Estate Planning For Digital Assets In 5 Steps

We Live In A Digital World

Yet, most of us don’t prepare wills (only 46% do, according to a recent poll), and if we do, we may not fully address these assets in our estate planning documents. As a result, a more significant proportion of our net worth is in our digital assets. Simply defined, a digital asset is content stored in a digital format that provides monetary or sentimental value.

Estate planning for our digital assets follows a similar process as planning for the distribution of our physical assets, but there are unique challenges. The legal landscape is still unsettled, outpaced by technological advances that produce a myriad of digital assets.

Take banking, for example. If we do our banking online exclusively, there is no paper trail for our loved ones to easily locate these accounts after we die. Getting access requires security questions and passwords that may not be readily available. Historically, we could find the latest financial statements to guide us to the assets at the bank.

Types of  Digital Assets We Own

  • Content, including images, books, logos, illustrations, photos, videos, documents
  • File-sharing and cloud accounts
  • PowerPoint presentations, Excel, Word, and Google documents
  • Digital tokens (i.e., cryptocurrencies and country-created coins)
  • Non-fungible tokens (NFTs)
  • Licensed domain names for websites and their blog content
  • Digital rights to intellectual property, including music, film, theatrical rights
  • Email, apps, and online community accounts
  • Social media accounts such as Facebook, Instagram, Twitter, Pinterest, and LinkedIn
  • Online bank, financial, and utility accounts
  • Seller’s accounts on Amazon, Etsy, and eBay
  • Online Gaming and betting, such as DraftKings
  • eSports Teams
  • Digital backups to important documents that were scanned (e.g., birth certificates, tax records, insurance policies)

Related Post: Guide to Estate Planning in 6 Steps

Creating A Plan for Digital Assets In 5 Steps

I will guide you through five steps (see below) so that your digital assets, those of value, monetary and sentimental, can be properly addressed for your loved ones.  How have we accumulated these various digital assets? The Internet of Things (IoT) has been extending our connectivity in our homes, at work, and socially. The line between work and home has increasingly blurred, resulting from technology and the effects of the pandemic. We are nearly all online using broadband, mobile and social media.

Take A Look At How We Use Technology:


    • 90% of US households have high-speed broadband connections (NCTA)


  • 97% have a cellphone, with 85% owning a smartphone (Pew Research); and



  • 70% are engaged in social media and social networking (Pew Research).





  • The typical person has over 100 digital accounts, ranging from email to social media, maintaining 100 passwords. Most (86%) of people commit their online passwords to memory. NordPass, multiple sources)




We devour digital technology, which creates our digital assets. These assets are part of our net worth. The average person in the US has over $55,000 in digital assets, but that is likely an understated number.

Cryptocurrencies Pose Unique Challenges

As much as 14% of Americans own cryptocurrencies, people have grown more comfortable with these assets. Cryptocurrency ownership poses unique challenges for your heirs who may not want these risky assets. Even so, cryptocurrencies are extremely difficult to access. Industry experts say millions of bitcoins (billions in value) have been lost.

By their virtual nature, cryptocurrencies are extremely secure, held in digital wallets by their owners. To access these assets, you need to know a private password and an especially encrypted private key known only to its account holder.

There is no central authority that tracks these keys as of yet, so without heirs having knowledge of how to access your crypto ownership when you are gone, significant value can be lost forever. Your loved ones may in luck if you hold your cryptocurrencies in a Coinbase account as they will help your family after you pass.

We May Not Be Fully Accounting For These Assets In Our Estate Planning

Digital assets refer to different forms of content stored in a digital format. A digital estate consists of digital media rights that may pass onto our heirs. If we fail to plan, we may frustrate our family’s ability to recover important photos, videos or pay our bills after we pass away.

In the past when you died, an executor of your estate, or a personal representative (if there wasn’t a will), would be responsible for the distribution of assets to loved ones.

They would sift through your paper records and physical mail recently received by the deceased to find bank accounts, insurance policies, or bills to determine monetary value.

Family members would also go through their assets at home or wherever to find their physical objects like photos, phone books with their contacts, videos, letters, all in the search for items of sentimental value.

However, a lot of that stuff is likely in a digital form now. There may be years worth of data, and it may be more challenging to find.

Finding Our Legacy Assets

In the days before the Internet, the family and the executor of the estate would likely have been granted access to the mail and the deceased person’s home. However, the amount of information we now generate online, stored in cyberspace indefinitely, has created significant privacy concerns.

If the executor or family  can’t quickly identify digital monetary and securities account ownership, those assets may end up in the state treasuries as “unclaimed funds.” Not only can these valuable assets remain hidden, but personal debts for the estate may also rise as bills go unpaid. Dormant bank accounts are particularly vulnerable to identity theft.

