Digital technology has seen great advances in recent years which has drastically changed estate planning for many people. It is important for individuals to think about digital assets when considering planning for the future. Most people only consider physical assets when they are planning their estate for the future, but now it is important to consider how valuable digital assets can be for you and your family. It is important to draft an estate plan that addresses the distribution of ownership and burdens of physical assets, as well as digital assets to avoid sentimental loss of value.
What Is A Digital Asset?
It is common for technology to grow at such a fast rate that is outpaces the regulations and law put in place years prior. This makes it difficult to walk through processes such as estate planning because of the addition of digital assets. Digital assets are considered to be any digital item that comes with property rights but is built in a binary format. The term digital asset actually covers a wide variety of different properties such as electronic communications such as social media accounts, website domains, or an email address. Digital assets also encompasses online financial accounts such as PayPal or Venmo, but it also includes online incentive programs such as credit card reward programs, airline travel mile programs, and other similar programs.
Digital assets also include online media and data. This can include media such as photos, videos, and written content, as well as data included in customer databases. Data is a term that can be used to talk about personal information, as well as contact information, or a variety of other important information. The last property that has been recently included into digital assets is cryptocurrency. Cryptocurrency contains materialistic value that is similar to traditional methods of currency but kept in a digital format that can be difficult to draft an estate plan for.
How Can You Cover Digital Assets When Estate Planning
Digital assets are relatively new to the accounting industry which makes it difficult to navigate because of the lack of solidified regulations. But it is vital to arrange what happens to your physical and digital assets after your death to provide your family members with as much value as possible. The first thing we always recommend to our clients is to speak with a certified accountant. Our team of professional accountants have years of experience working with estate planning for physical assets as well as digital assets. We have a firm understanding of the regulations in the Raleigh area to better help our clients. We recommend that you follow the tips below to plan ahead and arrange you digital assets.
- Speak with a professional – Digital assets can be difficult to navigate as they are new and the regulations are still catching up. This is why it is vital to speak with a professional who understands the regulations as well as understand what it takes to arrange estate plans for digital assets. You must update your wills, powers of attorney, and revocable living trusts that covers digital assets as well as physical assets. It may sound complicated but the our team at Steward Ingram & Cooper PLLC will guide you through the entire process.
- Make A List Of What You Own – It is important to begin with a list of digital assets that you own that can provide value to your loved ones. If your family members don’t know what assets you own, it will be difficult for them to ever see value from them. We recommend that you begin writing down all the login information for your online account such as email addresses, website domains, online banking, cryptocurrency wallets, etc. It is recommend that you store these passwords in a safe and easy accessible place for your family members.
- Understand The Value Of Your Assets – This is where the help of a certified accountant come in handy. It can be difficult to understand what digital assets are valuable and what assets aren’t. We typically stay on the side of caution and plan to pass assets to your family members even if they aren’t incredibly valuable. Assets such as PayPal accounts, Cryptocurrency wallets, Airplane reward accounts, and others can be incredibly valuable. But website domain names and social media accounts can also be valuable to individuals. This is where it is important to list all of your assets down in order to get a better idea of what is valuable and what isn’t.
- Back Up And Store Your Data – We highly recommend that you think about backing up your data onto both a physical hard drive that you can give to a family member for safe keeping as well as backing it up onto a cloud server. It is important to have your digital assets stored in multiple secure locations so you aren’t reliant on only one option that may fail.
Preparing Digital Assets For The Future
It is important to begin preparing your digital assets for the future as soon as possible. This means speaking with an estate planning professional as well beginning to take inventory of your digital assets. Taking inventory is typically considered to be one of the first steps as digital assets as well as decentralized assets such as cryptocurrency must be accounted for before they can be put into a will. Our experts will help guide you through the process of taking inventory of your assets, planning for the future, as well as drafting up a will.
To make the process as smooth as possible it is important that you take inventory of your entire digital portfolio while keeping track of the login information. It is important to have a detailed report of all usernames, passwords, security codes, and other information required to login as well as maintain the accounts. While tracking the login information for your digital accounts it is important to securely store the information. We recommend storing the data on both a secure physical hard drive as well as a cloud based storing location.
If you are worried about estate planning our trained professionals will be happy to help. With years of experience in estate planning as well as experience working with digital and decentralized assets our team can help guide you through the entire process.