Digital Assets and Estate Planning: 5 Steps to Protect Your Digital Life

These days, it’s likely that most of your important financial information is stored digitally through a combination of online accounts, saved documents on your personal computer, and your smartphone. Chances are you keep a lot of other important information stored digitally too. If you’re a small business owner with registered domain names, a thriving e-commerce website or a money-making blog, you should recognize these as important digital assets as well. Have you thought about what will happen to these financial and sentimental digital accounts if you have a major accident or when you die?

What Happens if?

While increased security measures like two-factor authentication (2FA) are incredibly helpful to protect our assets, unlocking phones and computers that use biological factors like Face ID or Touch ID makes it even more important to know how to answer the question; “Would the people responsible for handling my affairs know what digital accounts and assets I have, what I want done with them, and how to access them?”

The answer to this question doesn’t have to be an all-encompassing technical manual on how to break into each of your personal accounts. A thoughtful inventory, clear instructions, and providing the appropriate legal authority can go a long way towards a useful plan.

Going Without a Plan is a Bad Idea

Someone settling an estate or running a business in your extended absence may know about large items like a mortgage, or main investment accounts, but can quickly run into roadblocks and be locked out of ways to access other crucial aspects of your digital life like ongoing subscriptions, utilities and other accounts that are only accessible online or set to paperless billing, and even things like social media accounts. With biometric authentication, passkeys, and other security measures your computer and phone are effectively digital lock boxes without the proper authority or information.

It’s also crucial to understand that simply providing someone with the password, or other ways to access an account, does not automatically give them legal authority to access and use the account if the original account holder dies or becomes incapacitated. Making your digital assets part of your estate or succession planning helps to ensure that the proper legal documents are in place to avoid any confusion or mix ups.

These 5 steps can help outline how to thoughtfully incorporate your digital assets as an important addition to (not a replacement of) your planning documents.

Step 1: Make an Inventory of Your Digital Assets

Start with a list of your most important accounts and assets. Concentrate first on anything that involves money, important records, valuable intellectual property or information that you want preserved, and if you’re a business owner, anything that is key to the operations of your business. Don’t worry too much about your first list being a complete, exhaustive inventory, you can and should update your plan as needed.

Your inventory is likely to include:

If you’re a business owner, you should plan to make a separate document to track assets specific to your business, to keep the distinctions clear.

Business owner inventory is likely to include:

For each item, identify what it is, how to access it, and why it matters. You can also leave notes about any special access requirements such as multifactor authentication or passkeys.

Avoid putting your passwords (or other sensitive information) directly in your legal documents. Consult with your lawyer to help determine what belongs directly in your legal documents and what should be secured separately.

Step 2: Determine Who Is Responsible for Handling Your Digital Assets

The person responsible for your digital assets could be your executor, personal representative, trustee, or agent under a power of attorney. In some instances, you may also want to consider selecting different people to be responsible for different parts of your digital assets. One person may be better suited to handle your financial or business accounts, while another may be better suited to manage your social media and personal photos.

Determining who you choose is also an important detail to discuss with your attorney, as there are new laws around who gets access to what, and how, when the original account holder has passed.

In the U.S., most states have adopted a law called the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). This law recognizes that digital assets are different from physical property and allows a trusted, legally designated person to manage or close a deceased person’s online accounts.

However, when it comes to accessing other private information (such as emails, messages, photos, videos, etc.) the person accessing the account must have explicit legal permission given by the original account holder before death or incapacitation.

That’s why it’s important to be very specific when determining who is getting access to which accounts, and what they are allowed to do.

Step 3: Using Built-In Tools (While Understanding Their Shortcomings)

Some major technology companies now provide tools specifically designed to help users decide what happens to an account after death or prolonged inactivity. These can be useful because they communicate your choices directly to the company maintaining the account.

Apple Legacy Contact – Apple allows an account holder to name one or more Legacy Contacts who can request access to certain Apple Account data after the account holder’s death. The Legacy Contact generally needs the access key created when they were designated as well as a death certificate. Importantly, this does not provide access to everything. According to Apple, information stored in iCloud Keychain, including passwords, passkeys, and payment information are excluded, as are certain purchased media and subscriptions.

