Beginner’s Guide to Digital Assets Planning: Everything You Need to Know
When it comes to estate planning, we are always thinking of who we want to leave our business, house, or property to. However, there is a lot that has changed over the last decade or so.
Typically, properties fall in two categories – personal and real property. Real estate usually encompasses tangible property like land or buildings. On the other hand, personal property is divided into tangible property (things that you can see and hold) and intangible property (items that lack physicality).
The intangible property has now been subdivided further to accommodate the new category of personal property – digital assets.
Until recently, most of our lives required the physical exchange of documents; now, money and documents have been digitized. Also, a significant part of our personal lives is online through social media.
A handful of estate planners, including our estate planning attorney in Glendale, provide digital asset planning for their clients. This may pose significant challenges since digital assets are increasingly valuable, and they can be difficult to manage without proper planning.
Digital Assets, In a Nutshell
With most parts of our lives digitized, it only stands to reason that digital assets have become an essential part of estate planning. So, what are digital assets?
Any file that you save on your computer or in the cloud, or any online account that you have is defined as a digital asset. When you are discussing estate planning with our wills & trusts attorney, keep in mind the following few categories of digital assets:
- Financial Accounts
- Online Reward Programs
- Electronic Communications
- Digital Collections
In our efforts to staying up-to-date, many banks allow their customers to transact online. Other banks have partnered with other digital payment platforms such as PayPal and Zelle, which would enable customers to transact online.
Banks and digital payment platforms are considered as digital assets.
As we see, more companies move their goods and services online; they have, in turn, created online rewards programs. These programs typically reward their customers with cashback, points, or discounts. These rewards can grow and earn a spot in your estate.
Online interactions are on the rise because of social media. Your social media accounts, although they might not yield monetary worth, should be added to your estate plan.
Any photos, music files, or videos that have been digitized fall under digital assets. Just like electronic connections, these may not yield any monetary worth, but they carry a lot of sentimental value. This is what makes them be included in your estate plan.
How to Protect Your Digital Assets
Planning ahead can help solve a lot of headaches for your loved ones when you pass on. Here are four steps that you can follow:
- Create a list. List all of your digital assets so that your beneficiaries can know what you have and where to find them. You must include your passwords, digital property (including virtual currency), and online accounts.
- Understand what you truly own. There are times when you would purchase a digital asset only to find that you purchased a non-transferable license. This is the case when you buy music on iTunes.
- Back up the data you store in the cloud. If you have data stored in the cloud, back them up in a storage device or local computer regularly so that your loved ones and fiduciaries can access the files with less stress.
- Provide legal consent. An experienced estate planning attorney in Glendale can update your powers of attorney, your wills, or any revocable living trusts. The document should include words that give lawful consent to divulge the contents of your digital assets to the relevant parties.
Benefits of Including Digital Assets in Estate Planning
Some attorneys do not include digital assets in estate planning because they do not know how they all fit in estate planning. However, here’s how it is beneficial in estate planning:
- To make the process of accessing your digital assets easier on executors and family members.
- To prevent identity theft so as your identity will not be stolen, after you pass on.
- To avoid content theft thus stopping people from stealing material that you have stored online.
- To prevent unwanted secrets from being uncovered by malicious people.
- To prevent losses to your estate because some assets are valuable and can lose their value if they are undiscovered for a long time.
The digital world has become an integral part of our lives. Including your digital assets in your estate planning would help save your loved ones a lot of headaches later on. At Bazikyan Law, we have a wills & trust lawyer who can help you when you with digital asset planning.