Technology has revolutionised the way we view assets. Where once paper wills and physical assets dominated, we now have a new domain to navigate – the virtual one. In the modern era, everything from your social media profile to your crypto wallet holds value. Navigating this virtual maze requires an understanding of your digital footprint, current laws on digital assets, and the ways you can protect them.
Let’s say you own several crypto wallets and have a sizable following on social if you are the owner of a digital e-commerce store, the brand and the online store would become your digital assets. Now imagine not including them in your will or appointing an executor for its online management. When you pass away without a digital estate plan in place, you risk losing all of it to online risks such as data breaches and cybercriminals.
This article will help you plan your estate amidst the backdrop of an increasingly complex digital landscape.
1. Understanding Digital Assets
Digital assets are categorised as a form of personal property that may hold monetary or sentimental value or both. They are stored electronically and are transferable. They could be sold even though they are intangible by nature. They’re a broad class of online assets that have ascertained value. Some examples include but are not limited to cryptocurrencies, digital artworks, websites, non-fungible tokens (NFTs) and audio-visual presentations.
2. Importance Of Including Digital Assets In Estate Planning
It is important to document your digital assets and ensure your loved ones or executors have ways to access them in case of your demise. This includes passwords, keys, PINs, etc. that protect your digital assets from online risks. Identity theft, Data breaches, Malware, and Phishing are a few commonly occurring examples of online risks. Data security & privacy laws are constantly evolving. With the advent of Artificial Intelligence (AI), the digital landscape is set to grow even more complex. The laws on digital assets not only vary from country to country but are also subject to changes. Needless to say, they require a nuanced understanding.
It becomes vital then to comply with digital laws in place to protect your digital assets. Not only this, but failing to include them in your estate planning will open you and your loved ones to unnecessary risks & legal complications. This could include your loved ones losing claim to your digital assets, inheritance disputes, a lengthy probate process, & losing your digital legacy.
3. Role Of Wills & Different Types Of Wills In The Modern Era
Because the modern era has witnessed vast social, economic, cultural and technological changes, laws have also adapted to better accommodate them. Today there’s a will for every scenario you can imagine. You can choose to plan your estate using a will or a combination of legal arrangements that best fit your situation.
For example, today, Found families are included in wills just as much as biological ones. A drastic departure from previously established norms. Technological changes have led to the creation of digital assets as a whole different category of personal assets. A digital will or a letter of wishes can indicate how you want your online legacy to carry forward, long after you’ve passed on.
Traditional estate planning primarily dealt with physical & tangible assets. A Standard will would have been deemed adequate for such a purpose. However, if you are ill and anticipating long-term care, today you have more than one option. To illustrate, a living will could help you set out instructions for your medical care if you are unable to make the decisions yourself due to an illness. A property protection trust will, on the other hand, can help you protect your share of property from being subject to long-term care fees.
These are just a few examples of legal options you could include in your estate planning. An experienced attorney or solicitor can help you determine the best choice for you.
4. Creating a Digital Will & Appointing a Digital Executor
Digital wills are designed specifically to deal with digital assets. It is not legally enforceable and only acts as an informal will instrument. It lists your digital assets along with relevant information associated with them, like – Usernames, email IDs, keys/passwords/PINs, file/storage locations, etc. This makes it easier for your loved ones or beneficiaries to manage your digital assets after your demise.
It’d be wise to appoint a digital executor exclusively for your digital assets, especially if you hold digital currencies like Bitcoin, Non-fungible tokens (NFTs) and digital bonds. The digital executor must be tech-savvy and knowledgeable about the nuances of owning, selling and transferring digital assets. This includes being familiar with data protection laws, digital risks and inheritance tax laws in the context of online assets.
5. A Trust for Digital Assets
Placing digital assets in a Trust can be done anytime. You can help your beneficiaries avoid lengthy probate and save on estate taxes that come with a standard will. This is especially true when dealing with beneficiaries who are older, lack technological know-how to deal with digital assets, or are minors. You can appoint a digital executor as discussed above to manage the trust per your wishes.
Conclusion
It is important to acknowledge how much the online world has shaped our identity and legacy today. Our digital footprint will outlive our earthly lifespan. It is important therefore to protect our digital assets that form a part of our online legacy. Using the different tips used in this article, you can create a plan for the organisation & management of your digital assets in the future.