Ajemian v Yahoo! A Major Court Battle

Tech companies erected gateways to stall or prevent access to online accounts by loved ones and their legal representatives.  Access to online accounts has become more restrictive due to legislation, leading to a lot of lawsuits. One prominent court case, Ajemian v Yahoo!, reveals the difficulties families face when requesting access to emails.

John Ajemian had tragically died in 2006. He left a Yahoo! email account but no will or instructions for his account. Using privacy concerns, Yahoo refused the family access to their brother’s email. His siblings wanted to find information to invite friends to their brother’s memorial. Later, they sought access as a means to finding their brother’s assets.

The Supreme Judicial Court of Massachusetts decided on a lengthy court battle in 2018. It held that personal representatives might provide lawful consent on a decedent’s behalf even without the express authorization in the decedent’s will.

As a result of this case, tech companies like Facebook are getting better at dealing with digital assets on death. They are providing ways for account holders to create and provide access to legacy accounts after they die. Loved ones would be able to look after the  “memorialized” account or have it deleted from Facebook. Some believe that Facebook may have more “dead people” accounts by the year 2050 than the living accounts. Apple recently announced a new digital legacy service to pass on information stored by them though details are not yet out.

We Spend Our Lives Online, But We Don’t Always Own It

Each online service provider has its respective terms of service (TOS), making it very difficult for families to easily find access to those accounts, which may contain personal content dear to them. The Ajemian decision may promote legal change for streamlining the process. You should review and understand these terms when you sign for new accounts.

Still, you should have a plan so your loved ones can secure your digital property after you die. Sometimes you think you own a digital asset, but you purchased a nontransferable license to use the asset.

Your Estate Plan For Digital Assets


Step 1: Create A Digital Asset Inventory

Make a list of all of your digital assets, those with monetary and sentimental values. They should be categorized and referenced in a document. If you want to provide passwords associated with the accounts, you may want to store the list in a safe deposit box or use a digital asset manager. There are inexpensive password management apps such as 1Password or NordPass you can use. Make sure your digital asset list is in a secure place.

Besides passwords, there may be data encryption or another protective layer protecting access. This list would need to be updated periodically for new and closed accounts.

You can customize your list in the following categories:

Devices. Computer hardware, such as computers, external hard drives, flash drives, tablets, smartphones, digital music players, e-readers, home security systems, medical devices, smart television, digital cameras, and other digital devices like Nest and Alexa;

Online storage at home and work. Any information or data stored electronically, whether stored online, in the cloud, or on a physical device. Examples would include your Dropbox accounts;

Any online accounts. Email and communication accounts (e.g., iPhone, Skype, and Facetime), online banking, insurance, and other financial sites (e.g., PayPal, Square), cryptocurrency accounts, seller’s accounts (e.g., Etsy), social media accounts, shopping accounts, photo and video sharing, video streaming accounts (e.g., Netflix, YouTube), video gaming, online betting, and esports;

Points, Coupons, and Loyalty Rewards programs. Shopping, travel, hotel, airline, grocery, and shopping accounts are exceptionally loyal and have a monetary value on apps or cards.

Websites and blog accounts that you manage for personal and business;

Licenses domain names that exist and are owned by you and by your own business;  and

Intellectual Property, including copyrighted materials, trademarks, patents, and any code you may have written.

Cryptocurrencies include better-known Bitcoin and Ethereum, but there are thousands of different types; and NFTs. These assets should be on your digital asset list to give notice to your heirs. Separately, you can make reference to the essential passwords or private keys which should be in a secure place.

Step 2:  Decide How To handle These Accounts

You may want to divide the list into monetary and non-monetary accounts. The latter may be more personal or sentimental. You may wish to provide specific instructions on whether you have a legacy account for your social media accounts. 

Monetary Value

Digital assets with monetary value can pass through your will or a trust (more on that later). For example, websites, blogs, and domain names may have significant value as standalone businesses or, in combination and estate documents should reflect them.

Domain names can be sold for prices in the six digits, while the most expensive names have commanded millions.

Step 3: Estate Planning Documents: Powers of Attorney, Wills, and Trust

There should be a legally binding document that reflects your plans for digital assets. It could be a will, codicil (an attachment to your will), or refer to a letter of instructions mentioned in your will. Your will should not contain any passwords. You may want to consider a trust instead.

You should consult with an attorney who could help you decide what document is best and what sample language to use in your powers of attorney, wills, or trust.

Step 4: Powers of Attorney (POA)

Each state has its own Statutory Short Form of Power of Attorney, where your attorney can include language to limit or supplement authority granted to the agent you have chosen.

You can ask your attorney to spell out the agent’s power. The agent can have powers that allow them to do certain things such as use, manage, terminate, transfer or have full access to digital accounts, and name the type of accounts.

