The Dangers of Forgetting About Digital Assets in Estate Planning
In today’s digital age, many individuals have significant digital assets, such as online accounts, digital files, and cryptocurrency. However, these assets are often overlooked or forgotten when it comes to estate planning. Forgetting about digital assets when crafting a will or other end-of-life documents can have serious consequences for both the individual and their loved ones. In this article, we’ll explore the potential dangers of forgetting about digital assets and provide guidance on how to avoid these risks.
The Potential Dangers of Forgetting About Digital Assets
Confusion and Delay in Settling the Individual’s Estate
Without clear instructions from the individual, family members and loved ones may be left to sort through a maze of passwords, accounts, and files to access and manage these assets. This can create significant delays in settling the individual’s estate and additional stress and emotional strain on loved ones already dealing with grief and loss. For instance, if the individual has not provided a comprehensive list of their digital assets or specified how to access them, their family members may have to spend months or even years figuring out what assets exist and how to manage them.
Financial Loss or Identity Theft
Without clear instructions from the individual, family members may be unaware of the existence of certain digital assets or accounts or may not have access to important information such as passwords or security questions. This can create a risk of financial loss or identity theft, as hackers or other malicious actors may be able to access these assets. For example, suppose the individual had invested in cryptocurrency but did not provide instructions on accessing their accounts. In that case, their family members may be unable to claim these assets, which could be worth thousands or even millions of dollars.
Difficulty in Honoring the Individual’s Memory and Wishes
Digital assets such as social media accounts, blogs, or other online content may hold sentimental value for loved ones. Still, without clear instructions from the individual, they may be unable to access or manage these assets in a way that is consistent with the individual’s wishes or values. For instance, if the individual had a blog or social media account that contained important messages or memories, their family members may want to preserve or share this content but may be unable to do so if they do not have access to the account.
Legal Issues or Disputes
In some cases, the ownership or transfer of digital assets may be subject to complex legal issues, such as intellectual property rights or international data privacy laws. Without clear instructions from the individual, family members, and loved ones may be left to navigate these legal issues independently, which can create additional stress and confusion. For example, suppose the individual had developed proprietary software or other digital assets that were subject to patent or copyright laws. In that case, their family members may have to go to court to determine who has the legal right to claim or manage these assets.
How to Avoid These Probate Risks
To avoid these risks, including digital assets as part of the estate planning process is important. Here are some tips:
Create an Inventory of Digital Assets
Make a comprehensive list of all your digital assets, including online accounts, files, and cryptocurrency. Keep this list safe and update it regularly, especially if you acquire new assets or change your passwords.
Clear Instructions on How to Access and Manage Digital Assets
Include instructions on accessing and managing your digital assets in your will or other end-of-life documents. This may include providing passwords, security questions, and other important information.
Designate a Digital Executor or Trustee
Designate a digital executor or trustee to manage your digital assets in accordance with your wishes. This person should be someone you trust with the technical knowledge to manage your digital assets.
Consider the Privacy and Security of Your Digital Assets
Consider the privacy and security of your digital assets when creating your estate plan. For instance, if you have sensitive or confidential files, you may want to provide instructions on how to securely delete or transfer these files after your death.
Seek Professional Advice
Consult with a probate/estate planning attorney to ensure that your digital assets are legally protected and that the estate planning process is as smooth as possible for your heirs. They can help you navigate the complex legal issues related to digital assets and ensure that all your documents are in order and up-to-date.
Here are some fictional but realistic examples to illustrate the potential dangers of forgetting about digital assets in estate planning:
Example 1: Alice, a business owner with a significant amount of cryptocurrency, never provided instructions on how to access her accounts in the event of her death. When she passed away suddenly from a heart attack, her family members could not access or manage her cryptocurrency holdings. This led to significant financial loss for her heirs, as the value of the cryptocurrency had increased significantly since Alice had acquired it.
Example 2: David, a photographer who stored all his work digitally, did not specify how to access his files after his death. When he passed away, his family members were left with no way to access or retrieve his photos, which were his life’s work. This led to significant emotional distress for his family, who could not preserve or share David’s work.
Forgetting about digital assets when crafting a will or other end-of-life documents can have serious consequences for both the individual and their loved ones. By including digital assets as part of the estate planning process, individuals can ensure that their digital assets are managed in accordance with their wishes and that their loved ones are not left to navigate a maze of passwords and accounts after their death. Ultimately, planning for digital assets is an important part of the estate planning process that should not be overlooked. It is important to consult with a probate/estate planning attorney to ensure that your digital assets are legally protected and that the estate planning process is as smooth as possible for your heirs.