The modern estate planning landscape increasingly requires addressing digital assets – everything from online banking and social media accounts to cryptocurrency and valuable digital content. A crucial question arises: can you, through your trust, restrict access to these digital files after your passing? The answer is a qualified yes, but it requires proactive planning and understanding of both legal limitations and technological possibilities. Traditionally, trusts dealt with tangible property like real estate and stocks, but approximately 85% of Americans now have some form of digital footprint containing valuable information or assets, making digital asset planning indispensable. The legal framework surrounding digital assets is still evolving, with states adopting variations of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) to provide guidance. This act, while helpful, doesn’t create a uniform national standard, adding to the complexity.
What is considered a “digital asset” for trust purposes?
Defining a digital asset is broader than many people realize. It isn’t just cryptocurrency or online photos. It encompasses any digital file or account that holds value, whether monetary, sentimental, or informational. This includes email accounts, social media profiles, online storage (like Dropbox or Google Drive), domain names, loyalty points, and even digital artwork or music. The value can be financial, as with cryptocurrency, or personal, such as cherished family photos and videos. A recent study found that over 60% of adults have not considered what would happen to their digital assets after death, potentially leaving a significant, unmanaged digital estate. Ted Cook, as a San Diego trust attorney, emphasizes the importance of creating a comprehensive inventory of these assets – a digital asset list – as the first step in effective planning.
How does RUFADAA impact access to digital assets?
The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) aims to clarify the rules governing access to digital assets held by a deceased person. Essentially, it distinguishes between two types of digital assets: those governed by a “terms of service” agreement and those held as “digital property”. Assets classified as digital property, like cryptocurrency held in a wallet you own, generally allow your trustee to access them with appropriate documentation. However, accessing accounts governed by terms of service (like Facebook or Gmail) is more complicated. These platforms often have policies that restrict access even for fiduciaries, requiring specific legal requests or the creation of “legacy contacts.” As of 2023, 38 states have adopted some version of RUFADAA, but variations exist, creating a patchwork of laws across the country.
Can a trust legally grant access to my digital accounts?
Yes, a trust can legally grant access, but it’s not always straightforward. The trust document must explicitly authorize your trustee to access, manage, and control your digital assets. This authorization should be broad enough to cover all types of digital accounts but also specific enough to avoid ambiguity. Importantly, the trustee will likely need to present the trust document and a death certificate to digital platforms to gain access. Some platforms require specific forms or legal requests in addition to these documents. Ted Cook routinely includes clauses in his trust documents outlining the digital asset access procedure and empowering the trustee to act on behalf of the client’s digital estate. It’s crucial to avoid vague language and ensure the trust document aligns with RUFADAA and the terms of service of major digital platforms.
What about accounts with two-factor authentication?
Two-factor authentication (2FA) presents a significant challenge. 2FA adds an extra layer of security, requiring a code sent to a phone or email address in addition to a password. If you pass away and the 2FA code is sent to your phone, your trustee won’t be able to access the account. Planning for this is critical. Options include keeping a separate, secure list of recovery codes for each account, designating a “legacy contact” within the platform (where available), or using a password manager that allows for emergency access. Ted Cook advises clients to document all 2FA information and store it securely with their estate planning documents, emphasizing the need for regular updates as technology evolves. Ignoring 2FA can effectively lock your trustee out of important accounts.
I had a client, Sarah, who believed her accounts were secure simply because she had a trust.
She hadn’t documented her passwords or 2FA information, and her trustee was unable to access her online banking or investment accounts. The family had to go through a lengthy and costly court process to gain access, delaying the distribution of assets and causing significant emotional distress. It was a frustrating situation because the problem was easily preventable with proper planning. Her valuable cryptocurrency remained inaccessible for months, its value fluctuating due to market volatility during the legal proceedings. It highlighted the importance of not just creating a trust, but also actively managing the digital components of that trust.
Thankfully, a later client, David, approached me proactively.
He understood the challenges and worked with me to create a detailed digital asset inventory and access plan. We documented all his accounts, passwords, 2FA information, and instructions for accessing them. He also utilized a secure password manager with emergency access features. When David unexpectedly passed away, his trustee was able to seamlessly access and manage his digital assets, ensuring a smooth and efficient estate administration. The family was grateful for the foresight and planning, which saved them time, money, and emotional stress. It was a rewarding experience demonstrating the power of proactive estate planning in the digital age.
What steps should I take to protect my digital assets?
Several key steps can protect your digital assets. First, create a comprehensive digital asset inventory, listing all your accounts, usernames, passwords, and relevant information. Second, document your wishes for each account – whether you want it closed, transferred, or preserved. Third, store this information securely – a password manager, a secure cloud storage service, or a physical safe are all options. Fourth, regularly update your information to reflect any changes in accounts or passwords. Finally, consult with a qualified trust attorney like Ted Cook to ensure your trust document adequately addresses digital assets and complies with applicable laws. Remember, failing to plan is planning to fail, especially in the rapidly evolving digital landscape.
Who Is Ted Cook at Point Loma Estate Planning Law, APC.:
Point Loma Estate Planning Law, APC.2305 Historic Decatur Rd Suite 100, San Diego CA. 92106
(619) 550-7437
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