What you will learn: In this essential guide, you will learn how to seamlessly incorporate digital assets into your estate planning. We’ll cover the unique challenges presented by digital properties, from cryptocurrencies to social media accounts, and provide you with actionable strategies to ensure these assets are managed and transferred according to your wishes. Discover the steps to create a comprehensive inventory, understand the legal implications, and utilize tools for managing your digital assets as well as you do your physical ones. By the end of this article, you will be equipped with the knowledge to safeguard your digital footprint, ensuring that your legacy is honored and protected in the digital realm as well as the physical.
Planning Your Digital Afterlife
In our digital age, the essence of estate planning has evolved. While traditional assets like real estate, brokerage accounts and retirement accounts have long been the focus of estate plans, the rapid rise of digital assets demands equal attention. At Cogent Strategic Wealth, we understand the importance of including digital assets in your legacy planning to ensure a holistic approach to your estate.
What are Digital Assets?
Digital assets encompass a wide range of online accounts and properties including:
- Digital Content: Blogs, photos, videos, and monetized social media accounts.
- Intellectual Property: Digital rights to literary works, music, and films.
- Digital Collectibles: Non-fungible tokens (NFTs) and online gaming avatars.
- Online Accounts: Email, social media, cloud storage, online betting.
- Reward Points: Airline miles, hotel loyalty program points, credit card reward programs.
- Cryptocurrencies: Bitcoin, Ethereum, and others.
These assets are integral to our daily operations and, often, significant in monetary or sentimental value.
The Challenge with Digital Assets
Unlike physical assets, digital assets come with unique challenges:
- Access Restrictions: Service agreements often limit access after the account holder’s death, posing challenges without explicit instructions.
- Legal Implications: Laws like the Stored Communications Act and the Computer Fraud and Abuse Act restrict unauthorized access, making it crucial to include digital asset planning in your legal documents. In more than 90% of states, the Revised Uniform Fiduciary Access to Digital Assets Act is the primary law that provides estate executors or attorneys access to someone’s online accounts after death or incapacitation. In general, the act creates a tiered hierarchy to access digital assets. Illinois, California, Utah and many others have passed this act.
How to Plan for Digital Assets
- Inventory Creation: List all your digital assets, including login credentials and any critical details. This list should be updated regularly and stored securely.
- Legal Authorization: Update your will and power of attorney to include explicit permissions and instructions regarding your digital assets. This ensures that executors, agents, and successor trustees have lawful access to manage and distribute these assets.
- Utilize Online Tools: Many platforms provide options to designate legacy contacts or manage account settings for you after your passing. Engage these tools to specify your wishes directly with the service provider.
- Offline Backups: Maintain physical backups of important digital content, ensuring access to your digital legacy independent of online platforms.
Examples of Online Tools
Why It Matters
Ensuring your digital assets are adequately managed in your estate plan isn’t just about maintaining the value of these assets; it’s about respecting your legacy in the digital realm and simplifying the responsibilities of your heirs. It ensures your digital life is handled according to your wishes, providing peace of mind to both you and your loved ones.
How Cogent Assists
At Cogent Strategic Wealth, we are committed to helping our clients navigate the complexities of modern estate planning. By integrating digital assets into your estate plans, we help safeguard all aspects of your legacy. For more detailed guidance, connect with our team to discuss how you can secure your digital footprint for future generations.
For informational and educational purposes only and should not be construed as specific investment, accounting, legal or tax advice. Cogent Strategic Wealth provides investment advice only through individualized interactions. Certain information is based upon third-party data, which may become outdated or otherwise superseded without notice. Third-party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. © 2024, Cogent Strategic Wealth®
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Embracing the Future: Cogent’s Approach to Digital Asset Legacy Planning
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