5 Ways Estate Attorneys Can Bring Order to Digital Chaos

Written By Kevin McKernan

Digital assets are exploding. According to NordPass, the average person now has 168 online accounts, and that list is growing all the time. Many advisors still do not acknowledge digital assets as a general asset category to address with clients. As a result, many estate plans inadequately address-or completely ignore-access to and the disposition of the digital assets. 


Digital assets, at a high level, include; digitally stored documents, email accounts and electronic communications, loyalty program rewards and airline miles, photos and videos, social media accounts, cryptocurrency, subscriptions, online businesses, other digital interests, and accounts controlled by service providers. They all now demand proper estate planning. 


Overlooking digital assets leaves the legal representatives of the estate (i.e., executor, administrator, and personal representative): 

  • Potentially locked out of valuable digital assets and accounts, resulting in a direct financial or sentimental loss to the estate and its beneficiaries. 

  • Spending countless hours and resources trying to gain access to said accounts. 

  • Dealing with exposed personal identifiable information from the decedent's various online accounts, leaving them vulnerable to identify theft and other cybersecurity risks. This generally stems from a lack of understanding of: 

  • The prevalence of digital assets in most client's lives; 

  • The potential negative impact if these assets are overlooked; 

  • How to address this topic with clients; 

  • How to effectively incorporate digital interests into estate plans and accompanying materials; and where to turn to for technical guidance and support. 


1. Educate Clients on the Importance of Digital Asset Planning 

  • Photos or videos on a device or in a cloud 

  • Email accounts (and other online electronic communications, Slack, Google Chat, etc.) 

  • Social media profiles 

  • Online banking, utility, or shopping accounts 

  • Cloud storage (Google Drive, iCloud, etc.) 

  • Loyalty programs or airline miles 


Many clients may also now have an interest in or accumulate: 

  • Domain names and websites 

  • Digital works, recordings, and content (artists and creators) 

  • Ecommerce and other online businesses (Amazon, etc.) 

  • Cryptocurrency, NFTS, and Forex 

  • Gaming tokens 

  • Metaverse or other virtual property 

  • Avatars, digital twins, and personalized bots 

  • Name, image, and likeness (NIL) considerations, where applicable 

  • Do you use online bill pay for any of your recurring expenses? 

  • Who handles this in your household? 

  • How many personal email accounts do you use? 

  • How much shopping do you do online? 

  • What are your three most important digital assets? 

  • How do you store photos and videos? 

  • Do you use social media? 

  • What, if any, important information do you still receive through traditional mail? 

  • If something suddenly happened to you, is there information in cyberspace or data in a device that would need to be accessed to help administer your estate or that you would want to be transferred to a certain individual or deleted? 


2. Help Clients Inventory Their Digital Assets 

  • Computers and Laptops 

  • Smartphones and Tablets 

  • External Drives, Flash Drives and Hard Wallets 

  • E-Readers, Digital Cameras, and Music Players 

  • Wearables, Smart Glasses, and Gaming Devices 

  • Alarms and Smart Home Systems 


Include Stored Data 

The inventory should go beyond hardware and map out where digital files reside: 

  • Cloud Services: Google Drive, iCloud, Dropbox, etc. 

  • Local Drives and External Storage: Hard drives, SD cards, USBs 

  • Backups and Archives: Time Machine, Windows Backup 

  • AWS Drives and Services 

  • Applications 


List Accounts and Digital Assets with Monetary or Sentimental Value 

  • Email Accounts 

  • Financial Platforms 

  • E-Commerce and Subscriptions 

  • Utilities and Loyalty Programs 

  • Cryptocurrency 

  • NFTs 


3. Help Clients Set Wishes for Each Asset 

Access/Transfer 

Preserve 

Close 


Be Aware of Online Tools and RUFADAA Compliance 


4. Partner with Tech-Savvy Professionals and Advisors 

5. Make it Legally Binding and Review Regularly 

  • A will 

  • In some states, a revocable trust 

  • Financial and healthcare powers of attorney 


At a minimum, practitioners should discuss with their clients the laws governing fiduciary access to digital assets in their jurisdiction, and whether the client intends to provide for the access or deletion of their digital assets and accounts. 


Best Practices for Drafting Digital Asset Provisions 

  • The will should include a clear digital asset clause specifying the client's intent regarding:

  • Fiduciary access to digital assets, electronic communications, and online accounts.

  • A definition of digital assets 

  • Revocable trusts and financial powers of attorney should echo these directives. 

  • Wills and/or revocable trusts should designate beneficiaries for each digital asset. 

  • Never list usernames or passwords directly in a will or trust. Instead, store this information in a secure location instead. 

This document is designed for general information only. The information presented in this document should not be construed to be formal legal or tax advice nor the formation of a lawyer/client.

For further information please contact me at www.kmckernanlaw.com kevin@kmckernan.com or 718-317-5007.

Kevin McKernan
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