Estate planning is evolving beyond traditional assets like homes and bank accounts as people increasingly conduct their lives online. Experts now recommend including digital assets and online accounts in comprehensive estate plans to ensure these virtual possessions are properly managed after death.
The shift toward digital living has created a new category of assets that many people overlook when preparing their wills and trusts. From social media accounts and email to cryptocurrency holdings and online banking, the average person now maintains dozens of digital accounts that require proper handling when they pass away.
The Growing Digital Estate Challenge
Digital assets can include anything from photos stored in cloud services to financial accounts, subscription services, and social media profiles. Without proper planning, families may face significant hurdles accessing these accounts after a loved one dies.
“Many people don’t realize that without documented permission and access information, their families might never be able to recover precious photos, important documents, or even financial assets stored online,” said James Holloway, an estate planning attorney who specializes in digital assets.
The problem is compounded by terms of service agreements that often prohibit account transfers upon death. Major platforms like Facebook and Google have created legacy contact options, but many services lack clear policies for account management after death.
Creating a Digital Estate Plan
Estate planning professionals recommend several key steps for managing digital footprints:
- Create an inventory of all online accounts, including usernames
- Document how to access digital assets, including passwords and security questions
- Specify wishes for each account (deletion, memorialization, transfer)
- Name a digital executor who understands technology
- Include digital assets in legal documents like wills and trusts
Password managers have emerged as a practical solution for organizing digital access information. These services store login credentials securely and can transfer access to designated individuals when needed.
Some states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which provides legal frameworks for executors to access digital accounts. However, this legislation still requires account owners to provide explicit permission.
Financial Implications
Beyond sentimental value, digital assets often have significant financial worth. Cryptocurrency holdings, online payment accounts, and digital businesses represent substantial value that could be lost without proper planning.
“We’ve seen cases where families couldn’t access cryptocurrency worth hundreds of thousands of dollars because the owner didn’t leave behind access information,” explained financial advisor Sarah Chen. “Unlike traditional bank accounts, there’s often no central authority that can help recover these assets.”
Online businesses, blogs with advertising revenue, and digital intellectual property also require clear succession planning. Content creators should specify how their online work should be managed or monetized after their death.
The rise of subscription services presents another challenge. Automatic payments may continue long after someone dies unless accounts are properly closed, potentially draining estate resources unnecessarily.
As our digital footprints continue to expand, estate planning must adapt accordingly. Addressing online accounts and assets has become as important as planning for physical possessions, ensuring that both material and virtual legacies are preserved according to one’s wishes.
