Estate planning prepares for the future and makes sure that assets are distributed according to your will. Yet, often overlooked is having digital assets in the estate plan. A digital asset includes email accounts, online banking, digital photos and videos, cloud storage, websites, blogs, and cryptocurrencies. Without proper planning, they may become lost or inaccessible after death. Which can lead to potential complications for your loved ones. That’s why addressing these in your digital estate plan is essential to confirm their proper management and disposition.
Digital estate properties become increasingly significant as our connection to the digital world strengthens. Our online presence and activities accumulate over time. And if not properly addressed, they can easily overlook or forget them during estate administration. Adding them to your will or other estate planning documents ensures accounting for these assets, proper management, and distribution per your bidding. One key consideration in planning is deciding the fate of each account or asset. For example, an individual may want their social media accounts deleted, memorialized, or transferred to a trusted person to manage. They may have an online business or blog they want someone else to continue operating. These decisions should be made ahead of time and clearly outlined in a formal digital estate plan.
In the following sections, we will delve into the considerations and strategies for addressing digital estate assets in an estate plan. Which includes the identification and inventory of digital estate properties, the transferring of digital estate assets, and an overview of Colorado’s digital assets law.
The Different Types of Digital Assets
These cover a wide range of intangible digital assets with value in electronic form, such as cryptocurrencies like Bitcoin, digital art, domain names, digital media (photos, videos), virtual currencies in video games, digital documents, intellectual property, and online accounts. These assets exist exclusively in digital or electronic formats and typically require computers, networks, or online platforms for access, storage, and transfer.
Cryptocurrency, specifically Bitcoin, operates as a digital currency on a decentralized network known as the blockchain. Unlike traditional currencies, no central authority issues or regulates Bitcoin. Instead, powerful computers engage in mining, solving complex mathematical problems to validate and record transactions on the blockchain. When storing Bitcoin, there are several options.
Digital wallets, either software-based or online, provide secure storage and management for your financial accounts. Software ones installed as applications on computers or smartphones. While the hardware variant, physical devices designed to keep private keys offline, offers another option, enhancing security by reducing exposure to online threats.
Apart from cryptocurrencies, there are s non-fungible tokens (NFTs) that require attention in estate planning. These can hold significant monetary value and require careful consideration when including them in estate plans. It is crucial to understand the specific platforms, ownership rights, and transferability associated with these digital estates to establish their proper management and inclusion in estate planning. Having a well-thought-out plan for safeguarding digital estates and helping potential inheritors recover digital accounts is crucial to prevent the potential loss of assets or unauthorized access.
Crafting an Inventory and Planning for Their Future
Planning for the management and recovery of digital estate is an essential aspect of effective digital estate planning. By adopting proactive measures, an individual can mitigate the risk of loss and increase the chances of recovery if the need arises.
When creating a digital inventory for estate planning purposes, it is necessary to include a detailed list of your online accounts. Include associated usernames, passwords, and security questions. Don’t forget to account for cryptocurrency holdings, which should include wallet addresses and private key information. Other types, such as domain names, digital media (photos, videos), and assets with all rights reserved, should also be recorded.
Once completed, a digital asset inventory requires informed decisions about the assets’ distribution. Whether choosing to leave digital estate properties to individuals or organizations or opting for their deletion, clearly stating one’s wishes ensures respect during the administration.
One key strategy is implementing backup procedures to safeguard your digital estate. Regularly creating encrypted backups and storing them in secure locations ensures that you have a duplicate copy of your pertinent files. Additionally, password managers can help securely store and retrieve passwords, minimizing the risk of forgetting or losing access to your online accounts. Keeping detailed records of your information such as online account details, digital wallet addresses, and security keys, is essential. This extensive inventory allows for efficient tracking and recovery efforts.
Understanding the terms of service and conditions of online accounts is important. Familiarize yourself with the account recovery procedures offered by the service providers to ensure you know the steps to take in case of account loss or when transferring rights.
