As our digital footprints continue to expand, the measure of our wealth is no longer restricted just to physical assets like real estate, jewellery or cash. It’s intrinsically linked to our online lives.

Cryptocurrencies, such as Bitcoin and Ethereum, previously relegated to the fringes, have now become mainstream Similarly, NFTs have become symbols of exclusivity and digital ownership. Even intangibles like domain names, social media accounts and digital content hold inherent value, and it’s not just a fleeting trend.

These investments now represent a significant portion of HNWIs wealth. In fact, a recent survey by the American news channel, CNBC revealed that 47% of millennial millionaires now allocate a minimum of 25% of their wealth to cryptocurrencies, while over a third have entrusted more than half of their financial portfolio to the digital realm.

With so much wealth now held online, a crucial hurdle emerges with respect to estate planning: access. These digital assets heavily rely on passwords and encrypted keys owned by a single individual, complicating the task for heirs trying to secure and gain access to this digital wealth after you pass away.

This begs the question: Who holds the authority to access my online accounts and how will they be handled and distributed after I’m gone.

To answer this, it’s first important to understand what exactly constitutes a digital asset.

The scope of digital assets

A digital asset encompasses a broad range of electronic records and files securely stored online, on mobile devices, or personal computers. In essence, any information maintained in digital format qualifies as a digital asset and warrants careful consideration in your digital estate plan.

This can include:

• Cryptocurrency access platforms
• NFTs
• Email accounts
• Social media profiles
• Online banking credentials
• Subscription-based online services
• E-commerce or marketplace accounts (e.g., Amazon, eBay)
• Photos stored on the cloud or online platforms
• Accounts in online chatrooms
• Mobile applications
• Online dating or gaming profiles
• Online utility accounts
• Loyalty program benefits (e.g., frequent flyer miles, credit card perks)
• Any personal information stored on electronic devices such as computers, mobile phones, or tablets

It’s worth nothing that certain assets most would assume fall under the digital asset category, actually don’t. For instance, while electronic bank account statements are considered digital assets, the actual liquid funds within the bank account are not. Similarly, in the realm of cryptocurrency ownership, the account access platform (e.g., Binance) constitutes a digital asset, whereas the cryptocurrency itself (e.g., Bitcoin, Ethereum) forms part of the estate and is subject to a distinct set of legal considerations. This distinction underscores the necessity for precision when incorporating digital assets into your estate plan.

The challenges of access and ownership 

As you can see, the extent of what could be considered a digital asset goes beyond what most would think to plan for and the question of who has access is equally hard to answer.

The problem is digital assets operate within an alternate ecosystem, outside traditional financial institutions and regulatory frameworks so you can’t depend on the same systems that oversee conventional assets to regain access and ownership. To make it even trickier, there’s no personal link to these digital assets like you’d have in traditional contexts. This lack of a clear connection makes it tough for your heirs to take charge of these assets once you’re no longer around and means that proactive planning is a must to secure the continuity of these assets.

Taking control of your digital legacy

Fortunately, you can help avoid these obstacles by addressing digital property and information in your estate plan with the following steps:

1. Take inventory of Your digital assets: Begin by compiling a comprehensive list of your digital assets, ranging from social media accounts to online banking information. Document usernames, passwords, and responses to common security questions. This inventory ensures a thorough understanding of your online presence. You can use a reputable password manager to store and organize this information or if you prefer a non-digital solution, store the information in a physically secure location and give access only to trusted people.
2. Allocate access to your digital assets: After creating a master list, decide how each digital asset should be distributed. Some assets may be designated for preservation, while others may need to be erased. Consider specific allocations, such as granting access to family members, allocating income-generating assets to business partners, or deciding the fate of online businesses.
3. Appoint a digital executor: Choose a trusted individual to serve as the digital executor responsible for carrying out your wishes regarding digital assets. This person will have access to your online accounts and oversee their distribution or deletion. Although not always legally binding, specifying the digital executor in your Will adds clarity and minimises stress for your grieving family.
4. Make your digital estate plan legal and secure: To ensure the legitimacy of your digital estate plan, transform it into a legally binding document. You can incorporate it into your Will or add a codicil. This formalisation guarantees that your intentions regarding digital assets are legally acknowledged.

With these simple steps, you can avoid leaving your digital legacy in limbo, providing clarity and a structured plan.

Concluding thoughts

The evolution of wealth in the digital age necessitates a reevaluation of your estate planning strategy. Cryptocurrencies, NFTs, and various online assets have become integral components of high-net-worth portfolios, yet their inclusion in estate plans is often overlooked. The fundamental challenge lies in ensuring access to and control over these digital assets.

Fortunately, the solution is fairly simple. Taking inventory, allocating access, appointing a digital executor, and making the plan legally binding are essential steps. This strategic approach ensures a seamless integration of digital assets into broader estate plans, providing clarity for heirs and minimising potential challenges.

Don’t wait; act now to secure your digital legacy and protect the wealth you’ve built in the digital realm.