Digital Assets and Estate Planning
The law of wills, trusts, and estates is slow to change. That’s why most estate planners will advise you to review your plan every 3-5 years, or upon a significant life event like getting married or having kids. One glaring exception to this rule is the area of digital assets and cryptocurrency planning. Here, change is occurring so rapidly it can be hard to keep up! And the impacts of NOT keeping up can be significant (and not in a good way).
Fear not! Your favorite estate planning attorney (and I say that because I’m probably the only one you know) has a practical digital asset tip to share today that will either beef up your existing estate plan, or encourage you to get the ball rolling on one (here’s why you shouldn’t wait).
But first, let’s get a grip on what we are talking about here….
What the heck are digital assets anyway?
The term “digital assets” is a misnomer of sorts as we tend to think of assets as things of value. But digital assets are quite the opposite. They have little-to-no value and are either administrative, data-based or sentimental. Examples include digital pictures (think iPhoto albums), family videos, social media accounts and posts, email, username/password information for online financial and other accounts, and even private keys for your cryptocurrency investments or NFTs (i.e., non-fungible tokens, often in the form of digital artwork),
Why would I want to grant access to my digital assets?
First, you may want certain family members, friends or other loved ones to inherit or have access to digital items of sentimental value like your online digital photos/family videos, emails and social media posts.
Second, in 40 years, when you kick the can, your executor is going to need access to your online accounts in order to marshal your assets so they can be distributed to your loved ones. By having access to your online banking, investment, and email accounts, life will be much easier for your executor (who, remember, you blessed with this thankless job).
Third, digital life providers like Google, Facebook, and especially Apple are extremely resistant to granting access to a deceased user’s account, even to a spouse or children. There have been many cases of executors and/or loved one’s trying to gain access to get family pictures or other sentimental items only to be denied by these providers. When such cases go to court, the digital life providers win because user privacy is protected in the Terms of Service (TOS). What are TOS? It's that contract no one reads, but everyone signs by checking a box when opening an iCloud, Facebook, Google (etc) account.
Yeah, but my spouse (or whoever) has all my passwords anyway, am I good-to-go?
Nope. Without having your explicit, written, legal permission to access these accounts (and no, writing it on a napkin isn’t good enough), anyone who does so, even if they have your passwords, is committing a crime (see the Computer Fraud and Abuse Act of 1986, 18 USC §1030). Are they going to get caught and go to jail? Probably not, but I wouldn’t want to risk it – especially when it’s easy to avoid.
This sounds complicated, is it?
Yes and no.
How to fully integrate digital asset planning and protection is a bit complicated and is covered in my article “CYA – Cover Your (Digital) Assets,” which I encourage you to read with a nice cup of coffee to keep you awake.
But there is an easy, non-complicated, part, and that’s what I want to share with you today. No need for a lawyer, and you can get this part done in under 10 minutes.
Okay, Here it is – the Practical Tip I promised in the first paragraph
Under a pretty boring law called the Revised Uniform Fiduciary Access to Digital Assets Act – RUFADAA, the use of “online tools” by a testator to grant a fiduciary access to digital assets/accounts, trumps any conflicting statutory provisions, and even anything in the Testator’s will or other estate planning documents! An online tool is defined as any mechanism by which a digital life provider (Apple, Google, Facebook, etc) allows a user to grant access to a named person in the event of the user’s incapacity or death.
Many digital providers have implemented these online tools over the last few years, and the rest are planning to do so in the near future.
Please take advantage of this powerful tool right now. Take the next 10 minutes, login to each of your major digital life provider accounts, and follow the instructions to name your legacy agent.
I can’t provide the instructions here because they’ll just change over time, and then you’ll get mad at me when it doesn’t work. However, a simple Google search for the following online tools will get you where you need to go:
Apple Legacy Contact
Google Inactive Account Manager
FaceBook Memorialization Settings
Twitter and Instagram (still in the works – no online tool available yet)
Failing these “online tools”, the next best line of defense is to have digital asset clauses in your estate planning documents (wills, trusts, powers-of-attorney).
If you don’t do any of this, your executor might still be able to rely on standard executor powers and tangible personal property clauses in your estate planning documents to deal with digital assets, but this does not always work. As mentioned above, many providers, especially Apple, will fight such attempts in the name of protecting a deceased user’s privacy.
One last thing - Cryptocurrency and Digital Assets
Please understand that cryptocurrencies and NFTs are not digital assets, under estate planning parlance, because they are assets with real (monetary) value. However, the private keys, PINs, and passwords that grant access to the crypto most certainly ARE digital assets. And your executor will need access to them in order to eventually marshal and distribute them to your loved ones in accordance with your will/trust. Note: the topic of how to distribute cryptocurrency via a will or trust is beyond the scope of this BLOG, but see our cryptocurrency practice area for more information. You may also be interested in our award-winning article on how to buy cryptocurrency the smart and safe way (okay, I was kidding about the award-winning part, but it's pretty good).
The author is GuideOn Legal Services (GLS) founder Jack Grimes, a military veteran, former Intelligence Community executive, small business owners and JAG Corps Reserve Officer with over 17 years of experience in estate planning. He is among a limited number of attorneys in the country with an LL.M. (Masters of Law) in Estate Planning and Elder Law. The GLS motto, Live Long, End Strong® epitomizes the full life-cycle approach Jack takes to estate planning. It starts with the end in mind, and then builds a lifetime and legacy plan, culminating in the peace of mind that comes with protecting your family's future by preserving assets from taxes, probate costs, legal issues, and unnecessary financial risk.