An estate plan is a cornerstone of any comprehensive financial strategy. On a practical level, it can help ensure that your assets are distributed in keeping with your wishes. It can also provide you with a significant emotional benefit. Simply knowing that your affairs are in order can give you peace-of-mind that your legacy will be carried out the way you intend, without creating needless legal or administrative burdens for your loved ones.
Traditionally, estate plans have involved creating wills, naming beneficiaries for various financial accounts and establishing trusts. In today’s world, there’s an additional estate planning concern — determining how to manage your digital assets.
The growing importance of digital assets
Think about how much of your life is connected to your computer, mobile phone and other devices. Your digital footprint may be as basic as an email account or a social media page. But, if you’re like a growing number of consumers, your virtual assets may also include digital purchases made (books, music, movies), financial accounts, website domains and perhaps even cryptocurrencies like Bitcoin.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Now imagine what will happen to your digital assets when you pass away. Will your loved ones have access to those assets and accounts or know how to manage them in line with your wishes?
If the answer is no, now’s the time to address this gap as part of your estate plan.
New legal solutions
In the past, it may have seemed sufficient to simply list out usernames and passwords and make sure that list was available to a trusted individual. However, if a third party had access to your login information, it didn’t necessarily mean they were recognized as an authorized user of the account. Their attempts to access your accounts could result in unintended consequences (i.e., they could be accused of hacking).
Recently, new legal solutions, such as the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), have emerged to address this issue. RUFADDA, which applies in most states (check here to see if your state is included), allows individuals to designate a fiduciary to legally access their digital assets after their death or before their death if they lose the ability to manage the account. You can grant this authorization through a will, power of attorney or trust.
Meanwhile, some digital providers have started to offer ways for you to name authorized users within your account. For example, Google has a tool referred to as “Inactive Account Manager,” through which you can authorize another individual to access your account information in the event that you are no longer living or able to. Facebook has a similar feature that allows you to choose a “legacy contact” to take control of your account after you pass.
These are just some of the measures that make it easier for you to account for your digital assets as part of your estate plan.
Tips to get started
It will take a proactive approach to get your digital estate plan in order. But it’s well worth the effort. Here are five steps you can take to get started:
- Take inventory of all of your digital assets. Include any online accounts, no matter how basic or complex.
- Make sure you have username and password information documented in a secure place. You may want to consider using a password management tool. Designate a trusted individual who will have the ability to access to your login information after you die.
- If RUFADAA is applicable in your state, determine if online accounts offer a way for you to spell out your legal custodians and, if so, complete any required electronic forms.
- Update your will, trust and power of attorney documents to authorize the individuals you would like to serve as fiduciaries to access your digital assets. Indicate who will have access to what.
- Enlist the support of professionals to help you manage the estate implications of your digital assets. An estate planning attorney and a financial adviser can work together to help you develop a comprehensive plan that matches your legacy wishes.
While none of us will live forever, our digital lives can, theoretically, continue indefinitely. Taking these steps can help you create a legacy consistent with your wishes and values.
Ameriprise Financial Services Inc. Member FINRA and SIPC.
-
These Stocks Dipped in 2025. Do They Have Value?If you are looking to add new long-term positions to your portfolio, as you should, this is the time to examine stocks that the market shuns.
-
Striking Gold (or Gas): A Financial Pro Unpacks the Nuances of Energy InvestingInvesting in the energy industry, particularly oil and gas, involves understanding the facts about how projects generate returns through cash flow and long-term asset building, while also being aware of the risks.
-
Striking Gold (or Gas): A Financial Pro Unpacks the Nuances of Energy Investing
Investing in the energy industry, particularly oil and gas, involves understanding the facts about how projects generate returns through cash flow and long-term asset building, while also being aware of the risks.
-
Escaping the New Golden Handcuffs: A Financial Expert Has a Plan for Today's ExecutivesFeeling stuck in your job? It could be your complicated compensation package, but it also could be where you live, your family or even how you view yourself.
-
I'm a Financial Planner: Here's How to Invest Like the Wealthy, Even if You Don't Have MillionsPrivate market investments, once exclusive to the ultra-wealthy and institutions, have become more accessible to individual investors, thanks to regulatory changes and new investment structures.
-
Four Ways a Massive Emergency Fund Can Hurt You More Than It HelpsSaving too much could mean you're missing opportunities to put your money to work. Redirect some of that money toward paying off debt, building retirement funds, fulfilling a dream or investing in higher-growth options.
-
I'm a Financial Planner: How to Dodge a Retirement Danger You May Not Have Heard AboutTiming is everything, and sequence of returns risk can mean the difference between a retirement nest egg that's overflowing … or empty.
-
Caring for Aging Parents: An Expert Guide to Easing the Financial and Emotional StrainEarly conversations, financial planning and understanding the progression of care needs can help to mitigate stress and protect family relationships.
-
I'm a Financial Adviser: The OBBB Is a Reminder for Older People to Have a Long-Term PlanThe new tax bill presents a good opportunity for retirees to revisit tax plans, look into doing some Roth conversions and consider plans for long-term care.
-
I'm an Insurance Expert: This Is Exactly Why Your Insurance Rates Are Soaring (and What You Can Do)A dramatic rise in the frequency and cost of severe weather and wildfires means you need to prepare, prepare, prepare — no matter where you live — for higher premiums.
