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Why You Need To Add Your Digital Assets To Your Estate Planning
By Gardi, Haught, Fischer & Bhosale LTD
March 19, 2024
Why You Need To Add Your Digital Assets To Your Estate Planning
By: Ann Fischer
The Significance of Digital Estate Planning
As technology increasingly intertwines with our daily lives, the importance of a digital estate plan in Illinois has grown exponentially. This raises the critical question: Who will have access to my online accounts, and how will these accounts be managed and distributed in the event of my incapacity or death?
To answer this question effectively, let’s delve into the details of digital estate planning.
Understanding Digital Assets and Their Relevance In Estate PlanningThese assets may include:
- Email accounts
- Social media profiles
- Online banking accounts
- Subscription-based services
- E-commerce or marketplace accounts
- Cloud-stored photos
- Online chatroom memberships
- Mobile applications
- Online gaming or dating accounts
- Utility accounts
- Loyalty program benefits
- Any other personal information stored digitally
While this list is comprehensive, certain assets are not classified as digital assets despite being electronically stored. For instance, while electronic bank account statements are considered digital assets, the liquid funds within the account are not. Similarly, while the access platform for cryptocurrency qualifies as a digital asset, the cryptocurrency itself falls under estate jurisdiction, governed by state laws.
Safeguarding your digital legacy and assets is paramount. Hence, there’s no better time to enhance your account security and shield yourself from data breaches due to weak or reused passwords. For instance, solutions like 1Password can offer a robust defense against such vulnerabilities. With 1Password, you only need to remember one master password to access a secure password manager housing all your online credentials.
So, why is comprehending the scope of your digital assets estate planning so crucial?
Prioritizing the creation of your digital estate plan—often referred to as a Will for your digital assets—alleviates the burden on your family members and loved ones following your demise. By providing them with a written plan delineating the passwords for your digital assets and outlining how these assets should be managed, you spare them the ordeal of navigating a protracted probate court process.
Moreover, crafting a digital assets estate plan protects your online assets from risks such as identity theft, hacking, and fraud. Additionally, you afford your family members peace of mind, ensuring access to vital information like financial documents and insurance paperwork.
Crafting Your Digital Estate Plan in Schaumburg, IL: A Step-by-Step Guide
Since technology has become integral to our daily existence, storing crucial information about ourselves and our loved ones online has become second nature. Computers retain our passwords instantaneously, cell phones archive our photos, and tablets host our multimedia content. Furthermore, stringent password requirements for many accounts add complexity, making it easy to forget where vital information is stored.
Enter the digital estate plan.
Follow these four steps to safeguard your digital assets during estate planning and ensure they are distributed appropriately:
Take Inventory of Your Digital Assets
Initiate your digital estate plan by cataloging all your digital assets meticulously. Since much of our lives are now stored online, thoroughness in your checklist is imperative. Consider everything from social media accounts to online banking information. Need help figuring out where to begin? Utilize the bulleted list provided earlier as a guideline. Once you’ve compiled a comprehensive list of online accounts under your name, document each account’s associated usernames and passwords. It’s also prudent to record responses to commonly asked security questions for future reference by your family members.
Allocate Access to Your Digital Assets
After compiling your master list of digital assets, determine how you wish to distribute these assets. Decide which information you want to retain, what should be erased, and which assets should be allocated to specific individuals. For instance, you may wish to bequeath any digital assets with monetary value to your children while entrusting your spouse with the management of online photos. Designate access to a chosen business partner if you possess income-generating assets or online accounts linked to your personal business.
Appoint a Digital Executor
The next step entails appointing a digital executor to oversee your digital assets in accordance with your wishes. This individual will be granted access to all your online accounts and entrusted with managing their distribution or deletion.. Although a digital executor designation is not necessarily legally binding, documenting it in your Will is advisable.
Legalize and Secure Your Digital Estate Plan
The final step in formalizing your digital estate plan involves securing your information and rendering it a legally binding document. Certain states may need to recognize a digital estate plan independently, so formalizing it by incorporating it into your Will or appending it as an addendum is essential. Separating your digital estate plan from your Will is crucial for two reasons: firstly, your Will becomes public posthumously, necessitating protection for sensitive account credentials, and secondly, it facilitates annual updates to your digital estate plan without revising your Last Will or appending additional codicils. Your designated digital executor should be informed of the whereabouts of your digital estate plan to ensure prompt access when required.
Cataloging your digital assets today brings you one step closer to establishing a comprehensive estate plan. With a robust estate plan, your family and loved ones can circumvent the ordeal of sifting through years of online account information.
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