Digital Assets in Estate Planning
How to avoid one of the biggest mistakes in your estate plan – failing to account for digital assets
A client told me during a recent intake interview for preparing her Will that she had no digital assets. At the end of the 90-minute meeting, she mentioned her PayPal account – that was the lightbulb moment. Most of us have digital assets now.
Digital Assets in Estate Planning Under Pennsylvania Law
Estate planning has traditionally focused on tangible assets such as real estate, bank accounts, and personal property. However, in the modern digital age, individuals own a variety of digital assets that must be accounted for in their estate plans. Pennsylvania law recognizes the importance of digital assets and provides a legal framework for handling them upon an individual’s death. Understanding how to incorporate digital assets into an estate plan ensures a comprehensive and effective strategy for asset management and distribution.
Understanding Digital Assets
Digital assets encompass a wide range of electronically stored information, including but not limited to:
Financial Accounts: Online banking, investment accounts, and cryptocurrency holdings.
Social Media Accounts: Facebook, Instagram, Twitter, and LinkedIn profiles.
Email Accounts: Gmail, Yahoo, and Outlook accounts containing personal and professional communications.
Intellectual Property: Domain names, copyrighted materials, and digital business assets.
Stored Data: Cloud storage accounts such as Google Drive, Dropbox, and iCloud.
Digital Subscriptions and Rewards: Streaming services, airline miles, and loyalty program points.
Legal Framework in Pennsylvania
Pennsylvania has adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which governs how fiduciaries—such as executors, trustees, and agents under a power of attorney—can access and manage digital assets after a person’s death or incapacity. Under RUFADAA:
User Direction Takes Priority: If an individual has used an online tool provided by a service provider to designate a beneficiary or grant access to digital assets, that directive prevails over other estate planning documents.
Legal Documents Matter: If no online directive exists, the provisions of a will, trust, or power of attorney will determine the fiduciary’s authority to manage digital assets.
Service Provider’s Terms Apply: In the absence of explicit instructions in legal documents, the terms of service agreements with digital platforms dictate access.
Court Orders May Be Required: If there is no prior authorization, fiduciaries may need to obtain a court order to access or manage certain digital assets.
Incorporating Digital Assets into Estate Planning
To effectively manage digital assets within an estate plan, individuals should consider the following steps:
Create an Inventory of Digital Assets
A thorough list of digital assets, including account credentials, should be maintained. This inventory should include:
Account names and URLs
Usernames and passwords
Security questions and answers
Backup authentication methods This list should be stored securely and separately from a will to prevent unauthorized access.
2. Use Legal Directives to Grant Access
Individuals should explicitly authorize fiduciaries to access their digital assets in estate planning documents, such as:
Wills and trusts
Powers of attorney
Letters of instruction This ensures that fiduciaries have the necessary authority to manage, transfer, or delete digital accounts as needed.
3. Utilize Online Tools Provided by Service Providers
Many digital platforms, such as Google and Facebook, allow users to designate legacy contacts or establish account management directives. These tools override any conflicting instructions in estate planning documents and should be updated regularly.
4. Consider Privacy and Security Issues
Providing access to digital assets must be balanced with privacy concerns. Sensitive personal or financial data should only be shared with trusted fiduciaries, and encryption or password management tools should be used for security.
5. Review and Update Estate Plans Regularly
As digital assets evolve, estate plans should be reviewed and updated periodically to reflect changes in asset ownership, service provider policies, and relevant laws.