Digital Estate Planning: What You Need to Know
Your estate plan serves as a guide for how your assets will be distributed after your passing. In addition to addressing the post-mortem allocation of assets, other facets of your estate plan may center on asset growth during your lifetime, appointing someone to manage your assets in the event of incapacity, and safeguarding your assets against potential threats like estate taxes and the expenses associated with long-term care. Considering the pivotal role your assets play in your estate plan, you may be startled to discover that you have inadvertently omitted an entire category of assets from the plan. To make sure your estate plan is a success, the Indianapolis attorneys at Frank & Kraft explain what you need to know about digital estate planning.
What Is Included in Your “Digital Assets?”
In a brief span, the internet has profoundly transformed our lives. In just one generation, items like laptop computers and cell phones have evolved from luxury possessions to commonplace items, wielded and even used for learning by the average kindergartener. Regardless of age, almost everyone possesses digital assets. The initial step to incorporate them into your estate plan involves identifying these assets. Considering that, dedicate some time to compiling a list of various digital assets you may own, encompassing items like:
- Email accounts
- Domain names
- Intellectual property
- Online banking accounts
- Credit card accounts
- Social media accounts
- Information and data stored online or in the cloud
- Subscription services
- Online marketplace stores
- Domain names
- Cryptocurrency keys
- Text, graphic and audio files
- Utility accounts
- Contact lists
- Shopping accounts
- Photo and video sharing and storage accounts
- Smartphone, computer, tablet or cloud data
- Existing digital collections
- Websites or blogs you maintain.
Alongside each entry on your list of digital assets, provide a brief description of the asset, where it is located (physically or electronically), and explain how the asset can be accessed. If you can provide a current fair market value for the asset, include that as well.
Understanding the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA)
Your Executor will undoubtedly be thankful to have a list of your digital assets during the probate of your estate, but the list is only half of the equation. Your Executor, and the intended beneficiaries down the road, needs to be able to access your digital assets as well. As digital assets became a more frequent part of the average estate, lawmakers looked for a way to help resolve the problem of accessing digital assets. Eventually, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) was created and subsequently adopted by many states, including Indiana. The RUFADAA provides three tiers for accessing digital assets:
- Tier 1. If a digital service provides a tool to designate what happens to assets after you die, this designation guides what happens to the account. For example, if you used Google’s inactive account manager to designate a family member, this designation would guide what happens to your Google assets.
- Tier 2. If there isn’t any tool, then the owner’s directions in a will or legal document determine the handling of the account or asset.
- Tier 3. If neither of the first two scenarios are present, the terms-of-service agreement dictates how those accounts can be accessed. As mentioned, those agreements often restrict access to the original owner.
Digital Estate Planning
To ensure that your digital assets are properly handled after you pass away, the key is to ensure that they are identified and acknowledged in your overall estate plan. Making sure that your Executor is aware that they exist, and ensuring that the assets can be accessed, should be sufficient to ensure that your digital assets are included in the probate of your estate. Talk to your estate planning attorney at your next scheduled review about digital estate planning.
Do You Have Questions about Digital Estate Planning?
For more information, please join us for an upcoming FREE seminar. If you have additions questions about digital estate planning, contact an experienced Indianapolis estate planning attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
Paul Kraft is Co-Founder and the senior Principal of Frank & Kraft, one of the leading law firms in Indiana in the area of estate planning as well as business and tax planning.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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