Creating an estate plan is vital to providing financial security to your loved ones, establishing generational wealth, and ensuring your final wishes are carried out. When we consider our estate plan, we tend to think in terms of physical assets, such as real estate and personal property.
However, as technology evolves, many of our assets only exist in a virtual world. Therefore, it only makes sense to establish an estate plan that covers our digital assets in addition to our physical ones.
What Are Virtual Assets?
Virtual assets are non-physical assets that can be traded or transferred digitally. They can be used for payment or investments. Examples of virtual assets include cryptocurrencies, such as Bitcoin or Ethereum, virtual goods in online games, digital arts, and other forms of digital property that are representations of real-world assets.
The value of virtual assets can fluctuate significantly and is often determined by factors such as demand, scarcity, and utility within their respective digital ecosystems.
Why Should You Include Virtual Assets in Your Estate Plan?
Virtual assets can hold both sentimental and monetary value. Including them in your estate plan ensures a comprehensive valuation of your wealth after you pass away. If they have significant value, such as cryptocurrency or frequent flyer miles (depending on the airline’s policy), they can help ensure your beneficiaries benefit from them.
You can also help preserve your legacy by having a plan to distribute NFTs, digital art, and other online content.
Some digital assets, such as social media, email, and online banking or payment accounts, are often tied to personal information and can hold financial benefits. If they are not included in your estate plan, there is the risk that they will be inaccessible after your death and lose any value.
Last, unmanaged digital assets can increase the risk of identity theft and fraud. Cybercriminals can exploit inactive user accounts, leading to potential financial and reputational damage.
Creating a Digital Estate Plan
Here are some steps you can take to ensure your digital assets are properly included in your estate plan:
- Make a comprehensive list of all your digital assets. This includes online financial accounts, email accounts, social media profiles, digital collections (music, e-books, photographs), blogs, and cryptocurrencies.
- For each digital asset, list the necessary access information. This might include usernames, passwords, security questions, and other required details for login.
- Specify what you want done with each virtual asset. Do you want them transferred to another person, closed, or maintained? Would you like your digital collections downloaded and given to a specific person?
- Your virtual assets will likely change and grow over time. Regularly review your inventory and update your estate plan to ensure nothing is left out.
Creating a digital estate plan to safeguard your virtual assets can be challenging. California’s Revised Uniform Fiduciary Access to Digital Assets (RUFADAA) allows for the management and disposition of your virtual estate. However, the laws are complex, so it’s best to discuss your estate plan with one of our attorneys at Lonich Patton Ehrlich Policastri. We have the expertise you need to create an estate plan that covers your physical and virtual assets.
Disclaimer: this article does not constitute a guarantee, warranty, or prediction regarding the outcome of your legal matter.