The curse of digital assets: planning for your online legacy

Don’t let your digital legacy become a ghost in the machine: modern estate planning for your online assets

As technology continues to play a central role in our daily lives, many of us are unknowingly accumulating a treasure trove of digital assets such as social media profiles, cryptocurrency, and online subscriptions, that are often overlooked in estate planning.

Failing to account for these digital possessions can result in a legacy haunted by inaccessible accounts, lost wealth, and legal nightmares. To avoid this curse, it’s crucial to incorporate your digital assets into your estate plan.

What are digital assets?

Digital assets come in many forms including:

• Social media accounts such as Facebook, Instagram and LinkedIn
• Email accounts and online documents such as Google Drive and Dropbox
• Cryptocurrency holdings such as Bitcoin, Ethereum and NFTs
• Online subscriptions and memberships such as Netflix, Spotify and Amazon
• Online banking and investment accounts
• Domain names or personal websites

While some of these may seem inconsequential, others, such as cryptocurrency or online investment accounts, can represent significant financial value. Social media accounts may also hold sentimental value, containing years of photos, messages, and memories. Without proper planning, these digital assets could become inaccessible or lost forever.

The challenges of managing digital assets after death

Unlike traditional assets such as real estate or bank accounts, digital assets present unique challenges. Many online platforms have strict privacy policies, and without proper authorisation, loved ones may find it difficult or even impossible to access your accounts after you pass away.

For example:

• Social media platforms often have no clear process for transferring accounts upon death. Some, like Facebook, allow for “memorialising” an account, but without instructions, precious memories may become lost.
• Cryptocurrency wallets are protected by complex encryption. If your heirs do not have access to the private keys, your digital currency may be lost forever.
• Email and online banking accounts may be shut down, preventing access to important records or financial information.

To avoid these post-mortem complications, it’s essential to include digital asset management in your estate plan.

How to incorporate digital assets into your estate plan

1. Take an inventory of your digital assets

   Start by making a comprehensive list of all your digital assets. Include login credentials, usernames, passwords, and security questions where applicable. Keep this list secure by using a password manager or storing it in a safe, accessible location.

2. Appoint a digital executor

   Much like an executor for your traditional estate, a digital executor is someone you trust to manage your digital assets after your death. While not legally recognised in all jurisdictions, appointing a digital executor can help ensure that someone has the authority and understanding to manage your online presence.

3. Incorporate digital assets into your will

   In your will, specify how your digital assets should be managed and distributed. Provide detailed instructions on what should happen to each account—whether certain accounts should be deleted, memorialised, or passed on to specific individuals. Be mindful of privacy policies and terms of service agreements that might limit what can be done with these accounts after your death.

4. Secure your cryptocurrency

   Cryptocurrency is notoriously difficult to access without the right information. Make sure that your heirs or executor have access to your digital wallets, including private keys and recovery phrases. Consider using a cold wallet (an offline storage device) for added security but do ensure someone knows how to access it should the need to arise.

5. Consider legal tools for digital asset management

   Some jurisdictions allow for specific legal tools, such as a “digital asset trust,” to manage your digital estate. A trust can help you assign a trustee to manage your digital assets, ensuring they are distributed according to your wishes. Trusts can also offer protection from privacy policies that restrict access to certain accounts.

Some jurisdictions allow for specific legal tools, such as a “digital asset trust,” to manage your digital estate. A trust can help you assign a trustee to manage your digital assets, ensuring they are distributed according to your wishes. Trusts can also offer protection from privacy policies that restrict access to certain accounts.

The importance of regular updates

Digital assets change frequently from new platforms emerging, passwords getting updated, and new forms of digital wealth, like NFTs, entering the market. To ensure that your estate plan remains current, regularly review and update your digital asset inventory. Make sure that any new accounts or assets are accounted for and inform your executor of any changes.

Protecting your digital legacy

Just as you would protect your financial assets, safeguarding your digital legacy is essential. Proper estate planning ensures that your loved ones have access to important digital information and that your wishes are carried out for your online presence. Whether it’s passing on valuable cryptocurrency or preserving cherished social media memories, addressing digital assets in your estate plan will help you avoid the “curse” of digital assets left unaccounted for. Take the time now to plan for your online afterlife so your digital presence doesn’t haunt your heirs for years to come.