Woman securing her digital assets on her tablet

Digital Assets in Estate Planning: How to Secure Your Digital Legacy

Digital assets are a wide range of virtual items that hold value in the real world. This asset class includes digital services, products and art, cryptocurrency, non-fungible tokens, domain names, etc. Even though these items exist in the computer world and can often not be held and measured, they can obtain multi-million-dollar valuations.

It’s important to note that while there are opportunities to make money from digital assets, there are risks involved, including price volatility, regulatory changes, and scams. It’s crucial to conduct extensive research, understand the markets, and consider your risk tolerance before investing or participating in any digital asset-related activities. Additionally, tax implications may vary depending on your location and the specific actions you engage in, so it’s advisable to consult with financial or legal professionals for guidance.

Why Digital Assets Matter in Estate Planning

In short, you can make an incredible amount of money with digital assets. As mentioned, they are not without risks, and the market is volatile. However, digital assets have made millionaires out of many Californians and made the state a world economic power.

Types of Digital Assets

Cryptocurrencies are the most talked about and possibly the most mysterious class of digital assets. Cryptocurrencies include Bitcoin and Ethereum and have gained significant popularity as a means of investment. You can buy cryptocurrencies and hold them, hoping their value will increase over time. Some people also engage in trading cryptocurrencies to profit from price fluctuations. Of course, they are volatile, and limited legal safeguards are in place relative to other asset classes. Many traditional companies and blockchain projects issue digital tokens or stocks representing ownership in the company. You can invest in these assets through various online platforms. Some blockchain networks allow you to lend your digital assets to others in exchange for interest or to “stake your assets” (agree not to move them) in the network to earn rewards.

Non-fungible tokens are unique digital assets representing ownership of a particular item, artwork, collectible, or piece of content, often tied to blockchain technology, the tech at the base of cryptocurrency. Most NFTs are denominated in and tied to a cryptocurrency. Artists, creators, and collectors can make money by creating, selling, or trading NFTs.

Artists can create digital art and collectibles and sell them as NFTs or through online marketplaces. Collectibles in the form of digital trading cards or virtual items in video games can also be bought and sold, sometimes for significant amounts. Content creators on platforms like YouTube and TikTok can monetize their content through advertising revenue, sponsorships, merchandise sales, and fan donations. Building a large and engaged audience is crucial for success in this space. Many people were astonished when an Idaho skateboarder’s video, accompanied by Fleetwood Mac’s “Dreams,” went viral and was watched by hundreds of millions of viewers. His digital asset-based net worth is between 500,000 and one million dollars.

Valuable domain names can be bought and sold for a profit. Some individuals and businesses specialize in domain name flipping, where they acquire domains expecting to sell them at a higher price later. Other digital products require a little more investment and a personal touch. You can create and sell digital products like ebooks, online courses, software, and digital marketing services. Other people invest their creative energy in games and virtual environments. You can buy, develop, and sell virtual real estate in virtual worlds and metaverse environments. These virtual properties may appreciate as the virtual world becomes more popular. Professional gamers and esports athletes can earn money through tournament winnings, sponsorships, streaming, and content creation centered around video games.

Social Media and Your Estate: What Happens After You Pass?

If your social media accounts have value to you, either financial, sentimental, or otherwise, it is essential to consider them in your estate planning. You need to ensure that your wishes for those accounts are carried out. Most social media platforms have policies in place to handle the accounts of deceased users. These policies may allow for the memorialization of an account, meaning it remains visible but cannot be logged into or updated. Alternatively, they may allow the account to be deleted upon request from a verified family member or executor of the deceased person’s estate. Some platforms, like Facebook, allow users to designate a “legacy contact” who can manage their account after they pass away. The legacy contact can make specific changes to the account, such as writing a pinned post, responding to friend requests, and updating the profile picture. In some cases, family members or executors may request the deletion of a deceased person’s social media accounts.

The process for this can vary between platforms and may require proof of death and legal documentation. Accessing the content of a deceased person’s social media accounts, including messages and photos, can be a complex issue. Some platforms may grant access to a designated person if legally required and authorized, but privacy laws and platform policies can complicate this process. If no action is taken, some social media accounts may remain as they are, with no one managing them. Over time, they may become inactive or memorialized based on platform policies.

The rules and procedures for handling digital assets after death are still evolving, and they can vary by jurisdiction. Consulting with legal professionals who are knowledgeable about digital estate planning and the laws in your area can provide valuable guidance in ensuring that your digital assets, including social media accounts, are handled according to your wishes.

 Helping You Maximize Your Estate Through Digital Assets

Many people are making money from digital assets in a variety of ways. Our skilled legal professionals will provide legal advice to fortify your wealth, enhance your well-being, channel assets to your chosen heirs, and mitigate potential risks and expenses. We stand ready to assist with any inquiries, offer sound legal counsel, evaluate your estate planning, and tackle any necessary tasks to propel you forward.

Contact the dedicated team of attorneys at Lowthorp Richards for trusted guidance in digital asset management and estate planning by dialing (805) 981-8555 or completing our convenient online contact form. Our legal practitioners are deeply rooted in the California Tri-Counties region, serving Ventura, Santa Barbara, and San Luis Obispo.

NOTE: The information contained herein is not intended to be legal advice and the reader should know that no Attorney-Client relationship or privilege is formed by the posting or reading of this article which is also not intended to solicit business.

Cristian R. Arrieta, Lowthorp Richards McMillan Miller & Templeman, A Professional Corporation, 300 E. Esplanade Drive Suite 850, Oxnard, CA 93036