Google Inactive Account Manager – Google’s Inactive Account Manager allows users to specify what should happen after their account has been inactive for a chosen period. A user can designate up to 10 people and choose which eligible account data to share with them. Google also warns that a personal Google account my be deleted after at least two years of inactivity under its inactive-account policy, making advance planning especially worthwhile for accounts containing important information (like photo albums).

Facebook and Instagram Legacy Contact – Meta allows an adult user to select a Legacy Contact to manage certain aspects of a memorialized main profile for both Facebook and Instagram. A Legacy Contact may be able to write a pinned post, update profile and cover photos, request account removal and, if the account holder enabled the feature, download certain shared information. A Legacy Contact cannot log into the deceased person’s account or read private messages.

Keep in mind that while helpful, such tools do come with some limitations, like requiring your designee to be a member of that site as well, or maybe you signed up for the site not using your real name, or any other number of details that you may need to note in your instructions to whoever you want to be responsible for these accounts.

Step 4: Prepare Your Instructions

Now that you have an inventory to tell people what exists, you will need to prepare instructions to tell people what you want done with it.

When writing instructions, ask yourself questions like:

• Which accounts should be closed?
• Which photographs/ videos/ documents/ etc. should be preserved for family?
• Should social media accounts be memorialized, or deleted?
• Which subscriptions and recurring payments need to be cancelled?

If you are a business owner, you might want to consider additional questions like:

• Who should receive control of the business website or online storefront?
• Are there online communities or professional contacts that should be notified?
• Is there intellectual property or revenue-producing digital content (such as monetized videos) that need continued management?

The instructions can be brief, just include the necessary information to remove uncertainty and give clear directives during a time when family members and fiduciaries are already managing a lot, emotionally and physically.

Step 5: Review and Update Your Plan Periodically

Digital accounts can frequently change, passwords need updating, new accounts get opened, you cancel some services and start a new one. Still, keeping your plan updated and current doesn’t have to become yet another major annual project.

Instead, consider making it part of your other regular financial check-ins, or update specific accounts in your documents whenever they have major changes such as:

Keeping Your Digital Assets Organized

Using tools like a password manager can be a helpful “assistant” when compiling your important account information for anything you must log into online. Many password managers will allow you to assign additional users to your accounts to allow designated people to have access to the information and keep it organized in one secure location.

For your other important digital assets, some companies specialize in securing, protecting, and organizing all your digital assets, including documents that reveal the location of your trusts and wills, or even something like a special family recipe. While people may be hesitant to trust storing these documents online, these companies provide high-level security and offer privacy options that often reassure people’s concerns.

If you feel you must write down the information, or at least the information to access your password manager, keep it in a safe place such as a sealed envelope or a safe deposit box. Security experts warn against writing down such information. Still, if it’s a necessity, it’s better that your survivors can access this information if you are incapacitated or deceased than have it be lost.

A Part of the Larger Conversation

As mentioned above, planning for your digital assets should be a part of your overall financial and legacy planning. Your team of trusted professionals is exactly who you want to lean on for support as you create your plans. A financial advisor can help identify financial accounts and other financial assets that should be considered in collaboration with your attorney and tax professional. Your attorney can help to determine what legal authority your executor, trustee, or agent should have so your wishes are documented.

You don’t need to completely inventory your entire digital life in one afternoon. Start with the most important accounts, the finances, and irreplaceable personal information, and identify the people who may someday need to manage them. Start the legal conversations with your lawyer to establish appropriate authority and leave clear instructions about what matters most.

Your preparation today can give the people handling your affairs a clear place to start and a paved path towards fulfilling your wishes.

Note: The original version of this article was published in February 2013 and has been updated for freshness, accuracy, and comprehensiveness. 

Adam Robert, CFP® is a co-owner of Clute Wealth Management in South Burlington, VT and Plattsburgh, NY, an independent firm that provides strategic financial and investment planning for individuals and small businesses in the Champlain Valley region of New York and Vermont. For informational purposes only. LPL Financial does not offer legal or tax advice.

Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA /SIPC. Clute Wealth Management and LPL Financial are separate entities.