Many aspects of our lives, and especially our wealth, are stored and accessed online. You might use a digital trading platform to access your brokerage account, for example. Or, you may have copies of important documents saved in the cloud. You also likely communicate with friends, family, colleagues, and others online over email or social media.
With so much of your personal information and financial life stored online, it’s becoming increasingly important to consider the safety of your online accounts and digital assets, as well as how your loved ones will access them in the event you become incapacitated or die.
If you’re unfamiliar with the term, a “digital asset” can refer to any PDF, online document, password manager, or other piece of digital content that lives online and, often, holds value to the owner.
To help unpack this topic and share best practices, we turned to Kate Hufnagel, PMP, Founder & CEO of The Digital Wrangler®. Kate is a recognized expert in digital organization and legacy planning, and she specializes in helping individuals and families get their digital lives in order—especially when it comes to preparing for life’s unexpected events.
Managing Digital Assets in Estate Planning
Traditional estate planning documents, like a will, dictate who inherits your physical assets. The problem is, your loved ones need to be able to gain access to those documents—which very well could be through an online platform or digital account. Without a clear understanding of what your digital assets are and how to retrieve them, the wealth transfer process could be prolonged. In addition, your loved ones may have trouble accessing sentimental photos, videos, or other mementos stored online.
Traditional estate planning strategies might need to be paired with a more modern approach that incorporates your digital assets. As you continue updating your estate plan and work to make the wealth transfer process easier on your family in the future, consider questions like:
- Do my beneficiaries know what accounts I have and where they live?
- Does my family know how to access my online accounts?
- Does my family know when bills are paid and from which bank account?
- Does my family know where I keep my personal documents stored online?
If the answer to any of the questions above is “no,” that’s a good indication you need to start making note of where your digital assets live, how to access them, and who you’d like to give account access to in the future.
Did You Know? “A 2024 NordPass survey shows the average person now has 168 personal passwords—a 70% increase in just over three years. For the first time, the survey also found people use an average of 87 business-related passwords.”
A Note About Sharing Online Access with Others
Failing to have a proper plan in place after you die can add unnecessary stress to your loved ones’ lives during an already difficult time. Ultimately, you’ll want to ensure your family is able to access and manage your digital assets and accounts as needed.
That being said, it’s important to distinguish that the actual, physical funds held in your bank and investment accounts are not technically digital assets (even though you may be able to access and manage them online).
Those assets are still considered part of your estate and subject to estate laws and legal protections (such as beneficiary designations or joint ownership). In other words, just because you give a relative the username and password to your bank account doesn’t necessarily mean they have the right or authority to access the funds.
Establishing Your Digital Estate Plan
The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) is a law adapted to help executors and certain professionals manage digital assets in estate planning.
RUFADAA gives designated individuals (like an executor) the legal authority to access digital accounts in the event an individual dies or becomes incapacitated.
But here’s the tricky part: RUFADAA can only be enacted if the deceased grants permission in advance. Without this protection, it can be difficult to access digital assets (assuming no username and password are available). Your heirs would be at the mercy of the website or service provider’s original terms of service.
“I often see families struggle to access digital accounts because the individual never utilized account-specific tools like Apple’s Legacy Contact or Google’s Inactive Account Manager. It’s not just about naming someone in a will; it’s about enabling access on the platforms themselves,” shares Kate Hufnagel.
RUFADAA determines access based on the following order of priority:
Online tool instructions (most specific and controlling)
Estate planning documents (if they mention digital assets)
Default platform rules (Terms of Service)
Unfortunately, Massachusetts and Louisiana are the only two states that have not yet adopted the RUFADAA law, although this could change in the near future.
The good news is, there are other ways to secure your digital footprint and reduce the stress on loved ones who will need to locate, access, and protect your online accounts.
3 Steps To Protect Your Digital Assets
It’ll take some digital organization before you can accurately and effectively document your wishes in a formal plan. If you don’t want to create an inventory, monitor, and track your digital assets on your own, you can find plenty of resources available online to help. Once organized, you can easily begin to document your assets, update the list as needed, and share your wishes with others.
Protecting your digital assets also means keeping them safe from hackers and other bad actors. You can take steps now to secure your accounts and ensure your digital assets are accessible to your beneficiaries later. Here’s a more in-depth look at our top tips for cybersecurity best practices.
Here’s how to start your digital plan and document what your loved ones need to know.
1. Inventory Your Online Accounts.
Take stock of your online accounts and list assets with both monetary and sentimental value. This should include your bank accounts, cryptocurrency or other non-traditional assets, social media accounts, cloud storage, photos, and other documents you keep online.
Consider creating a detailed inventory document that provides clear instructions on how to access these digital assets.
In addition to the name of the account and where to find it, include information such as:
- Username and password
- Two-factor authentication method (text verification, email, app, etc.)
- Who currently has access to the account and why
- Any other special instructions for managing or closing the account
2. Document Recurring Expenses and Subscriptions.
Make a list of all your bills and the payment details, especially anything set to auto-pay.
Beyond your mortgage and utilities, review your credit card statements for other common recurring expenses like streaming services, gym memberships, loan repayments, and magazine subscriptions.
Being thorough with this step can help your family avoid unnecessary charges or sudden cancellations of a service.
3. Review account ownership and select beneficiaries.
Consider who in your family may need access and under what circumstances. For any financial accounts, indicate if there is a joint owner. Keep your beneficiaries updated across the accounts and review these regularly.
Document instructions for how to handle your accounts after you’re gone. For example, some online accounts, like social media platforms, may allow you to designate someone as a “legacy contact” who can manage the account or close it after death.
Estate Planning for the Digital Age? We Can Help
Estate planning in an era where digital and physical assets overlap certainly comes with its own set of challenges. But when you take the extra steps needed to protect your digital assets, you can better ensure your entire financial footprint is accounted for—and, ultimately, reduce the burden on your beneficiaries. As Kate shared with us, “Digital estate planning isn’t about perfection—it’s about progress. Every step you take to make your online world more transparent is a gift to the people you care about most.”
Interested in learning more about protecting your digital assets? Reach out to our team to explore how digital planning and protection can be integrated into your greater estate plan. And to learn more about Kate and download her free ebook to help you begin organizing your important life details, go to www.thedigitalwrangler.com.
