How to Protect Digital Assets in an Estate Plan

By Samuel Dangremond

Introduction

As the digital landscape continues to evolve, so too does the importance of digital assets in the context of estate planning. With the rise in identity theft, estimated to affect 22% of individuals over a lifetime, with losses from identity theft totaling $16.4 billion in 2021, safeguarding digital assets is vital.1

Digital assets are projected to generate more than $80 billion in revenue in 2024, and interest in certain digital assets like non-fungible tokens (NFTs) and convertible virtual currencies and cryptocurrencies such as Bitcoin is growing.2 Practitioners must proactively address digital assets as part of the estate planning process. And this is only one indicator of the growing importance. No doubt as AI expands its reach, digital assets will continue to grow in importance.

Thus, in today’s increasingly digital world, an individual’s electronic assets are an important and growing part of client’s estates. Everything from social media accounts to digital photographs to email can be considered a digital asset, and it is essential to properly account for the digital asset category in an estate plan. This requires addressing digital assets at the planning stage, assuring that estate planning documents incorporate provisions to deal with digital assets, but also guiding clients on practical steps that they might consider to secure and eventually transmit digital assets.

Despite the growth of digital assets, many clients, especially older ones (who are the most likely to be addressing estate planning) often do not appreciate the importance of digital assets or the steps necessary to take as part of the estate planning process. Most clients use digital assets every day. This use can include social media accounts, airline miles, and online investment accounts, photographs that have significant sentimental value, and more. Unfortunately, there is no simple magic bullet step to manage or dispose of digital assets. For example, every website or online service has its own methodology. Few clients understand the implications of this. Failing to address these issues may create tremendous problems for agents under durable powers of attorney, trustees, and personal representatives. Worse, it could jeopardize vital assets that clients wish to protect and transmit as part of their plans. Failing to consider digital assets can lead to significant legal, financial, and personal challenges for clients’ heirs.

In 2024, 1.94 trillion photos are estimated to be taken worldwide, and users share approximately 14 billion images through social media platforms on a daily basis.3 All these personal images exist as digital assets in online accounts such as Facebook, Instagram, Twitter, Google Photos, Apple iCloud Photos, Flickr, and others, and an estate plan should account for them.

It is Not Just Legal Documents

Practitioners might recommend to clients to list all digital assets. This might be incorporated into the standard estate planning organizer firms use by asking for such a listing. Clients can be prompted to document their online accounts, including email and social media accounts so that practitioners can determine the scope of digital assets that they have to address in the planning. Those documents might caution clients not to indicate passwords but to use a password manager to organize them. That may lead to a discussion with clients as to how to safeguard passwords and other sensitive electronic information. While that has never been a topic of traditional estate planning, it should be now. The client can be prompted in the organizer to indicate what they would like to happen to those assets after their deaths.

Digital assets may also include:’

• Airline miles, credit card points, hotel points, and other rewards program points (American Express, for example, includes the following language in the terms and conditions of its Membership Rewards program (https://www. americanexpress.com/content/dam/amex/us/rewards/membership-rewards/mr-terms-conditions-07.17.23.pdf): When the client dies, the personal representative may be able to make a one-time points redemption, depending on their Product, by calling 1-800-AXP-EARN (297-3276))

• Photos saved to a cloud-based storage platform like Dropbox and Google Photos

• E-commerce accounts on sites like eBay and Amazon, and other sites where clients may store digital goods like e-books, music, and software, and

• Cryptocurrencies like Bitcoin and Ethereum, along with digital wallets used to manage these assets.

Advise Clients to Designate Legacy Contacts for Accounts That Offer the Ability to Add Them

Some tech companies have established ways for users to set up “legacy contacts,” meaning trusted individuals who can be authorized to access an individual’s data after that person’s death. After death, a user’s account is memorialized and a legacy contact can be given access to certain parts of the account to decide what should happen to the material within it. On Facebook, for instance, a legacy contact can share a final message

on the deceased individual’s profile and also decide who can see and post memorial tributes. Here are links on how to find the legacy contact pages for some major tech companies:

• Apple (https://support.apple.com/en-us/102631)

• Google (https://myaccount.google.com/inactive)

• Facebook (https://www.facebook.com/ help/1070665206293088)

Setting up a legacy contact is typically a straightforward process. Using Apple’s Legacy Contact process as an example, the client designates a Legacy Contact who can request access to their data after death by providing a death certificate and an “access key,” which is a QR code and a series of letters and numbers that can be printed and given to a Legacy Contact or transmitted by text message. A Legacy Contact may have access to a wide range of data, but the access will vary by provider and change over time. They may be able to access messages, photos, and files stored in iCloud, along with the client’s call history, email, health data, notes, contacts, calendars, voice memos, Safari bookmarks, and reminders. For that reason, it is important to consider carefully whom clients designate as a legacy contact.

