Bitcoin and Other Aspects of Estate Planning in the Digital Age
Cryptocurrency, social media, online account management—our ways of holding and transferring assets and information have changed dramatically in recent years, and the pace shows no sign of slowing. This can have a considerable impact on estate planning and lead to delays and difficulties if we fail to plan appropriately.
Make Sure the Right People Have Access to Information
Possibly the most important way to protect and manage digital assets in the estate planning process is to ensure that the right people have access to the right information. Personal representatives, trustees, and/or trusted family members need to know what assets you own, where to find them, and how to gain access to those assets. Easier said than done!
Understanding Digital Assets
It is important to understand the different things that fall under the umbrella of digital assets. Unlike tangible assets that may be managed digitally, these assets are actually stored, owned, and accessed entirely online or in a digital format.
- Digital assets that need to be accounted for in your estate plan include:
- Cryptocurrency (Bitcoin, Ethereum, etc.)
- Assets in mobile payment services (such as Zelle, Venmo, and Square)
- Online bank accounts with no physical branches (such as Discover Online Savings)
- Online content (including blogs) and websites
- Credit card points and frequent flyer miles
- Cloud-based accounts
- Social media accounts
While cars have titles and traditional bank accounts provide statements, digital assets do not have a paper trail of ownership. Owners often leave no physical evidence of these assets, and the assets cannot easily be withdrawn.
Ensuring Access to Digital Assets
If you don’t tell someone about a digital asset you hold, they may have no idea it exists. Even if they know about it, they will have no way to access it unless you leave specific information and instructions.
That means it is crucial to maintain detailed and up-to-date records of all accounts, user names, and passwords. It is particularly important to ensure that someone can access your email accounts and cell phone because access to many other accounts is tied to an ability to communicate through these channels. Digital assets like Bitcoin offer no customer service help, so when you lose access to one of those assets, you essentially lose the asset itself.
How to Prepare
Digital estate planning is growing more complicated by the day, so it may be impossible to keep up-to-date completely. However, it is wise to start with a plan that complies with the current laws governing digital assets. For instance, verify that your financial power of attorney documents grant your agent access to online accounts and digital assets.
Some platforms have a provision for a “digital executor.” They allow the owner to designate someone to manage the account after the owner passes away. Take advantage of these provisions, and be sure to designate current beneficiaries in any type of account that allows for beneficiary designations. Even credit card points or frequent flyer miles may be eligible for a beneficiary designation.
If nothing else, keep a list of accounts, user names, and passwords and update it monthly. For security purposes, it might be best to handwrite the list so that it cannot be accessed digitally by a hacker and keep it in a safe place. But make sure the right people know about it.
An Estate Planning Attorney Can Help Ensure Digital Assets are Covered in Your Plan
Like digital assets themselves, estate planning is a task that is always expanding. Fortunately, an experienced estate planning attorney can help you ensure that you have taken all the right steps to prepare for whatever lies ahead. For a confidential consultation to find out how the estate planning team at the Law Office Of Ralph W. Powers, Jr., P.C. could help protect your digital assets, contact us today.