How Will Estate Planning Change as Technologies Evolve?
- January 17, 2024
In our rapidly advancing digital age, the landscape of personal wealth and assets has undergone a profound transformation. As technology continues to redefine how we live, work, and communicate, estate planning must adapt to address the complexities introduced by digital assets. This article explores the changing face of estate planning in response to the evolution of technology and the increasing prominence of digital assets.
The Rise of Digital Assets
Traditionally, estate planning primarily dealt with tangible assets such as real estate, investments, and personal belongings. However, the prevalence of digital assets, including cryptocurrencies, online accounts, and intellectual property, has added a new layer of intricacy to the process. As individuals accumulate digital wealth, it becomes imperative to consider how these assets will be managed and transferred to heirs upon one's passing.
- Examples of digital assets include: cryptocurrencies, online accounts like email, e commerce and social media, domain names, cryptocurrency keys, NFTs, loyalty program benefits, intellectual property, electronic medical records, and more. Intangible assets that are not considered digital include copyrights, trademarks, or patents.
- The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) has been enacted in 45 states and provides power of the Executor of an Estate or Trustee when managing an individual's digital assets alongside tangible assets.
Protect Your Assets By Knowing Your Inventory:
- Compile your account names, usernames, security questions/responses, and your passwords and store them in a private document or password manager. Update the information anytime you make changes.
- Organize assets by identifying the types, names, contact information for the custodian of each asset, and any arrangements you have put in place for the custodian upon your death or incapacitation.
- As you plan your estate, be sure that your digital assets are explicitly addressed in any legal documents to avoid complications. Understand the Terms of Service Agreements (TOSA) impact on how you may distribute your digital assets, as some may prevent password sharing or require the service provider to delete your account after you have died. Some service providers may allow you to establish an account manager or agent through their TOSA.
Combine Digital and Traditional Assets:
- It is crucial to create an inventory that combines both traditional and digital assets. Examples include real estate, investments, bank accounts, intellectual property, and any other valuable possessions.
- Advancements in technology also offer tools and platforms to streamline the estate planning process. Online platforms and software can assist individuals in creating and updating their wills, ensuring that they reflect the current state of their assets, both physical and digital. Additionally, digital storage solutions and cloud-based services provide a secure repository for important documents, reducing the risk of loss or misplacement.
- For any digital assets that hold monetary value, you may want to discuss providing a specific disposition of these assets in your will or revocable trust. With cryptocurrency, it may be possible to move funds to a “hard wallet” or a device that stores your cryptocurrency privacy keys, as well as blockchain tools or secure cloud storage.
As we navigate the digital frontier, estate planning must evolve to accommodate the intricacies introduced by technology and digital assets. Being proactive in addressing these considerations ensures a smoother transition of wealth and assets to future generations. Whether it's safeguarding cryptocurrencies, managing online accounts, or outlining digital legacy wishes, integrating these aspects into the estate planning process is crucial for adapting to the ever-changing landscape of personal wealth in the digital age.
Speak with an Oppenheimer Financial Professional today to learn more.
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