—such as executors, trustees, or agents under power of attorney—the right to access and manage a decedent's digital assets, but only if the account holder has granted them explicit permission. 

This means that individuals must specify who will have access to their digital assets and how these assets should be managed. In California, RUFADAA applies to all types of digital assets, including social media accounts, email, and online banking. However, it doesn’t automatically grant access to all digital content. 

For example, a decedent’s email or social media profile will be inaccessible to a fiduciary unless the deceased had granted specific permission to an estate planning attorney or designated person. 

Thus, it's essential for individuals to explicitly state their intentions regarding digital assets in their estate plans, particularly to avoid confusion or disputes among family members after death.

Types of Digital Assets

To develop effective estate planning strategies, it’s helpful to classify digital assets into several categories. The following list identifies some of the most common types:

• Financial accounts: These include online bank accounts, payment platforms like PayPal, and cryptocurrencies such as Bitcoin or Ethereum.

• Social media and email accounts: Platforms like Facebook, Instagram, X, and Gmail may hold valuable content such as photos, personal messages, or business correspondence.

• Digital content: Photos, videos, music, eBooks, and other personal media stored on cloud services like iCloud, Google Drive, or Dropbox.

• Websites and blogs: Domains, hosting accounts, and content associated with personal or business websites, including any associated revenue streams.

• Online subscriptions: Services like Netflix, Spotify, or Amazon Prime, which may contain recurring payments or memberships.

• Cryptocurrencies and NFTs: Virtual assets that require careful management, especially regarding private keys and access to digital wallets.

Each type of digital asset may require a different strategy, which is why it’s critical to work with an estate planning attorney familiar with the unique challenges posed by these assets.

Strategies for Planning Digital Assets

There are a number of different strategies that an estate planning attorney may suggest when planning for your digital assets including:

Inventory of Digital Assets

Creating an inventory of digital assets is one of the first steps in planning for their distribution after death. This inventory should include not only login information and passwords but also the value and significance of the assets. 

A comprehensive list should be kept up-to-date and accessible only to trusted individuals, such as an estate planning attorney or a designated fiduciary. Tools like password managers can help organize this information securely.

Designating Access to Digital Assets

California law permits individuals to designate agents to manage their digital assets, but such appointments need to be done explicitly. It’s important to state in an estate plan who will have the authority to access and manage digital assets upon death or incapacitation. 

The estate planning attorney can help with drafting specific provisions in the will or trust that assign these responsibilities. RUFADAA also allows individuals to designate a “digital executor” through online services, giving that person the right to manage digital assets. 

However, not all online platforms recognize such designations, so it's essential to include these decisions in the will or trust.

Account-Specific Instructions

Each online platform has its own rules regarding what happens to an account when the user passes away. For example, Facebook allows family members to request the deletion or memorialization of a deceased person’s profile, while Google provides options for data transfer or account deletion. 

Individuals can give detailed instructions in their estate plan regarding what they want to happen to each of their digital accounts. By specifying how accounts should be handled, whether to delete them, transfer the content, or pass on access to certain individuals, a person can help eliminate ambiguity after their death.

Special Considerations for Cryptocurrencies and NFTs

Cryptocurrencies and NFTs (Non-Fungible Tokens) require unique planning strategies, as they depend on private keys and wallet access. Without the proper credentials, a decedent’s cryptocurrency holdings or NFTs may be lost forever. An estate planning attorney can assist with creating a secure plan for managing these assets.

It’s important to consider safe methods for storing private keys, such as in a password manager or secure physical location. The estate plan should outline who will have access to these keys and how they’ll be used or distributed.

Working With Digital Executors

In California, as in many other states, individuals can designate a “digital executor” who’s responsible for overseeing digital assets after death. This person may be tasked with closing accounts, transferring funds, or managing digital content according to the individual’s wishes.

An estate planning attorney can help designate the appropriate individual and make sure the digital executor is familiar with the responsibilities involved. This could involve accessing and managing financial accounts, social media profiles, or virtual properties. 

However, digital executors should only be trusted individuals who understand how to handle these assets with care.

Using a Revocable Trust to Handle Digital Assets

Many people choose to use a revocable trust as part of their estate plan, as it allows for more flexibility in managing and distributing assets. This option can also be applied to digital assets, seeing they’re transferred or accessed according to the individual’s wishes. 

A revocable trust can be designed to incorporate both traditional assets (like real estate or investments) and digital ones, reducing the need for probate. An estate planning attorney can craft a trust agreement that includes provisions for digital assets, identifying specific instructions for each asset type. 

This trust can name a digital executor to provide a smooth transition of digital assets without unnecessary delays.

Managing Social Media Profiles

Social media accounts are often one of the most emotional types of digital assets, and without proper planning, they can lead to family disputes. Some platforms allow account holders to designate what should happen to their profile upon death. For example, Facebook permits users to create a legacy contact, who can manage the deceased person’s account.

An estate plan can incorporate instructions regarding social media profiles, detailing whether accounts should be memorialized, deleted, or transferred to a loved one. It’s essential to consider the wishes of the account holder and the emotional sensitivity of family members when making these decisions.

Protecting Privacy and Security

Digital privacy is a growing concern, especially when dealing with financial accounts and sensitive personal information. An estate plan should address how digital assets can be accessed securely, and precautions should be taken to prevent unauthorized access. 

This could include setting up two-factor authentication, using strong passwords, and designating trusted individuals who can step in if needed. A well-drafted estate plan will also focus on how to secure personal data during the transfer process. This means that the deceased's privacy is protected and that no unauthorized access occurs.

Consult With a Legal Professional Today

Planning for digital assets is an essential part of modern estate planning, and with the help of an estate planning attorney, individuals can create a comprehensive strategy that aligns with their goals and wishes.

Attorney Geoffrey Fong serves Rocklin, California, and the surrounding area including Roseville, Folsom, and Citrus Heights. Reach out to the Law Office of Geoffrey Fong today to learn more about how to protect your digital assets.