When most people think about estate planning, they picture houses, cars, and bank accounts. Traditionally estate planning has focused on transferring tangible property and financial assets to beneficiaries after death. However, in today’s world, a growing share of personal and financial value is tied to digital assets. From cryptocurrency wallets to photo storage accounts, digital
property is often overlooked, yet it can create significant challenges for executors and families if
not addressed properly in an estate plan.
This article explores what qualifies as a digital asset, why it matters in probate and estate
administration, and how individuals can take proactive steps to ensure their digital property is
protected and accessible to heirs.
What are Digital Assets?
The term “digital assets” covers a wide range of property.
Financial Assets: cryptocurrency, online brokerage accounts, PayPal or Venmo balances, and
online banking credentials.
Personal accounts: email, social media profiles, cloud storage, and subscription services.
Intellectual property: websites, blogs, domain names, or digital art.
Sentimental property: family photos and videos stored on platforms like Google Photos,
iCloud, or Dropbox.
While some digital assets hold obvious monetary value, others carry emotional weight or affect
a person’s online identity. Either way, they can become significant points of dispute or frustration
during estate administration if not planned for in advance.
Why Digital Assets Pose Unique Challenges in Probate
Digital assets differ from traditional property in the following ways.
Access Restrictions
Even if an executor has legal authority under a will, that doesn’t guarantee access to online
accounts. Most platforms have strict privacy policies and terms of service agreements that limit
third-party access. Without proper documentation, heirs may find themselves locked out
permanently.
Lack of Awareness
Many people never tell their families what accounts they have. Cryptocurrencies in particular
can be lost forever if heirs don’t know they exist or lack the private keys required to unlock them.
State Laws and RUFADAA
In response to growing concerns about digital property, most states, including Michigan, have
adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). This law
allows individuals to designate who may access their digital accounts after death. However,
compliance requires careful planning, because providers often give priority to instructions set
through the platform itself over direction in a will or trust.
Probate Delays
Even if access issues are eventually resolved, disputes over digital assets can slow down the
probate process significantly. Executors may need court orders to retrieve certain accounts,
adding extra time and cost.
How to Incorporate Digital Assets into an Estate Plan
Due to digital property being easily overlooked, many clients benefit from legal guidance when
incorporating these assets into wills and trusts. Below are some practical steps.
Creating an Inventory
The foundation of any digital estate plan is a comprehensive list of accounts and digital property.
This should include usernames, types of accounts, and instructions for access. Note that
sensitive information like passwords should not be listed directly in the will.
Using a Password Manager
Instead of writing passwords on paper, many clients use a secure password manager that
allows a designated person to gain access upon death. Some services even have built-in
“legacy contact” features.
Designating a Digital Executor
Michigan does not have a law that formally recognizes a separate role called a “digital
executor”. Instead, the authority to manage digital property falls under the powers given to a
personal representative. Michigan has adopted the Revised Uniform Fiduciary Access to Digital
Assets Act, which governs how fiduciaries can access digital accounts.
Updating Estate Documentation
Wills and trusts should explicitly reference digital property, granting the executor or trustee
authority to manage it. Language should align with RUFADAA and include broad powers to
access, modify, or transfer digital accounts as necessary.
Using Provider Tools
Many platforms allow users to select legacy contacts or pre-authorize account transfers. For
example, Facebook offers a “legacy contact” feature, while Google’s Inactive Account Manager
lets users decide what happens to their account after inactivity. Taking advantage of these
features can both save future time and offer peace of mind.
Digital Assets with Significant Value
Some digital properties can rival traditional assets in financial importance.
Cryptocurrency
Unlike a bank account, crypto is not centrally managed. Without a private key or seed phrase, it
becomes unrecoverable. Estate plans should include detailed instructions for accessing and
transferring crypto safely.
Online Businesses
Bloggers, influencers, and e-commerce sellers may generate income through platforms like
Etsy, Shopify, or YouTube. These streams of revenue may be sold, transferred, or wound down
by the executor, but only if access is provided.
Intellectual Property Rights
Domain names, original creative works, or NFTs may carry substantial market value. These
should be appraised and transferred like any other asset.
The Cost of Neglecting Digital Assets
Failing to account for digital property can cause both financial and emotional harm. Families
may lose access to cherished memories stored in cloud accounts. Cryptocurrency worth
thousands of dollars could vanish permanently. Executors may spend months navigating legal
obstacles to retrieve online information.
These risks underscore why modern estate planning must extend beyond physical property.
Clients who take the time to plan for digital assets give their loved ones peace of mind and
preserve both wealth and legacy.
Conclusion
Estate planning has always been about more than distributing wealth. It’s about protecting the
legacy and wishes of the individual. In today’s digital age, that legacy increasingly includes
online accounts, digital currencies, and electronic memories.
By inventorying digital assets, leveraging state laws like RUFADAA, and integrating specific
instructions into wills and trusts, individuals can ensure their online property is passed on
smoothly. Executors, in turn, can fulfill their duties with fewer roadblocks, keeping the probate
process efficient and avoiding unnecessary loss.
As technology continues to evolve, digital assets will only grow in importance. Addressing them
proactively in estate planning is no longer optional but essential.