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Protecting your digital assets

A solid estate plan should include key things like who gets what, who manages the distribution of your assets, and who gets guardianship of any minor children. But it should also include a list of online assets and directions for getting access. Without this information, your heirs may not even know what exists. And even if they do, they may not be able to access it.

For example, lack of passwords could cause them to be locked out of your crypto hard wallet.1 Retrieving lost crypto passwords can cost a lot of money. Even lesser digital assets could potentially — like your next but yet unpublished bestseller—may have monetary value. Or it could have precious sentimental value like the photos of your great-great grandmother that you scanned before they disintegrated.

Here are things to consider when creating a plan for your digital assets.

 

Take inventory

Consider how you access your crypto, photos, music, frequent-flyer miles, credit-card points—even the song you wrote when you were 16. Some of these digital possessions may not seem to have value now, but they might down the road.

 

Understand who owns your assets

This could be more complicated than it sounds, especially if your online service provider is owned by a different company. Read the service contract. If you purchase music, books or similar assets from companies like iTunes, Amazon or Facebook, you're not really buying anything. You've purchased a lifetime lease that you can't sell or bequeath.2

How much of a problem this is depends on your goals. For example, if you have digital assets that are part of your business and you're storing them with a company that claims ownership, you may want to rethink where the assets reside. Otherwise, you may not be able to leave them to your heirs.

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Using a password manager for your non-financial accounts will help minimize the amount of login and password info you need to put in your estate plan.

Know your passwords

Identify your current passwords and keep track of them. Many people have dozens of passwords. You may want to use a password manager to keep track of all of them for yourself. This also allows you to just have to leave one user ID and password for your heirs—and it ensures you don't need to update your list every time an individual password changes. Alternatively, you may choose to use a password manager for most of your accounts, but have individual passwords for your high-value financial accounts.

Where you put this information is up to you. Consider keeping it with your will and other estate planning documents prepared by your lawyer. Or this might be a good use for a bank safety deposit box. But no matter where you decide to store your passwords, make sure your heirs know where to look when they need it.

 

Consider the value to your heirs

Even if these assets only have sentimental value, consider the impact on you and your heirs of their loss. Photos are a good example. They can help your heirs understand their family tree, let them see people they've never met, or remember people who have passed. Names, dates and context increase value and help your heirs know what you thought might be worth keeping and why.

 

Use it or lose it

Survivors will have trouble accessing the miles and points you leave behind because the companies that issue them usually won't transfer them. Better to use them while you are able to enjoy them. If you can't use them, gift them while you are still alive.

 

Make a plan

The best way to secure your financial and sentimental legacy is make a digital assets plan. First, identify your digital assets with a clear list of everything you have in the cloud (financial or otherwise). Then add all the details your heirs will need to access those assets when you're gone. Include in it who gets access to your photos, written correspondence, personal records, and other information that's stored online. Families can be contentious, so it is best to spell out who you want to have what.

Important disclosure information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.

  1. Nathaniel Popper, "Lost Passwords Lock Millionaires Out of Their Bitcoin Fortunes," The New York Times, published Jan. 12, 2021, accessed Dec. 5, 2021. Back
  2. Martin Law Firm, PC, “Inheriting iTunes: What Happens to Your Digital Assets at Death?" Accessed Dec. 5, 2021. Back