As one of the oldest legal specialties, estate planning is steeped in centuries of tested tradecraft designed to protect your assets and accomplish your lifetime and legacy goals. But every coin has a flip-side, and for estate planning it’s slowness to change. Truly, it’s a lumbering dinosaur when it comes to being at the cutting edge of technology and the future digital economy; including cryptocurrency, NFTs, and decentralized finance (DeFi).
Thankfully, at GuideOn Legal Services (GLS) we have taken that dinosaur by the horns (think Triceratops) and taught it to use a mobile device. Why? Because protecting your digital assets is now a critical component of a high-quality estate plan. Without digital assets provisions in your plan, your assets are at risk and the job of your executor (in a will), trustee (in a trust), or agent (in a power of attorney) will be much more difficult.
What the heck are digital assets?
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 username/password information for online financial or social media accounts, and digital images or video of sentimental worth.
Why should you care? Two reasons:
- You will want to pass on sentimental items to loved ones, such as your 50 gig family photo album in iPhoto. And digital providers make this very difficult after someone has passed away.
- Your executor/trustee will need access to your online accounts in order to properly marshal, inventory, and distribute your assets.
So, why can’t I just give my named executor/trustee a list of my usernames and passwords to access these items? Again, two reasons:
- It’s dangerous – do you really want to share (or provide access to) your usernames/passwords to financial and other accounts? I think not.
- It’s a crime to access other people’s accounts without explicit (and legal) permission to do so. And people who now reside in heaven can’t give permission. . .other than through a will or trust.
Okay, you’ve convinced me to ride the technosaur, what do I do?
It’s simple, you need to ensure that your will, trust (if you have one), and power of attorney all have digital asset provisions. More specifically,
Your will/trust/power of attorney should define “digital assets,” By way of example, a partial excerpt from the GLS archives, “The term “digital asset(s)” means an electronic record in which either I have a right or interest. . .does not include an underlying asset or liability. . .can be stored on computers (or other hardware or devices), in the cloud, or in online accounts. . .includes online accounts (financial or otherwise), internet-based businesses, domain names, social medial accounts, networking websites, email, photographs and video, personal blogs, documents. . .includes cryptocurrency private (or recovery) keys for cryptocurrency accounts. . .”
- Your will or trust should distribute your digital assets as part of your personal property claluse or as a specific bequest, “I give and bequeath all remaining furniture and furnishings, pictures, books, appliances, jewelry, wearing apparel, personal automobiles, boats, household goods, garden or farm equipment, china, silver, antiques, works of art, Digital Assets (as that term is defined in ARTICLE IX). . .”
- Your will/trust/power of attorney should grant your fiduciary power to access and manage your digital assets, “The Executor shall have the power to exercise all powers I may have over any Digital Assets (as that term is defined in ARTICLE IX), digital devices (including any cryptocurrency digital device), user accounts and electronically stored information, including any user account and digital assets that currently exists or may exist as technology develops. . .”
- Your will/trust/power of attorney should indemnify service providers who honor your digital asset provisions to encourage compliance. Why? Providers don’t like to get sued for carrying out your wishes, so you promise they won’t be, “I hereby indemnify and hold harmless any executor, agent, or digital asset provider who relies on this power in. . .”
- Bonus Tip: Contact your digital-life providers (Facebook, Google, etc.) and inquire into its “online tool” settings. Under the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) and similar statutes adopted in most states, account holders can create an “online tool,” separate from their terms of service, through which they can direct the extent to which their digital assets are revealed to third parties, including fiduciaries. (On Facebook, for example, the online tool is known as Facebook Legacy Contact). If a user has provided direction through the online tool, it will supersede conflicting directives, including those in a will or power-of-attorney.
Most Americans (>60%) do not have wills, and most wills do not have digital asset provisions. So, let’s talk when you are ready. At GuideOn Legal Services (GLS), we employ cutting edge estate planning techniques to protect and preserve your assets and accomplish your lifetime and legacy goals.
**And, by the way, if you have cryptocurrency in your portfolio, please contact us immediately. Don’t leave your crypto sitting on an exchange. We have a crypto expert on staff who can show you how to protect your accounts and secure your private keys. We look forward to serving you and your family!
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.