As the digital world expands, more people are accumulating valuable digital assets, such as cryptocurrencies and online businesses.
These assets can make estate planning more complex, especially when it comes to ensuring they are properly included in an estate plan and appropriately handled during estate litigation.
Understanding digital assets
Digital assets include a wide range of electronic possessions, such as digital currency, social media accounts and online business interests. As these assets become more valuable and commonplace, they need to be handled with care in an estate plan.
Including digital assets in an estate plan
To include digital assets in an estate plan effectively, one must first ensure they have a comprehensive inventory. This inventory should detail all digital assets and include access information such as passwords and encryption keys. The estate plan should specify who will inherit these digital assets and under what conditions.
You must ensure that executors or heirs have the legal authority to access digital devices and online accounts. This often requires special provisions in the estate plan because standard wills may not automatically grant such access due to privacy laws and terms of service agreements with digital platforms.
Contesting digital assets in estate litigation
When disputes arise over digital assets after an individual’s death, these assets can become central points of contention in estate litigation. Contesting a digital asset generally revolves around issues such as the clarity of the owner’s intentions and the legal ownership status at the time of death.
For instance, if an estate plan does not explicitly mention a particular cryptocurrency wallet, heirs may dispute who the rightful owner should be. The courts must then interpret the intentions of the deceased, often relying on other documents or the general provisions of the will.
Best practices for digital asset estate planning
Here are some best practices for including digital assets in an estate plan:
- Update your digital asset inventory regularly
- Include detailed instructions for accessing and managing your digital assets
- Consider appointing a digital executor who specializes in managing online assets
- Specify clear instructions on how heirs should handle your digital legacy
By taking these steps, individuals can ensure that their digital assets are protected and clearly defined in their estate plans, reducing the potential for disputes during estate litigation. This approach not only secures the financial value of the digital assets but also preserves the owner’s digital legacy according to their wishes.
