Including digital assets in your estate plan (part 2)

Hey there, time traveller!
This article was published 21/12/2024 (308 days ago), so information in it may no longer be current.

If you read part 1, you know the value your digital assets might have, both sentimental and financial. You probably also see it will be a bit of work to transition those assets to their beneficiaries.

Here, we’re going to talk about how to set up the transition.

Much like your physical and financial assets, digital assets should be incorporated into your will. There are two keys:

The first is documenting the credentials for your digital assets so it’s actually possible for them to be accessed; the second is appointing a person, commonly called a digital executor, to oversee the transition to their beneficiaries.

Let’s dive in …

Document access

If you want someone to be able to get to your digital assets after your death, you will have to provide them with access credentials. In this step, you will be writing down usernames and passwords for some accounts.

There is a shortcut. If you use a password manager or save passwords to your smartphone, then you can skip writing down the details and just indicate which platform stores the credentials.

Some digital assets, like cryptocurrency wallets, can have more complex steps to access. It’s a good idea to make sure access instructions are clear, so include any necessary details.

Two points of caution: first, this step involves writing down your usernames and passwords. This is sensitive information and you shouldn’t just leave it lying around. Always store the document somewhere safe. Consider keeping it in the same place as your will, like in a safety deposit box or with your lawyer.

Second, accessing or using an online account when you are not the owner might be against the terms of service of the platform or even against the law. Make sure you know what is and isn’t allowed to be done with your digital assets when you die.

I can feel you already dreading what I’m about to say next: read the terms of service for your online accounts. Remember you are saving your loved ones a lot of stress in a challenging time. (Pro tip: AI chatbots could be a shortcut.)

Here are some things to keep in mind:

• Social media platforms might have special processes for transferring or shutting down the account of a deceased person;

• Online platforms for financial institutions can’t legally be accessed or directed by anyone other than the owner. All financial institutions have standard procedures to follow when an account holder dies. Best to not document this access information, because your executor should deal directly with the financial institution to disburse your accounts;

• Online subscriptions can be cancelled, but the account should also be shut down following your death;

• Access to cryptocurrency wallets can be complicated and transferring cryptocurrency might be taxable.

Digital will, digital executor

Work with a lawyer to incorporate your wishes for your digital assets into your will. In the same way you have clear written instructions for distributing your financial assets and porcelain fruit collection, create clear instructions for your digital assets.

Remember the executor will be responsible for overseeing the distribution of the assets in your estate. In the case of your digital assets, consider whether your executor is up to the task.

It’s important the person is good with technology. They will be responsible for executing your wishes, so they should understand their way around a computer.

They may have some complicated tasks. For example, if you want your children to have the photos on your Apple account but not your emails, the executor would be responsible for extracting the photos from iCloud and delivering them to your kids.

If you don’t think your current executor can handle that, consider appointing a different digital executor.

Always talk to a lawyer when drafting legal documents and making decisions about your will or your estate.

Dollars and Sense is meant as an introduction to this topic and should not in any way be construed as a replacement for personalized professional advice. Please consult legal, tax, insurance and investment experts for advice on your unique situation.

David Christianson, BA, CFP, R.F.P., TEP, CIM, and Andrew Froese, CFA, B. Comm (Hons), are wealth advisers and portfolio managers with Christianson Wealth Advisors at National Bank Financial Wealth Management.