Lost In Space? Planning for Digital Assets

A side hustle—and assets socked away in an online business? A lifetime stockpile of treasured loyalty points? Dabbles in cryptocurrency? Treasures of all kinds saved in the cloud? Digital assets are becoming more and more integral to our lives, and that makes it important to factor them into estate planning too—otherwise, they could be lost in space forever. 

Inventory Your Digital Assets, and Grant Authority + Access

At Lathrop GPM, attorneys Vern Adkins and Joanne J Lue caution that although digital assets represent a growing share of wealth, they generally don’t appear on traditional account statements, and remind us: “If a family doesn’t know they exist or can’t access them, that value can be lost.” Adkins and Lue explain that a well-designed digital asset plan ensures three things: 

1. Successors know what you own, 
2. Have the legal authority to manage it
3. Have a practical way to access it

A solid first step related to securing the future of digital assets is inventorying what you have. Because many people fail to recognize the extent of their digital assets, Adkins and Lue offer these reminders: 

• A digital asset is any asset that exists primarily in electronic form, and the category is broader than most people expect. 
• Create a digital asset inventory. List what you own, the custodians and platforms that hold it, any hardware devices and the recovery steps for each.

Common examples include the following:

• Cryptocurrency (such as Bitcoin and Ethereum)
• Domain names
• Online businesses and e-commerce stores or accounts
• Monetized social media accounts
• Airline miles and loyalty points
• Photos, document libraries and other intellectual property stored in the cloud
• Email accounts
• Subscriptions and software accounts

When considering the future of your digital assets, keep in mind that a sound plan needs to include both “legal ownership and practical access,” and follow these pointers from attorneys:  

• A person may own a profitable online business, but its website, payment accounts and customer records may be controlled through separate platforms. 
• Even if a trustee has legal authority to manage the business, the trustee may be unable to access critical accounts, recover credentials or satisfy a platform’s verification requirements. 
• Even when the trustee has legal authority to take control, practical barriers to accessing the necessary accounts can disrupt business operations.
• The reverse can also happen. You probably don’t “own” e-books, music and movie libraries or cloud storage in the traditional sense. You may hold only a license to use them, and that license may not be transferable. 
• Even if your successor can access the account, the right to continue using the service may not pass to them.
• Because cryptocurrency is designed for security, attorneys at Lathrop GPM provide additional planning guidance to ensure access upon the owner’s death.

Designating And Preparing Your Fiduciaries

Ultimately, the success of any estate plan rests with the individuals you designate to carry it out based on your arrangements and intentions. Depending on your plans, the roles of these individuals may include: executor, personal representative, or trustee. Regardless of the specifics, they are fiduciaries, which means they have a legal obligation to put the interests of your estate and beneficiaries ahead of their own, and to follow all applicable laws in settling your affairs. 

While it is key for all fiduciaries to be well informed about the plans for your estate, it is particularly important to prepare them for digital asset management, noting: 

• Your fiduciary may not have the authority to act, even if your documents give broad powers over your property. General language may not be enough in a digital setting, and a platform may refuse access without the right permissions. Each platform typically sets its own rules for access and transfer after death or incapacity, and legal standards for digital asset access are still developing.

• If your digital assets are worth a lot or matter to you for sentimental reasons, it helps to understand the rules of the platforms you rely on. For example, if an account needs both a password and a code sent to your cell phone (multifactor authentication), your successor will need both your current password and your phone. Leaving that information with someone can feel uncomfortable – though without it, your assets may be lost for good or recovered only after great expense and delay.

Because fiduciaries manage sensitive assets and court-monitored affairs, they may be required to secure estate bonds before commencing their duties. An estate bond is a type of  fiduciary bond—a formal financial guarantee in the form of a three-party contract between the court, the fiduciary, and a surety company—that ensures the estate and its beneficiaries are protected against mismanagement, fraud, or error.

Navigating the bonding process doesn’t have to slow down estate planning and administration. Colonial Surety Company makes it easy, fast, and affordable for executors, trustees, and personal representatives to obtain estate and all types of fiduciary bonds. 

Fiduciary, Executor, Personal Representative, Trustee and Estate Bonds Right Here

Good To Do: Legacy Contacts

Even though it is a bit tedious, it’s a good idea to name a “legacy contact” for each of your online accounts, such as Apple, Google, and Facebook. Essentially, a legacy contact is the person you authorize to manage the account when you die. You can follow these pointers and links for setting up the legacy account features with Google, Apple, and Facebook:

• Apple added a legacy contact feature to its software in 2021 and lets you select a manager for your Apple account used with iPhones, iPads and Macs. To set it up, go into your system settings on the device or Mac, select your name and then Sign In & Security, and choose Legacy Contact.
• Google has an Inactive Account Manager tool for dealing with your Google Account if you are not able to use it. To set it up, visit the Data & Privacy settings of your Google Account.
• Facebook has a legacy contact setting for designating someone to manage your profile page, as well as a setting to delete your account when the company is notified of your death. For sites that don’t let you designate a person — and that you haven’t left instructions about — your executor typically must contact the company and request that the account be deleted or memorialized (converted to a static page).

Estate Law Practice?

Estate planning attorneys can efficiently help all their 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. 

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In business since 1930, Colonial Surety Company 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 Surety Company www.colonialsurety.com