As more and more people live their lives online, so do their assets. That goes for everything from digital currency and investment accounts to social media and photo storage.
That creates a unique challenge for estate planning: How should digital accounts be handled after you pass away?
Many states have attempted to address this by adopting the Fiduciary Access to Digital Assets Act established by the nonprofit Uniform Law Commission. The law expands a fiduciary’s purview to include digital assets in addition to material property.
A total of 36 states and the U.S. Virgin Islands have enacted the bill, according to Suzanne Brown Walsh, a partner at law firm Murtha Cullina.
But even with legislative efforts, the burden still largely falls on individuals to plan for what will happen to those assets.
“It’s more difficult, because 20 years ago we didn’t have assets that were essentially going to disappear,” Walsh said. “We certainly didn’t have an asset that wasn’t accessible if a private key was lost.”
Private keys are required to access cryptocurrencies, including bitcoin, one of the assets that’s most at risk of vanishing.
“It’s all going to slip through the cracks unless someone knows about it,” Walsh said.
If you don’t leave the private key, a number that enables the cryptocurrency to be spent, that will create a problem for your estate, she said.
Companies that hold those assets receive inquiries from fraudsters who pretend to represent the deceased. At the same time, an unwitting fiduciary could toss out the cryptocurrency without realizing it. “I don’t think people look at thumb drives and automatically think cryptocurrency,” Walsh said.
“It’s all going to slip through the cracks unless someone knows about it.”
Unlike traditional bank or securities accounts, most wallet services that hold cryptocurrencies don’t have you name beneficiaries.
Leaving instructions on how to access those private keys will help prevent the loss of those assets.
Everplans, a digital estate planning company, recently added a section where users can leave instructions on where their private keys are and how to access them.
Most people don’t realize how many digital accounts they actually have, according to Lee Poskanzer, founder and CEO of Directive Communication Systems, a company that helps manage digital assets…