The rapid growth of technology has changed our world at an unprecedented pace over the past few decades, affecting virtually all aspects of our daily lives. Whether you are a cryptocurrency investor or simply have an online banking account, virtually everyone has some form of digital assets. Digital assets can also include personal online photographs and website domain names. When drawing up an estate plan, it is important to take digital assets into account. The estate planning lawyers at Baxter Legal Services are prepared to discuss digital assets and your estate plan: call us at 425-686-0574 to learn more about your options.
Washington’s Revised Uniform Fiduciary Access to Digital Assets Act: How Does It Affect Estate Plans?
Before beginning the estate plan process, it is important to be aware of how state laws can play a role in the process. While the laws regarding digital assets and estate plans are still evolving, some states have passed legislation that updates estate plan law to account for digital assets. Washington passed the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) in 2016; this law focuses on the process for accessing digital assets following the death of the asset holder.
The RUFADAA allows a personal representative or other fiduciary to request digital asset information from the digital asset custodian, who is now allowed to provide that information. Before the RUFADAA, custodians like banks, brokers, and financial advisors could deny access to digital records.
Who Can Access Digital Assets Under RUFADAA?
The RUFADAA addresses a common problem that many personal representatives encountered before the law was passed in 2016: difficulty accessing digital assets when trying to settle an estate. Other fiduciaries (someone legally appointed to manage someone else’s account) are also able to access digital assets more easily, including:
- Attorneys in fact under power of attorney agreements
- Court-appointed guardians of incapacitated individuals
- Trustees
According to the RUFADAA, digital asset owners can now designate a recipient for some or all of their digital assets. This is done by using an online portal to direct the custodian of the assets to grant access to this designated recipient. The fiduciary will be granted control of the assets when the owner dies or can no longer manage the assets, but the owner has the right to make any changes related to accessing these assets prior to their death. Digital properties covered by the RUFADAA include virtual currency, computer files, and web domains, but not social media accounts, email, or text messages - unless otherwise specified in the agreement.
What Digital Assets Should Be Included in an Estate Plan?
Digital assets may not be the first thing most people consider when beginning their estate plan, but they are just as important as physical assets like homes, vehicles, and family heirlooms. According to the Commodity Futures Trading Commission, a digital asset is “anything that can be stored and transmitted electronically, and has associated ownership or use rights.” Common digital assets that should be included in estate plans include:
- Cryptocurrency holdings, such as Bitcoin, Ethereum, Litecoin, etc.
- Website domain names
- Digital photos and videos
- Passwords and usernames
- Money held in online gambling accounts
- Digital rights to artistic works, such as music, writing, or films
- Monetized accounts on YouTube, Twitch, etc.
- Online banking and credit card accounts
- Frequent flier miles accounts or other loyalty rewards for companies
These are some of the most common types of digital assets, but each digital asset profile is unique. The estate planning lawyers at Baxter Legal Services can help make sure everything is in order regarding digital assets and your estate plan.
How to Account for Digital Assets in Your Estate Plan
Accounting for digital assets in your estate plan takes preparation. It is important to be aware of potential roadblocks that could prevent beneficiaries from accessing digital assets. Planning ahead makes life easier for loved ones and fiduciaries who are tasked with settling the estate. Additionally, it protects the owner of the digital assets from digital risks like hacking, fraud, and identity theft. Here are some preventative measures that can be taken to avoid such roadblocks.
Determine What Digital Assets You Have
A digital asset could be anything with monetary or sentimental value. Be thorough and include anything that could fall into one of those two categories. Include all online accounts, data or photographs stored on computers or flash drives, financial software such as TurboTax, email, social media, subscription services that will need to be canceled, and anything else that could be relevant or important.
Include Specific Consent for Digital Asset Access in Your Estate Plan
Determine who will be granted access to your digital assets in the event of your death or incapacitation. Most people choose a family member or close friend. When deciding who would be best suited for this responsibility, consider choosing someone tech-savvy who would have an easier time accessing the accounts. Legally, this person will be known as the Personal Representative of the estate.
Compile a List of Online Accounts and Passwords
Writing down a list of online account usernames and passwords will make it easier for the personal representative to access the accounts. While internet security experts may advise against writing these details down, there are more technologically secure ways to maintain a list of accounts and passwords. Consider using a service that stores all of this information and grants access to all accounts using a master password.
Keep the Estate Plan Up to Date
In an era when so much of our lives have become digitized, digital assets often change after an estate plan has been legally finalized. It is important to continuously update an estate plan to account for any changes in personal digital assets, along with changes in local or national laws that could affect digital assets as they relate to estate plans. Consider revisiting the estate plan every year or two to make sure it is up to date.
Contact an Experienced Estate Planning Attorney For Assistance With Digital Assets and Your Estate Plan
When crafting an estate plan, it’s critical to be thorough and take all of the important variables into account. Because this is such an important legal document that will significantly impact your loved ones, it may be best to discuss your options with an attorney with experience in estate planning for digital assets. You can learn more about digital assets and your estate plan in a consultation with one of Baxter Legal Services’ experienced estate planning attorneys: get in touch with us today at 425-686-0574.