When Sarah's father passed away suddenly at 58, she inherited his home, his investments, and years of financial records. But she couldn't access his online banking, his cryptocurrency wallet, or the thousands of family photos stored in the cloud. The passwords died with him, and so did access to significant financial assets and irreplaceable memories.
Sarah's story isn't unique. Most estate plans were written before the digital age, yet the average person now has over 100 online accounts. Digital assets can represent significant financial and sentimental value, yet only one in three Americans have included them in their estate planning.
At MJT & Associates, we help clients build comprehensive legacy plans that protect both traditional and digital assets. Here's what you need to know about planning your digital legacy, and why it matters more than you think.
What Are Digital Assets? (And Why They Matter)
Digital assets fall into three main categories, each requiring specific planning attention.
Financial digital assets
- Cryptocurrency and NFTs
- Online banking and investment accounts
- PayPal, Venmo, and payment apps
- Rewards points and airline miles
- Digital business assets (domain names, websites)
Personal digital assets
- Email accounts (Gmail, Outlook)
- Social media profiles (Facebook, LinkedIn, Instagram)
- Cloud storage (Google Drive, iCloud, Dropbox)
- Digital photos and videos
- Music and book libraries (Kindle, Audible)
Business and professional digital assets
- Client databases and CRM systems
- Business email and communications
- Intellectual property stored digitally
- Subscription services and software licenses
According to recent studies, digital assets now represent an average of $55,000 or more per person in the U.S. For business owners and high earners, that number can be substantially higher.
For entrepreneurs planning an exit, digital assets can significantly impact your business valuation. Documenting and securing these assets is essential whether you're selling to a third party, transferring to family members, or planning management succession. The process we outline in "The Entrepreneur's Exit Plan: How to Retire from Your Business on Your Terms" includes comprehensive digital asset planning as a core component of business succession.
The 7-Step Digital Legacy Checklist
Step 1: Create a Comprehensive Digital Asset Inventory
Start by listing every online account, platform, and digital asset you own. Include account names, usernames, and URLs. For financial accounts, note the approximate value.
Update this inventory quarterly or whenever you open a significant new account. A simple spreadsheet works well, stored securely in a password manager's notes section or a safe deposit box.
Step 2: Designate a Digital Executor
Choose someone tech-savvy and trustworthy to handle your digital assets. This may be the same person as your traditional executor, or it may make sense to appoint someone with more technical expertise.
Make sure this person knows they've been designated, and document their responsibilities clearly. Update your will or trust to formally designate this person and grant them the legal authority they'll need.
Step 3: Set Up a Secure Password Management System
Use a reputable password manager like 1Password, LastPass, or Bitwarden. These services offer emergency access features that allow a designated person to request access to your vault. After a waiting period you specify, they gain access automatically.
Store your master password in a secure, accessible location known to your digital executor. Never email or text passwords, as these communication methods are not secure.
Step 4: Document Access Instructions
Create step-by-step instructions for accessing your most important accounts. This is especially critical for cryptocurrency wallets, business systems, and accounts with complex authentication.
For cryptocurrency and digital wallets, document wallet addresses, private keys, and the location of seed phrases. Never store seed phrases digitally; keep them in a physical safe or safety deposit box. Lost cryptocurrency keys mean permanently lost assets.
Step 5: Review Platform-Specific Legacy Settings
Many major platforms now offer built-in legacy planning tools:
Facebook allows you to designate a Legacy Contact who can manage your memorialized account, or you can request that your account be deleted after your death.
Google offers an Inactive Account Manager that automatically shares data with designated people or deletes your account after a specified period of inactivity.
Apple introduced Legacy Contact features in iOS 15.2 and later, allowing you to designate people who can access your iCloud data after your death.
Step 6: Address Cryptocurrency and Digital Financial Assets
Cryptocurrency requires special attention because it's entirely different from traditional financial assets. If your private keys are lost, the assets are gone forever. There's no customer service department to call, no forgot password option.
Document all wallet addresses and types. Store hardware wallets securely with clear instructions. Keep seed phrases in a physical location, never digitally stored or photographed.
Step 7: Coordinate with Your Estate Planning Attorney
Your digital assets need to be explicitly addressed in your will or trust. State laws on fiduciary access to digital assets vary, and your estate documents should grant your executor the maximum authority available.
Consider creating a separate digital assets directive document that provides detailed instructions. Review and update these documents every two to three years as both technology and laws continue to evolve.
Frequently Asked Questions
Should I include my passwords directly in my will?
No. Wills become public record during probate, so including passwords there would expose all your accounts. Instead, store passwords in a secure password manager or safe deposit box, and reference their location in your estate planning documents.
What happens to my cryptocurrency if I die without sharing my private keys?
Unfortunately, cryptocurrency without accessible private keys is permanently lost. Unlike traditional bank accounts, cryptocurrency has no forgot password recovery option. This is why documenting your crypto assets and securely storing access information is absolutely critical.
Can my executor access my email without my password?
It depends on your state's laws and the email provider's policies. Under RUFADAA, executors can request access to digital accounts, but providers aren't required to give password access. This is why proactive planning with password management systems is essential.
How often should I update my digital asset inventory?
Review your digital asset inventory at least annually. Also update it after major life events like marriage, divorce, starting a business, or making significant investments. Set a calendar reminder for the same time you review other estate planning documents.
What's the difference between a digital executor and a traditional executor?
A digital executor focuses specifically on digital assets: accessing accounts, downloading data, and securing digital business assets. A traditional executor handles physical assets and overall estate administration. They can be the same person, but often it makes sense to appoint a more tech-savvy individual as your digital executor.
Conclusion
Your digital life represents decades of memories, significant financial assets, and in many cases, ongoing business value. Without proper planning, these assets can be lost forever or become sources of conflict for your loved ones.
At MJT & Associates, we integrate digital asset planning into comprehensive legacy strategies that address every aspect of your financial life. Whether you're a business owner with significant digital assets, navigating divorce, or simply want to ensure your family can access what matters most, we can help you build a complete digital legacy plan.
Let's protect both your traditional and digital legacy. Contact us today to discuss how digital asset planning fits into your comprehensive estate strategy.
