Digital asset protection in a living trust
Over the past few decades, thanks to the multitude of technological advances that have been made, our lives have become increasingly affected by information that is now stored in electronic form. These are referred to as “digital assets,” and they require more modern estate planning solutions.
Digital assets include any type of information that is stored electronically, including information stored on your computer or any other digital device, content that you have uploaded from the Internet, and rights in digital property. Additionally, they include records that are either the catalogue or content of an electronic communication.
Some types of digital assets include:
- Bitcoin or other cryptocurrencies
- Domain names for websites
- Online betting accounts
- Blog content
- Non-fungible tokes (NFTs)
- Digital rights to musical composition, motion picture, literary, or theatrical works
- Email and social media accounts
- Financial records stored on computers, smartphones, or in the cloud.
There are other types of digital assets that do not have extrinsic economic value, but do have sentimental value; examples are digital photos and videos.
For California residents, the state’s Revised Uniform Fiduciary Access to Digital Assets Act, allows a California testator (a person that has made a last will and testament) or grantor (a person that has created a living trust) to give his or her executor, administrator, trustee, or other person fiduciary authority over his or her digital assets upon the testator’s or grantor’s death or incapacity.
What to look for
What does this mean for the digital assets you own? The revised act allows to whomever you grant authority, access to accounts as well as the authority to modify and delete files and online accounts. This would include social media, email, and banking accounts, file sharing, and other online platforms.
Internet providers or “custodians” such as Twitter, Google, Facebook, often establish their own independent policies when it comes to accessing digital assets. In many cases, their policies are codified into their “terms of service agreement” and are, consequently, subject to contractual restrictions which prevent them from being transferred to the heirs of customers after their death.
In order to prevent this scenario, you can provide instructions for the custodian in which you name a “digital executor” who can have access to your digital assets if you become incapacitated or upon your death.
Many legal experts recommend that you create a “digital assets letter of instruction” which should include:
- A list of each digital asset that you own and their passwords where appropriate
- Instructions for how each assets should be treated for the custodians
- Instructions to your fiduciary on how to access the list you stored in a safe deposit box
- OR give your fiduciary access to your saved password manager
Note: Our trusts and powers of attorney give the trustee and agent authority over digital assets.
Documents and considerations
Make sure that all relevant documents, including wills, a living trust, Power of Attorney, and other estate planning documents are updated to provide “lawful consent” as per California’s RUFADAA.
With proper planning, you can ensure that the distribution of your assets, including your digital assets, is less stressful and costly for your heirs. The San Diego estate planning attorneys at the Law Office of David W. Foley provide comprehensive estate planning services.