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Planning for digital assets in an estate plan

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Planning for digital assets in an estate plan

On Behalf of | Aug 20, 2018 | Estate Planning, Firm News

Colorado and many other states have passed laws that allow executors to manage digital assets just as they would other types of assets. However, people still need to take steps to ensure that executors and other loved ones are able to access the assets both legally and from a technology standpoint.

One expert says that instead of using a USB to store information such as key locations, passphrases, PINs and more, a pen and paper is the best way to record information. There should be two copies of the documents, and they should be kept with other estate planning information. These lists may need to be updated weekly if a person trades frequently. Once a year may be often enough for people who are less frequent traders. One probate judge has pointed out that the court system will need to get a more sophisticated understanding of cryptocurrency in the next few years.

A potential issue for executors is the fact that cryptocurrency values change frequently. As a result, executors may want to sell the currency quickly to avoid any accusations of mismanaging it if it drops in value.

However, what an executor is able to do with cryptocurrency is based on what a person’s instructions are in the will or other estate planning documents. For example, unless there are outstanding bills to be paid that are associated with the estate, if a person leaves cryptocurrency accounts to another person, an executor must protect the asset and pass it on to the designated heir. People should also keep in mind that digital assets may also include email and social media accounts, photos and other online accounts. Different sites have different terms of service regarding who can access the accounts and how, and the plan for the digital assets must be compliant with the site requirements.