We live more of our lives online than ever before, and our assets reflect that. From cryptocurrency wallets to cloud storage accounts and digital photo libraries, the average person has valuable digital property. But what happens to these assets when you pass away?
Many people overlook digital and virtual assets when creating an estate plan. Without a plan in place, these accounts can become inaccessible, locked away behind passwords, or lost altogether. Probate may not provide a simple or timely solution, either. In this blog, we’ll explain how to avoid probate for your digital assets and cryptocurrency so that your loved ones aren’t left guessing.
Why Digital Assets Present Unique Challenges
Digital assets don’t behave like traditional property. A house or a car can be handed over with a title. But digital assets are protected by passwords, two-factor authentication, encryption, and user agreements. If no one knows they exist or how to access them, they may never be recovered.
Furthermore, many digital accounts are governed by terms of service agreements that restrict third-party access, even after the account holder’s death. Pennsylvania has adopted a version of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which gives fiduciaries limited rights to access digital property, but the rules are strict. If access isn’t pre-authorized through the platform or estate plan, your family may be stuck.
Limitations of Traditional Estate Planning Tools
Wills and standard trusts are not always enough. These documents often:
- Only become effective after probate, which delays access
- Aren’t accepted by some digital service providers without prior approval
- Fail to include login information or crypto keys, which are needed for access
- Trigger privacy concerns, since wills become part of the public record
A power of attorney can be helpful during your lifetime for managing online accounts, but it ends at death. That means it can’t help your loved ones access digital property once you’re gone. Without a tailored plan that addresses post-death access, even well-drafted documents can fall short.
Strategies for Non-Probate Transfers of Digital Assets
To keep your digital assets out of probate and accessible, consider the following steps:
- Create a digital asset inventory. This includes cryptocurrency accounts, online payment services like PayPal, social media, email, photo storage, and even video game content or NFTs.
- Establish a digital asset trust. This allows you to pass digital property directly to a beneficiary without the need for probate, while also appointing someone to manage those accounts.
- Name a digital executor. This person can handle only your digital property, making administration smoother.
- Use built-in tools. Some platforms allow you to set up legacy access or assign someone to manage your account after your death.
- Securely store access information. Passwords, recovery codes, and crypto wallet keys should be stored safely and shared only with trusted individuals or via encrypted instructions.
These digital asset planning tools help ensure that your digital property doesn’t get stuck in probate or disappear altogether.
Storing Access Information Safely
Having a plan isn’t enough if no one can carry it out. That’s why access information needs to be stored in a secure but reachable way.
Options include:
- Password managers with emergency access features
- Encrypted cloud storage
- Offline USB drives stored in a safe or lockbox
Whatever method you choose, keep the details out of your will. Wills become public documents once they go through probate, and you don’t want to expose sensitive login data. Instead, reference a separate letter of instruction or secure storage location that your executor can access.
Remember to update your information regularly as passwords change or accounts are added.
Platform-Specific Policies That May Affect Access
Not all digital accounts work the same way. Some platforms offer ways to plan ahead, while others require court orders. Here are a few examples:
- Google: Allows users to set up an Inactive Account Manager to grant access after a set period of inactivity.
- Facebook: Offers a legacy contact option to manage your memorialized profile.
- Apple: Requires users to opt in to digital legacy access through iCloud settings.
- Cryptocurrency exchanges: Platforms like Coinbase have their own forms and processes, which may require a death certificate and other legal documents.
Since each provider has its own rules, planning ahead on a platform-by-platform basis can prevent future roadblocks.
Contact Our Experienced Pittsburgh Estate Planning Attorneys
The digital world moves quickly, and estate plans need to keep up. Without preparation, your digital accounts, photos, documents, and cryptocurrency can end up lost, inaccessible, or locked in probate. At Jones, Gregg, Creehan & Gerace, we assist clients in Pennsylvania in incorporating digital assets into their estate plans. If you’re ready to put a plan in place, contact us today. We can guide you through the process.