Dabbling in cryptocurrency more than your family knows? Tucked away emergency funds in a purely online bank? Most of us are incrementally accumulating more digital assets than we realize. Whether of actual or sentimental value, if we want loved ones to access digital assets in a pinch, it’s wise to proactively inventory and plan for them.
What’s On Your List?
If the unexpected happens, what are the digital assets loved ones need to know about and be able to access? Certainly cryptocurrencies and non-fungible tokens (NFTs) are digital assets that need to be included in estate plans. How about other kinds of digital assets? Estate planning experts suggest that at this point, most of us probably need to take the time to make a comprehensive inventory of digital assets:
It has become the norm to store financial records in smartphones, computers, or the cloud, and to conduct financial transactions electronically. In addition to email and social media accounts, most people also own a trove of digital assets, which can include:
- Bitcoin, Ethereum, and other cryptocurrencies1
- Non-fungible tokens (NFTs)
- Domain names for websites
- Digital photos and videos
- Digital rights to literary, musical composition, motion picture, or theatrical works
- Digital accounts in an online betting account
- Blog content
- Airline miles, hotel points, or any other transferable rewards programs
- Online video channels where the content is monetized and producing an advertising revenue stream for its owner
- Online gaming avatars that offer online goods or services that may be worth real-world money
With an inventory of digital assets in hand, a good next step is to consider who needs to know about them, understand your intentions for them, and readily access them. Traditionally, when wills and trusts are created, fiduciaries, such as executors and trustees, are designated to carry out the intentions expressed in them. These days, however, appointing a digital executor may also be strategic:
Now you can create a last will that allows you to appoint not only a traditional executor to manage your assets, but also a digital executor. This person is in charge of handling your digital assets—whether that means deleting, downloading, converting files, managing social media profiles, etc. Your last will should also list your digital assets one-by-one, instructions for how to access these assets (including logins and passwords as necessary), and your specific instructions for what your digital executor should actually do with each asset.…While a digital executor provision makes your wishes known for your digital assets, the area of digital estate planning is a relatively new field….Research the…issues that may impede your digital executor….For example, find out which websites…allow account access to designated executors, what authorization is needed…, and whether state law requires your digital executor to reside in the same state as you.
Be sure the fiduciary you entrust with digital assets is armed with up to date information about accessing them. Keep in mind obstacles related to passwords, data encryption, and both criminal and data privacy prevention laws (intended for our protection), that might occur on the path to administering digital assets in line with the estate plan. Three additional tips for estate planning when digital assets are concerned include:
- Store your list in a secure location and make sure your family members know how to access it. Avoid storing keys and passwords for crypto and other virtual currencies digitally…. If someone hacks into your crypto wallet, there may be no recourse for getting your money back….
- Understand what you really own….You may have thought you purchased a digital asset, but in fact you purchased a license to use the asset. Check the terms of agreement.
- Back up data…. One layer of protection in the cloud…is a secure online safe deposit box, to save digital backups of electronically scanned essential documents such as bank and investment account statements…. It may be appropriate to also back up your data to a local computer or personal storage device.
With rules changing rapidly, getting guidance from an attorney on overall and digital estate planning is worth the investment. To ensure all of your plans sync up, legal documents, such as wills, powers of attorney, and trusts, should incorporate whatever arrangements have been made for digital assets. For good measure, be sure to ask your estate planner about the best way to provide designated fiduciaries with access to account credentials.
Fiduciary and Estate Bonds Explained
Frequently the representatives appointed to administer estate plans, such as executors, digital executors, personal representatives, or trustees are required to obtain fiduciary bonds, which are sometimes generally referred to as estate bonds.The purpose of an estate bond is to guarantee that assets will be properly handled in accordance with the estate plan, and in keeping with state laws and protocols. An estate bond is sometimes alternatively named specifically based on the role of the fiduciary. For example, an estate bond may be referred to as a trustee, executor, personal representative, guardianship or conservator bond.
Colonial Surety Company makes it quick and easy to obtain estate bonds of all kinds. A user-friendly online service allows you to quote and obtain a bond that is instantly available to download or e-file. Fiduciaries in every state can efficiently obtain their estate bonds here:
Estate planning attorneys can efficiently help clients secure court and fiduciary bonds with a few clicks on The Partnership Account® for Attorneys. Just select the bond needed, send it to your client for payment, and then download, e-file or print the bond. Our fiduciary bonds include: administrator, estate, executor, guardian, personal representative, probate, surrogate, trustee, conservator and the list goes on. Court bonds include: appeal, supersedeas, injunction, replevin, receiver and more.
Colonial Surety is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed, and licensed for business everywhere in the USA. Our customers have awarded us a 4.8 Trustpilot score.Whenever and wherever you need a bond, trust Colonial: www.colonialsurety.com