The specific accounts may be email accounts, digital music, video, photos, software licenses, e-commerce accounts, and bank/financial accounts.

Does the agent have access, including passwords and access controls?

Your attorney can inform the designated agent whether they will handle the digital property or if there is a specific digital agent with respective powers for those assets.

Step 5: Distribution of Digital Property: Wills or Trusts

Traditionally, some assets go through your will to your heirs.  Distribution of other property may be by operation of law or designated beneficiary. A life insurance policy is such an example.

Distribution of Valuable Digital Assets May Be through Wills or Trusts

Just think about how you access your accounts now. The nature of accessing online accounts requires knowledge of your usernames, security questions, passwords,  and possibly additional encryption layers. That is challenging for those not familiar intimately with your accounts or digital assets.  That information should not be in a will, mainly because it will become part of the public record if it has to go through probate.

Trusts May Be Better Than Wills For Digital Assets

Trusts are more desirable for digital ownership and account information because a trust does not become part of the public record like wills.

You may grant authority to a trustee as to how to handle this property. If the digital property in question is of significant value, you can create a Digital Asset Trust. Alternatively, your attorney can create a testamentary trust pertaining only to the digital assets that can be folded into a will.

If You Want Digital Assets In Your Will

You can guide your attorney by providing your digital inventory list and distribution of digital assets. When you die, the executor of your estate has the responsibility of distributing all of your assets to your intended recipients.

You can pass some of your digital assets through your will, but many of these assets cannot be passed through a will. 

Examples of Distribution of Digital Property 

  • Funds that are in your bank, investments, PayPal accounts.
  • Travel reward points and frequent flyer miles.
  • Stored photos or videos on your hard drive.
  •  Business websites, blogs, products that you sell in an online store.

If you don’t own the property or have sentimental rather than financial value, it isn’t likely to qualify as a testamentary asset distributed through your will.

Examples of what may not get quickly passed onto heirs (although changes are emerging) 

  • Email, apps, and social media accounts generally have terms of service agreements that often ask you to agree that your account is “non-transferable.”  In recent years, the tendency has been to give heirs the ability to terminate these accounts upon showing a death certificate.
  • Downloaded music from iTunes usually comes with a limited set of rights, and you don’t own digital music.
  • Licensing agreements, such as domain names that you don’t own.
  • Streaming subscriptions like Netflix are services to download movies you don’t own.

Consider Naming A Digital Executor

Your attorney can add language to enable the executor (or digital executor) to have authority to manage, handle, access, use, distribute, control, and dispose of digital property, including and not limited to all named digital assets. You can assign a separate executor in the will to have authority for all digital assets.

What the digital executor does:

  • Transfers money, points, and credits from online accounts to your heirs.
  • Closes social media accounts unless you left instructions for a memorial site.
  • Archives owned electronic files that contain owned photos and videos.
  • Cancels subscriptions to online services.
  • Transfers or closes blogs, websites, or any online businesses.

Letter of Instructions

The will should never contain passwords or sensitive information because of the risk that the will may become part of the public record if the will goes to probate. Instead, you should have your attorney consider referencing in your will an external list of digital properties with relevant usernames, access codes, security questions, and passwords maintained in a separate document.

A letter of instructions is the best way to contain sensitive, detailed information about accessing your digital property. These letters have been used with traditional wills for a long time. This letter can be referred to in the will but is a separate document.

Have A Safe Place To Keep Sensitive Information

You should store information like accounts and access data in a separate location from your will. Given its sensitivity, you probably want to put your document into a safe deposit box or another secure place.

Review Your Digital Inventory List Periodically

We are often opening, closing, or changing our online accounts, along with their access information.

Monitor Income-Generating Accounts

Keep track of essential accounts, particularly income-generating accounts such as fledging small businesses, with customer lists and their websites. That is where most of the digital assets’ monetary value resides. If you are changing your passwords frequently, you will need to record that information.

Keep Track Of Your Assets

Review your estate planning documents periodically every few years and when there are life-changing events. If these documents have been completed but are largely silent concerning digital assets, you should update your plans to include them.

Final Thoughts

I have been writing about digital assets for years as mass changes occur. Our digital lives are changing so rapidly with technological advances that it is not easy to predict what we may store online in the future. Many of the laws predate the explosion of the Internet. They have not kept pace with these rapid developments balanced with our need for privacy.

Therefore, we need to be proactive about staying on top of what we own digitally. Digitization helps us in so many ways, but it is messy for those we leave behind.

Do you have an estate plan that addresses your digital property? Do you keep track of your property with an inventory list?

Thank you for reading! We hope this guide helps you in your estate planning. Please visit us at The Cents of Money. We would love to hear from you about different ways to keep track of your online accounts to save time and effort.















Leave a Comment