Digital Estate Planning: How to Protect Your Virtual Assets

Did you hear about the dog who inherited a million dollars? Well, what about a virtual humanoid block inheriting a million coins? Technically, the block and the money don’t exist, but the coins are still worth over $1,000,000. How’s it possible? Because we’ve expanded beyond buying traditional property to enhancing our online presence—and now we need the digital estate planning to match.

TABLE OF CONTENTS

• What Is a Digital Estate?
• Who Needs Digital Estate Planning?
• What Happens If I Don’t Make a Digital Estate Plan?
• Digital Estate Planning Checklist
• Get Answers About Digital Assets and Estate Planning

What Is a Digital Estate?

Your digital estate can include everything from free iCloud accounts and websites to virtual characters and NFTs worth thousands of dollars. Digital estate planning manages how all your electronic and virtual assets will be managed or distributed upon your passing. A comprehensive digital estate plan may include:

• Social Media and Messaging Accounts like LinkedIn, Facebook, Instagram, TikTok, WhatsApp, X, and other social platforms
• Email Accounts including personal and work-related email addresses
• Digital Photos, Videos, and Documents stored on devices or saved in cloud services like Google Drive or Dropbox.
• Cryptocurrency keys and location information of Bitcoin, Ethereum, and other NFTs
• Domain Names and Licensed Software of any personal blogs or business websites
• Subscriptions to Netflix, Spotify, Apple Music, and other streaming services
• Virtual assets like in-game purchases for an avatar
• Online Logins for utility accounts, bank accounts, computer and cellphone apps, or e-commerce accounts
• Intellectual Property such as patents, text, original art, blueprints, graphics, or audio files
• Right of Publicity/Name, Image, & Likeness (“NIL”) – these are the images, videos, and sound recordings of you. NIL is how collegiate athletes financially benefit from the use of their personal brand
• Loyalty Program Perks such as travel miles or credit card points

Who Needs Digital Estate Planning?

The short answer: practically everyone. Millennials and Gen Z are leading the cryptocurrency market, but digital assets have gone way beyond Bitcoin or Ethereum. Portfolios can extend to digital artwork, proprietary information, and virtual real estate in the metaverse. Would your family even know you had these assets—and would they ever be able to access them if they did?

Fortunately, Florida has adopted its own Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). This bridges the gap between privacy laws and estate conveyance, allowing an appointed digital executor access to a deceased person’s online accounts. If your house is in order, your digital estate planning proceeds much the same way as the transfer of your physical assets.

What Happens If I Don’t Make a Digital Estate Plan?

In Florida, there’s a three-step process for determining how a person’s digital estate will be handled:

1. If you designate a legacy contact or account preferences using a service provider’s online tool, this designation determines what happens to the account.
2. If you didn’t direct a legacy custodian using the service provider’s tools, your legal documents determine what happens to the account.
3. If you did not use online legacy tools or make a digital estate plan, the service provider’s terms of service determine what happens to the account.

As you can see, neglecting to create a digital estate plan can lead to a myriad of complications, including:

• Lost Access. Family members may be unable to access your digital accounts, leading to lost memories, lack of financial resources, and disputes among heirs.
• Unauthorized Use. Without a plan, accounts may be left open, allowing unauthorized access or misuse by others.
• Emotional Distress. Family members may struggle to manage your posthumous online presence without guidance, leading to confusion and distress.
• Unintended Consequences. Do you really want a provider’s terms of service dictate how (or if) your family can access your accounts?

Digital Estate Planning Checklist

The first step to making your plan is to select the right digital executor. A digital executor is the person you designate to handle the digital portion of your estate. You can name your digital executor in your traditional Will (if different from your personal representative). 

1. Name Your Digital Executor

This role is crucial, as they will manage your online assets and ensure your wishes are carried out. At a minimum, your digital executor should:

• Be Trustworthy. You must share access to your digital estate plan, passwords, and any other essential information with your digital executor. Choose someone who can handle sensitive information responsibly.
• Be Reasonably Tech-Savvy. Don’t choose someone who abhors electronics, no matter how much you trust them. Digital assets are only going to get more complicated in the future, and you need someone who can handle your online portfolio.
• Fully Understand Your Wishes. Discuss your plan with your digital executor, ensuring they understand their responsibilities. If you explain your reasoning behind your choices now, your executor won’t hesitate to make decisions when the time comes.

2. Inventory Your Digital Assets 

List all your online accounts, assets, and their corresponding login information. This includes usernames, passwords, account numbers, and any two-factor authentication details. The only unhackable method is pen and paper, but I recommend a spreadsheet unless you want carpal tunnel.

When it comes to things like digital wallets, private keys, seed phrases and the like, your inventory is only as good as the supporting information. There are horror stories everywhere about how lost fortunes populate the blockchain – don’t be the next one.

3. Check the Ts and Cs

Before you start making a plan, you need to know if what you want is even possible. Remember those terms and conditions—those things we all often click through without reading—that you already accepted when you opened the account? You should review this information for each of your accounts to ensure your legacy instructions conform to company policies.

For example, you must nominate a legacy contact if you want your Facebook page to stay open as a memorialized account. Similarly, Google allows you to authorize someone who can control your digital accounts upon death.

4. Outline Your Wishes and Draft Instructions

Decide what you want to happen to each asset and provide clear instructions. For instance, do you want your social media accounts deleted, memorialized, or handed over to a loved one? It’s best to provide some reasoning behind your decisions in case companies no longer offer your chosen option.

If you have channels, blogs, or accounts that generate income, you must decide whether the business will be dissolved or continue when you’re gone. Your digital estate plan could appoint a successor to manage the account or direct your executor to write a final message to your followers before shuttering the site.

5. Store Your Plan Securely

Keep your digital estate plan in a secure location, and make sure your digital executor knows how to access it. Include not just your passwords but your backup verification methods (how many times per year do you reset a forgotten password? Don’t let your executor get locked out)!

6. Review and Update Regularly

Since more of our lives are lived online with every passing year, it’s essential to regularly revisit your digital estate plan to accommodate new accounts or changes in your wishes.

Get Answers About Digital Assets and Estate Planning

Digital estate planning is still informal in many states, so it may be necessary to add a codicil to your Will to ensure your wishes are followed. At Yolofsky Law, we carefully assess your digital portfolio to protect your loved ones and your legacy. Email us at hello@yolofskylaw.com today or schedule a 15-minute call to get answers to your questions.