Do you have social media accounts, emails, or photos on your phone? If so, you own digital assets. Many people mistakenly believe that digital assets only refer to virtual currencies like cryptocurrency or Bitcoin; however, they encompass a much broader range of items. Digital assets include anything stored virtually or digitally, such as photos, documents, and data. Access to your digital assets can be safeguarded even after you pass away or become incapacitated if you take proactive steps. It is crucial to understand how to “back yourself up” for the future to ensure these digital assets remain intact and secure. As more aspects of our lives transition online—from financial accounts to family photos—digital estate planning has become increasingly vital. To guarantee that all your assets are accounted for, your estate plan should incorporate digital assets alongside traditional ones.
What Are Digital Assets?
A digital asset refers to any item in a digital format that holds value and can be owned by an individual or organization. Digital assets encompass:
1. Digital Hardware. This category includes devices that store digital information, such as computers, hard drives, flash drives, smartphones, tablets, digital cameras, and other electronic devices.
2. Non-Monetary Digital Assets. These are items like photos, documents, videos, games, or music stored digitally or in the cloud. While they may not possess direct monetary value, they often carry sentimental significance and are important for individuals to pass on to loved ones and beneficiaries.
3. Online Accounts. Individuals typically maintain various online accounts related to different aspects of their lives, including finances and communication.
4. Intellectual Property in Digital Format. This encompasses logos, videos, and other creative works you have produced online, including music, images, and narratives.
5. Domain Name. A domain name serves as the identifier for your website and is a primary means through which users access it.
6. Cryptocurrency. Digital or virtual currency that uses cryptography for security and operates independently of a central authority.
7. NFTs. NFTs, or non-fungible tokens, represent unique digital assets such as images, music videos, or games. They are created by assigning an identifying code through encryption to a digital object, ensuring its uniqueness and ownership.
8. Accumulated Points. These points may be earned through loyalty programs associated with hotels, airlines, and similar services.
Current Federal Law on Digital Fiduciary Responsibilities
There is no federal law specifically addressing digital fiduciary responsibilities. However, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) has created a level of consistency regarding these duties, as it has been adopted by most states, including New York.
Guidelines Established by RUFADAA
RUFADAA provides a framework for digital fiduciaries managing the digital assets of deceased or incapacitated individuals. It generally permits fiduciaries to access the digital assets and accounts of the deceased if authorized by an estate planning document. If such authorization is not explicitly stated in a will or estate document, fiduciaries may seek a court order for access or refer to the service provider’s terms of service if they believe access is necessary for settling the estate.
Relevant Laws in Digital Estate Planning
In addition to RUFADAA, various federal and state laws play a crucial role in the digital estate planning process. These include:
- Your state’s estate planning laws and probate process
- Data privacy laws that safeguard your electronic communications
- Criminal laws aimed at preventing identity theft and unauthorized access to accounts
Complexity of Digital Fiduciary Duties
Digital fiduciary responsibilities can be intricate. If you have been designated as a digital fiduciary, it is advisable to consult with an estate planning attorney to understand your obligations and the relevant laws in your state.
Consulting an Estate Planning Attorney
If you are working on creating an estate plan that encompasses your digital assets, consider reaching out to an estate planning attorney for guidance. This post is not to be construed as legal advice but is merely a brief overview of rules and considerations surrounding digital assets. If you have any questions about your situation, please call our offices today at 716-636-7600.