Locating Ownership Following the Death of an Individual
After an individual’s passing, if necessary to determine the proprietorship of financial accounts, social media accounts, or cryptocurrency, one can take certain steps to gather the required information. Following these measures can yield valuable insights into an individual’s digital assets.
Start by scrutinizing the decedent’s records, such as bank statements and financial documents. Search for signs of transactions or evidence of online exchanges or storage they may have used.
Then, explore the decedent’s email and online account information. Examine any communications or notifications related to cryptocurrency holdings. Look for emails from online transactions, wallet providers, or other online platforms.
To gain further insights, consider reaching out to trusted contacts of the deceased, such as family members or close friends. They may possess knowledge about the individual’s involvement in cryptocurrency and have information regarding certain accounts or holdings. Their input can provide valuable leads in the quest to determine possession.
It’s important to approach this process with sensitivity and respect for privacy. Be mindful of the decedent’s requests and any legal obligations concerning privacy and confidentiality. Consult with legal professionals to certify compliance with relevant laws and regulations related to particularly those relating to accessing and managing digital assets.
By diligently exploring personal records, reviewing online communications, and seeking insights from trusted contacts, you can piece together a complete picture of the decedent’s potential digital currency holding. This information is crucial for estate management, ensuring the proper handling and distribution according to their demands and legal obligations.
Considerations When Transferring Digital Assets to Beneficiaries
Transferring digital estates requires careful planning and attention to detail to ensure a seamless and successful process. To begin, it is essential to provide clear and thorough instructions to recipients regarding the existence and location of said assets. This involves sharing crucial information about online accounts, and any necessary access credentials. By providing these details upfront, a person helps empower the heritor to navigate the complexities of managing and accessing their digital assets.
Maintaining an updated inventory is equally important. The inventory acts as an extensive record, preventing any assets from being overlooked or forgotten during the transfer process. Regularly reviewing and updating this inventory accounts for all relevant holdings, updating any additions or changes to a digital portfolio.
Transferring to the grantee requires a combination of clear communication, proper documentation, professional guidance, and ongoing vigilance. By proactively addressing these practical considerations, you can help establish a smooth transition to your chosen legatee, providing them with the necessary knowledge and resources to manage and preserve your digital legacy.
Given the dynamic nature of digital assets and technological advancements, it is crucial to regularly review and update a digital estate plan. Technological advancements may introduce new types of online assets or change the landscape in which existing assets operate. By staying informed and incorporating these updates into a digital estate plan, an individual can confirm that their wishes are accurately reflected and carried out during the asset transfer process.
Understanding Colorado’s Digital Asset Laws
Colorado has enacted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), establishing a legal framework for fiduciaries, including digital executor, trustees, and agents under a power of attorney, to manage and distribute digital assets.
The Colorado RUFADAA grants fiduciaries, like an agent under the power of attorney or a digital executor, the authority to manage and distribute a deceased or incapacitated individual’s digital assets. To gain access to a person’s accounts, a digital executor or agent with the power of attorney must submit a written request and provide appropriate documentation as per the custodian’s terms of service agreement. The custodian could be an email service provider, social media platform, or other online service. The custodian must then legally comply with the request from the digital executor for access, considering any exceptions or privacy considerations.
The Colorado RUFADAA allows individuals to specify their preferences regarding their digital assets accounts within their estate arrangement documents, such as Wills, trusts, or powers of attorney. By including explicit instructions in these legal documents, individuals can verify that their holdings are handled per their wishes.
Completing a digital asset checklist and providing clear instructions to beneficiaries is essential for a comprehensive digital estate plan. In this process, a digital executor or agent with power of attorney can guide loved ones, ensuring digital assets’ preservation and protection.
The Law Office of Josh Krieg, LLC stands ready to assist with any estate planning inquiries, including those involving digital currency. We understand the importance of digital assets in estate planning and commit to offering expert guidance expertise as digital executors or agents with power of attorney. Operating from Fort Collins, Colorado, we proudly provide comprehensive remote services across Colorado, Wyoming, and North Dakota. Contact us today for a consultation and experience our professional, personalized legal approach.