A Plan for Digital Assets

Question: Should my Estate Plan cover digital assets? If so, how do I make sure this is accomplished?

Answer: The short answer is yes; your Legacy and Estate plan should include provisions for digital assets. It’s important to designate someone to have access to your online activity if you were to become temporarily disabled or in the event of your death. The occurrence of disability may be more significant and critical so someone can process payments and conduct financial transactions required to maintain your lifestyle, especially if you’re incapacitated for a period. 

Many of us have online accounts, assets, services, and important stored documents that may not be covered in current provisional documents. These intangible possessions are noteworthy and do have value. In contrast, tangible items including real estate, hard assets, jewelry, collectables, and investments accounts are easily identifiable. Digital assets aren’t always top of mind when creating and maintaining an estate plan. Overlooking those digital assets could lead to unpleasant challenges for family members including the permanent loss of items of value, both sentimental and monetary in nature.

Organizing digital assets is advantageous for reasons beyond death or incapacity. Having a secure contingency or backup plan to access important accounts, pay utility bills, and access medical portals in this digital age where electronic assets are as commonplace as tangible records and files is expected. Legal and tax documents, insurance policies, licenses, passports, and certifications can be stored securely using an online vault. We offer our clients a vault to store these files and let them indicate who’ll have authorized access and permission to retrieve the information. Typically, that right of entry is given to an attorney, CPA, power of attorney’s and executors. Files are uploaded to folders in your online vault file sharing platform that offers multiple layers of digital security creating a safe online location to store important files.

Getting a handle on passwords and usernames can be challenging under the best of circumstances. Anything that can be done now to make life smoother in the future is highly recommended and begins by identifying your digital assets. Begin by taking inventory to provide clarity and order to this area of your life. 

The term digital asset includes digital currency wallets, online family photos and even non-fungible tokens (NFTs) for a digital piece of art or collectible. Electronic device apps are also digital assets and show the expansive nature of this asset category. You might not want to bother including a crossword puzzle or Mexican Train app, but there are many apps that have monthly fees and contain important information that should be included in your online digital asset identity inventory. 

The most common examples are financial accounts, service accounts, legal and financial document storage, cloud storage, online photos, and health records. Email and social media accounts fall into this category as well. Making sure that there is a process and procedure to make social media accounts and digital assets accessible to loved ones when the time comes so these accounts can be closed gracefully is a gift you give to those you care about.

It may be helpful to create your digital asset inventory gradually over time when you use and log into specific apps. A comprehensive ongoing recap helps organize these items. Now that you’ve been introduced to the idea of a digital estate, you’ll likely find it easier to identify and plan for these assets and accounts.

For practical purposes, you may want to consider setting up a cloud-based backup to consolidate digital asset information not tied to specific service accounts, including photos, videos, and PDFs of health records and legal documents. We have access to some of these tools with an online vault to help organize your assets while providing gated access and rigorous cybersecurity.

For online accounts, it’s a good idea to change passwords regularly for security reasons. A secure password manager can make it easier to manage strong, complex passwords and simpler for loved ones to access the accounts if needed.

Creating an estate plan is an act of love. By making your intentions clear with a holistic, comprehensive plan, you help reduce additional stress and friction for your loved ones as they grieve. Though the understanding of the value of digital assets is new, accounting for them in an estate plan follows the same foundational principles as with any other asset.

And like with all planning practices, it’s better to have a plan too early than to need one suddenly. We are happy to discuss ways to account for digital assets in your holistic long-term financial plan. Stay focused and plan accordingly. 

The opinions expressed are those of the writer as of October 24, 2021, but not necessarily those of Raymond James and Associates, and subject to change at any time. Raymond James and its advisors do not offer legal advice. You should discuss any legal matters with the appropriate professional.

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This article provided by Darcie Guerin, CFP®, Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Drive Suite 401, Marco Island, Florida 34145. She may be reached at 239-389-1041, email darcie.guerin@raymondjames.com Website: www.raymondjames.com/Darcie.