Estate Planning For Digital Assets

A surprising amount of modern life takes place online. Having a combination of multiple email accounts, cloud storage accounts with photos and videos, social media accounts, banking, web domains, and payment apps like Venmo or CashApp is no longer rare, or even surprising. Even if you’re not an experienced investor in cryptocurrencies like Bitcoin or digital non-fungible tokens, chances are you own something that exists only — or mostly — on the internet.

If your estate planning doesn’t include your digital assets, your legatees and beneficiaries  may not be able to access them. While not everyone risks leaving $190 million in Bitcoin inaccessible upon their death, failure to properly plan for digital assets can result in the loss of priceless family photos or videos, online bank balances, or even web domains or gaming accounts that might have substantial value.

Digital accounts can be difficult to access for a variety of reasons. Federal and state laws  prohibit unauthorized access to computer systems and private personal data, so it is critical that your estate plan gives your heirs and representatives any authorizations or consent that may be required to access your digital data.

Make An Inventory

To plan for distribution of your digital assets, you must first have a full understanding of your assets. To that end, make a list of all of your digital accounts, including any necessary information about passwords or encryption. If you have two-factor authentication enabled for any accounts, make sure that you include information about the device used for that authentication. For example, if you use a cell phone to receive passcodes, make sure you include the phone number and passcode to that device. Likewise, if you use an authenticator app like Authy or Google Authenticator, or a password manager such as LastPass, include information for how to access those accounts as well. 

Include login information for any hybrid assets, also known as your bank or retirement accounts that you access primarily online. If you have cryptocurrency accounts, ensure that any keyword phrases and account information, including the location of any cold storage wallets, are included. And don’t forget to include information about any “digital liabilities,” or automatic payments.

Ensure Your Beneficiaries And Administrators Have All Required Authorizations To Access Your Accounts

Once you’ve inventoried your digital assets, the next step is to ensure that you’ve prepared and executed any authorizations that your executors or trustees may need to access those accounts.

The Stored Communications Act, 18 U.S.C. § 2701 et seq., and the Computer Fraud And Abuse Act, 18 U.S.C. § 1030 et seq., are the central federal laws that govern access to digital accounts and assets. As a general rule, these statutes prohibit the use of, or access to, an account or service by anyone other than the creator. These laws can make it extremely difficult for administrators or heirs to access online accounts owned by the decedent.

In Illinois, the Revised Uniform Fiduciary Access To Digital Assets Act, 755 ILCS 70/1 et seq. explicitly permits an executor or trustee to access and manage a decedent’s accounts, if the decedent had authorized that access. One can authorize access either by using an online tool furnished by the provider, or,

If a user has not used an online tool to give direction under subsection (a) or if the custodian has not provided an online tool, the user may allow or prohibit in a will, trust, power of attorney, or other record, disclosure to a fiduciary of some or all of the user’s digital assets, including the content of electronic communications sent or received by the user.

755 ILCS 70/4(b)

A knowledgeable estate planning attorney can assist you in preparing and executing a valid authorization that will survive scrutiny by a service provider or court.

Account For Cryptocurrency

If you own cryptocurrency or other digital assets such as non-fungible tokens — also called NFTs — estate planning is critical. While an exact number is not available, most experts believe that as much as 20% of all cryptocurrency ever placed into circulation is located in “dead wallets” — cryptocurrency wallets that contain coins or tokens but are inaccessible due to lost or forgotten passwords or private keys. Because of the decentralized nature of cryptocurrency, the account cannot be accessed through a bank or other central source.

The loss of the currency itself can be difficult for heirs, but a lost wallet can have further implications Substantial income and estate taxes may be due on the value of the cryptocurrency asset, even if it is not retrievable. Creating a thorough inventory of your cryptocurrency and other decentralized digital assets is an essential part of ensuring that your beneficiaries  are protected.

The Importance of Preparing for Probate

There are many steps you can take to make difficult life transitions easier for the people who matter most to you. Getting a handle on your property and assets, including your digital assets, and preparing for probate are important steps you can take now — with enormous benefits to offer your loved ones down the line

Planning ahead can help keep peace within your family, minimizing the risk for strife and arguments. At the same time, you can help secure your family’s future, saving them time, money, and stress when it comes to the complex legal process of probate. 

Whether you are ready to take some steps to safeguard your assets, or are dealing with the legal aftermath of losing someone close to you, an experienced probate attorney is an important partner to have on your side. 

That’s where our team would be happy to step in and help. At The Law Offices of J. Jeltes, LTD., our team of compassionate and knowledgeable legal advocates know what it takes to guide you through some of life’s most challenging family transitions. 

Our legal professionals are driven, attentive, and dedicated to achieving the best result possible.  Every situation is unique and before hiring our firm, our attorneys will provide you with a comprehensive one-on-one consultation to discuss your legal concerns and goals. 

Looking to the future? We can help you understand what goes into the estate planning process, evaluate your assets, and prepare all necessary documents, including basic wills, trusts, powers of attorney, and advanced directives. 

Facing the probate process? We understand that settling one’s financial matters after a death, with both family members and creditors, can be daunting. The Law Offices of J. Jeltes, Ltd. can help you navigate challenges that may arise during probate administration, from minor and disabled heirs and legatees to dealing with creditors or unfunded trusts. Our attorneys have experience with both contested and uncontested estates, asset division, and probate administration. 

Have any more questions? Ready to get in touch? Don’t hesitate to contact us whenever you’d like to begin the conversation.