Provide the Client’s Legal Representatives with Access to Online Accounts in a Will and Revocable Trust

As the ABA Real Property, Trust and Estate Law Section previously covered, an Executor or Personal Representative does not automatically gain access to a decedent’s online accounts without specific consent from the decedent. Nearly every state has adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). For people who die living in one of those states, legal representatives will be able to access a decedent’s online accounts if:

1. A client has activated a setting within the online account (an online tool) in which the client provides a direction to disclose the contents of their account upon their death to their representatives, or

2. A client’s will specifically allows legal representative to access their online accounts.

Sample Language for a Digital Asset Provision in a Will

“My Executors may take any action with respect to my Digital Assets, Digital Accounts, and Digital Devices, as my Executors shall deem necessary or appropriate, and as shall be permitted under applicable state, Federal, or international law, giving due effect to the authorization provided in this paragraph. This authority shall include, but shall not be limited to, (a) the authority to access or control any Digital Device, including any computer, camera, telephone, or data storage device owned or lawfully used by me, individually or jointly, (b) the authority to manage, control, delete, or terminate any e-mail, telephone, bank, brokerage, investment, insurance, social networking, internet service provider, retail vendor, utility or other account which was owned or lawfully used by me, individually or jointly, and (c) the authority to change my username and password to gain access to such accounts and information. I expressly authorize the disclosure to my Executors of (a) a full catalogue of my Digital Assets and Digital Accounts, including a full catalogue of my electronic communications, and (b) all content of electronic communication sent or received by me. My Executors may engage experts or consultants or any other third party, and may delegate authority to such experts, consultants or third party, as necessary or appropriate to effectuate the actions authorized under this paragraph. This authority is intended to give my ‘lawful consent’ for my Executors to take the actions described in this paragraph, to the fullest extent allowable under The Electronic Communications Privacy Act, as amended, the Computer Fraud and Abuse Act of 1986 as amended, the Gramm-Leach-Bliley Act, as amended, and any other Federal, state, or international laws that may require such consent or authorization. To the extent that a specific reference to any such law is required in order to grant my Executors the authority described in this paragraph, I hereby express my intent to reference such law, whether currently in existence or enacted or amended to require such reference after the date of this Will.”

Ensure That Legal Representatives Have Access to a Client’s Digital Asset Plan

Make sure that the client’s executor or personal representative has a list of their digital assets, including email and social media accounts. The representative should also have the passwords to access those assets and up-to-date log-in information.

Encourage Clients to Revisit Their Digital Asset Plan to Ensure It Still Accomplishes Their Goals

Just as estate planning experts recommend that clients review their will and estate planning documents every few years or upon a major life event like marriage or divorce, individuals should keep their digital asset plan current. This requirement means keeping a digital asset plan separate from a will and other estate planning documents and reviewing it at least once a year to ensure the accounts and passwords are still accurate.

Conclusion

Practitioners should guide clients to:

• Document all their online accounts, including email and social media, and the relevant passwords. Decide what they would like to happen to them after their death.

• Determine which digital accounts can add legacy contacts, and choose whom they would like their legacy contacts to be.

• Share their digital asset plan with their legal representatives.

By taking the steps outlined in this article, individuals can make sure that their digital assets are accounted for in their estate plans. Given how often and the degree to which technology changes, though, it is important to keep digital asset estate plans up to date.

Endnotes

1. “Victims of Identity Theft, 2021,” https://bjs.ojp.gov/press-release/victims-identity-theft-2021, accessed Nov. 27, 2024.

2. “Digital Assets – Worldwide,” https://www.statista.com/outlook/dmo/ fintech/digital-assets/worldwide, accessed Nov. 22, 2024.

3. “How many photos are taken every day?,” https://photutorial.com/photos-statistics, accessed Dec. 5, 2024.