Digital estate planning is often overlooked during the estate planning process. With the growing number of digital assets you own, it's important to have a plan to manage them after you have passed.
In this article, Crowe MacKay's trusted Estate Planning advisors discuss digital estate planning, its importance, challenges, and how to manage your online assets effectively.
What are Digital Assets?
Digital assets encompass a range of items in electronic form. Understanding what constitutes a digital asset is the first step in managing it effectively.
Examples of common digital assets include:
- Social media profiles
- Email accounts
- Online banking information
- Cryptocurrencies
- Digital photos and videos
- Hardware (cellphones, laptops, tablets etc.)
- Domain names and blogs
Essentially, any information or data you store electronically can be classified as a digital asset. Recognizing the breadth of these assets ensures that none are overlooked during estate planning.
STEP Canada's Awareness Campaign
Overview of STEP Canada's Initiatives
The Society of Estate and Trust Practitioners of Canada (STEP Canada) has been at the forefront of raising awareness about the importance of digital estate planning. Their research highlights the significant gap in public understanding and action regarding digital assets.
According to STEP, 60% of people do not consider their digital assets when planning their estate. This indicates a pressing need for increased awareness and education on this topic.
Key Findings from the YouGov Survey
- Twice as many people prioritize their sentimental digital assets over financial ones (64% vs. 32%).
- Despite the priority given to sentimental assets, 57% of respondents had no plans to pass these assets on.
- Only 3% of respondents had used digital legacy tools provided by platforms like Google and Apple.
- People in the 35-55 age range were most concerned about their digital assets.
Public Awareness and Action Steps
In response to these findings, STEP launched a public campaign to raise awareness about digital estate planning. They focused on the sentimental value of digital possessions and provided simple actions people can take to protect these assets.
Actions Included:
- Advising people to update legacy settings on platforms like Apple and Facebook.
- Advising people to discuss digital asset plans with family.
- Sharing educational resources to help people understand digital estate planning.
Importance of Preserving Digital Assets
Legacy and Sentimental Value
Digital assets often hold sentimental value. Photos and videos capture treasured memories that families usually wish to preserve. These digital keepsakes offer comfort and a sense of continuity for future generations.
Recognizing the sentimental value of digital assets highlights the need to include them in your estate plan.
Financial Value and Considerations
Digital assets can also have financial value. Online banking accounts, investment portfolios, and cryptocurrencies are all examples of digital assets with financial implications. Properly managing these assets is vital to ensure they are accessible to your beneficiaries and that your heirs benefit from your digital wealth.
Legal Implications and Ownership Rights
Ownership rights can vary depending on the platform and jurisdiction where your digital assets are located. Accessing and managing these assets can become a legal nightmare for your heirs without proper planning.
Therefore, including digital assets in your estate plan helps clarify ownership and access rights, reducing the chances of legal hurdles. It guarantees that your digital wishes are honored and carried out as intended.
Challenges in Digital Estate Planning
Lack of Awareness Among Individuals and Professional Advisors
One of the main challenges in digital estate planning is the lack of awareness. Many individuals and even professional advisors overlook the importance of digital assets. This oversight can lead to significant gaps in estate planning.
Raising awareness about the significance of digital assets is the first step in overcoming this challenge. Educating individuals and advisors ensures that digital assets are appropriately accounted for and managed.
Legal and Technical Obstacles
Legal and technical obstacles can complicate the management of digital assets. Different platforms have varying policies regarding account access and transfer after death, and understanding these policies can be cumbersome and time-consuming.
Consulting with an estate planning expert can help you streamline this process and ensure compliance with all relevant regulations. This guarantees that your beneficiaries won't face the hassle of accessing multiple platforms in the event of your passing.
Privacy and Security Concerns
Ensuring that sensitive information is protected while making it accessible to designated individuals is something you will want.
Implementing robust security measures and clearly defining access protocols can help mitigate these concerns. It is also important to use secure storage solutions for passwords and login information.
Difficulty in Accessing Accounts
Accessing digital accounts after the account holder's death can be challenging. Many platforms have strict policies that make it difficult for heirs to gain access without proper documentation.
Planning ahead by including specific instructions and necessary documents in your estate plan can ease this process. Designating a digital executor can also help manage these accounts efficiently.
Implementing robust security measures and clearly defining access protocols can help mitigate these concerns. It is also important to use secure storage solutions for passwords and login information.
Identifying and Locating All Digital Assets
Identifying and locating all digital assets can be a daunting task. People have digital assets scattered across various platforms, some of which they might not even remember. This can include everything from email accounts and social media profiles to online subscriptions and digital wallets.
To address this challenge, creating a comprehensive inventory of all digital assets and your associated login information is essential. This inventory should be stored securely but accessible to trusted individuals who will manage your estate. Regularly updating it ensures that no digital assets are forgotten or overlooked.
11 Best Practices for Managing Digital Assets
Inventory and Documentation
- Create and update an inventory of all digital assets.
- Update your estate plan to include digital assets.
- Designate a digital executor with clear instructions.
- Inform trusted individuals about the existence of your digital assets.
Security Measures
- Use a password manager to store and organize login information.
- Use two-factor authentication for online accounts.
- Encrypt sensitive digital information.
- Regularly update passwords and use strong, unique passwords.
Storage and Backup
- Back up important digital assets regularly.
- Utilize secure cloud storage solutions.
Legal Considerations
- Consult with legal professionals about digital asset-specific laws and regulations.
The Role of Trust and Estate Practitioners (TEP)
They Understand How to Incorporate Digital Assets into Your Estate Plan
Advisors ensure digital assets are correctly included in wills and other estate planning documents. They also guide clients in managing digital assets and avoiding potential issues and conflicts.
They Educate Clients on Digital Asset Preservation
Advisors can educate their clients about the importance of preserving digital assets. This includes understanding their assets' sentimental and financial value and the legal implications of ownership.
They encourage proactive management of digital assets, ensuring the protection and accessibility of assets for future generations.
Conclusion
You can safeguard your digital legacy by understanding digital assets, recognizing their importance, and following best practices.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.