Digital assets are any assets that are stored digitally. They can have monetary or even sentimental value and may be stored online, on a mobile device, or on a computer.
The most common digital assets include the following:
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Cryptocurrencies
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Blog content
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Online bank accounts or brokerage accounts
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Pictures and digital documents
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Subscriptions
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Music, video, and video game accounts or purchases
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Manuscripts
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Artistic creations
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Recipes
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Shopping and reward programs
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Email accounts
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Social media accounts
Digital assets can be complex, and some are difficult to define. For instance, an online bank account could be considered a digital asset, but the funds inside the account might not be considered digital if the bank has a traditional brick-and-mortar institution. An estate planning attorney on our team can help you categorize your assets to ensure they are protected within your estate plan. For more information and to receive a free consultation, call us today at 510-901-5375.
What Are California’s Laws Regarding Digital Assets?
In the past, assets only included physical property or accounts with a physical address. Nowadays, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) gives access to online accounts if the owner passes away or is no longer able to manage them. This revised version extends the power that a person would normally have over their loved one’s physical property to include digital property as well.
After an individual passes away, the executor of their estate or the trustee of a trust is assigned fiduciary duties to manage another person’s property like it is their own. With the revised digital assets act, this now includes any digital assets in an estate plan.
Under California law, the following is now true:
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An executor or trustee can access and manage an individual’s digital assets and electronic communications if it is written in a will or trust
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An individual can use an online tool to direct the new owner of their digital assets regarding their management and disclosure
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An individual can also use a will, trust, or power of attorney to direct the new owner about the management of their digital assets
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The custodian of these assets must act with a fiduciary duty, including requests for disclosure or termination of the account
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Custodians of digital assets are not to be held liable for any acts or omissions when complying with these duties
A custodian of digital assets is any business that makes or provides digital assets. This could be an online social media platform, like Facebook, or an online digital storage service, like Google Photos. The online tool referenced under California law can be provided by any online platform or by an individual’s estate planning document.
Generally, a custodian’s online tool will take precedence over any wishes named in a will or trust. For instance, Facebook’s Legacy Contract allows users to name a successor of a Facebook account if the user passes away. This online tool takes precedence over any estate planning document for digital assets.
How Do You Prepare a Digital Estate Plan?
Transferring digital assets is monitored and facilitated by RUFADAA. If you want to control your estate’s digital assets, you must work with an estate attorney to name the assets, explain how they are divided, and designate an executor.
Below is a detailed explanation of how a digital estate plan is prepared:
Creating an Inventory
Many social media services and cryptocurrency accounts won’t be able to transfer digital assets from an account creator to an executor. Because of this, creating a comprehensive list of digital assets is essential.
Ideally, the inventory should contain the following information:
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The username and password of each account
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The name and location of each account
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The answers to any account recovery questions
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The phone number or email address used for 2-factor authentication
Dividing Assets
Most digital assets are subject to the online company’s policies. Legacy policies may allow a named individual to take control of your account, create content on your profile, or transfer funds to an executor or beneficiary. However, some digital assets, like e-commerce profiles, cryptocurrency accounts, and monetized blogs, may be considered both personal and financial assets.
If you have any accounts that generate income, make a detailed account of how these assets can be securely transferred to a beneficiary. Our team can help you secure your assets and ensure they are taken over if you pass.
Designating an Executor
In California, you can name a digital estate executor who is responsible for the preservation and distribution of your digital assets. The executor you name will have a fiduciary duty to act in your best interest. You should choose a digital executor who is trustworthy and familiar with technology and your digital assets.
Storing Your Estate Plan
Your digital estate plan must be stored in a safe place that you can easily access. It is advisable to make multiple copies of your estate plan, store one in your home, and leave one with your attorney. Our team would be happy to store your estate plan and ensure its safety.
Should You Consult an Estate Planning Attorney?
Digital assets are a relatively new concept, and the state of California has only just started creating laws surrounding their succession and transfer after death. If you have digital assets you would like to protect, our team will advise you on how to create an estate plan that is in your best interest to keep your digital assets safe. We can also advise you on using online tools to create a succession plan for both personal and financial assets you wish to preserve. If you would like to create a digital estate plan, contact The Singh Law Firm today by calling 510-901-5375.
