Your money isn’t just in banks anymore. It’s in online accounts, trading apps, digital wallets, and payment platforms. These are financial assets—and they matter. But most estate plans leave them out. If something happens to you, will your loved ones know where to look or how to get in? As a well-regarded financial planner for families in Fort Collins and Northern Colorado, Dunnigan Financial helps make sure your digital financial assets are accounted for, safeguarded, and passed on the right way.
What Are Digital Assets?
Digital assets are online or electronic accounts and items that hold financial value or generate income. They aren’t always tied to a physical product, but that doesn’t make them less real. If they can be bought, sold, traded, or inherited—and they live online—they’re digital assets worth including in your estate plan.
Some examples:
- Bitcoin, Ethereum, and other crypto wallets
- Financial documents and valuable information stored online, in hard drives, or on the cloud
- Non-Fungible Tokens (NFTs) tied to art, music, or online collectibles
- Domain names with market value
- Online stores or monetized YouTube channels
- Royalty rights from digital books or music
- Sports betting or fantasy league accounts with cash balances
- Online rewards like hotel points or airline miles
There are some nuanced situations to be aware of, with online banking being one of the most prominent. Online banking accounts and investment platform accounts are considered property and are, inherently, digital assets as well. However, the actual money inside of these accounts, depending on the type of currency, is not considered a digital asset. This is because these specific online accounts are only representative of physical assets, like cash, that are stored by their respective institutions, like banks. Financial planners can help you understand which of your assets count as “digital” and which do not.
Why Digital Assets Should Be Part of Estate Planning
A solid estate plan should account for all valuable assets, including digital ones. Digital assets like cryptocurrency hold monetary value—oftentimes they’re even key elements to build generational wealth. While this isn’t new, financial records stored online are core to proper estate management as well. If these assets and records aren’t included in an estate plan, loved ones are likely to face frustrating legal barriers and complications that would otherwise not be necessary. In the worst case, this could mean lost funds, lost access, or entirely shut down accounts.
There are four major hurdles that prevent the successful transfer of digital assets to your desired beneficiaries: passwords, data encryption, consumer protection laws, and data privacy laws. All of these are likely to play a role in how easily you can pass on digital assets. A well-prepared estate plan strives to ensure your digital financial assets are safeguarded and accessible when they’re needed most.
How to Include Digital Assets in Your Estate Plan
Here’s a process you can follow to get started safeguarding your digital assets for your estate:
1. Inventory Your Digital Assets
First things first: make a list of all your digital financial assets. Don’t forget login credentials, security questions, and backup codes. Keep this list updated and stored securely—preferably somewhere your executor can access when the time come
2. Use a Digital Asset Manager
Consider using a password manager or digital asset manager to store your credentials safely. These are not official parts of an estate plan, but whether the manager is a person, service or software system, it makes organizing, maintaining, and overseeing digital assets far easier and more straightforward. These tools keep everything organized and allow you to designate emergency access so your chosen executor can retrieve important financial information when needed. Don’t forget two-factor authentication (2FA)—it’s one of the best ways to protect passwords.
3. Designate an Executor
The executor is the person legally appointed to manage and distribute the estate plan according to your will, so it’s important to choose someone you trust or a legal representative. If no executor is named in the will, a court may appoint one. Ensure the executor understands their responsibilities and have the necessary permissions. They’ll need clear instructions to avoid legal or logistical roadblocks, like the four major hurdles discussed at the beginning of this article.
4. Legal Documents and Authorization
Include digital assets in your will or trust, and work with a financial planner or attorney to ensure everything is legally binding. Many online platforms have strict policies about posthumous account access. Some might allow users to set up legacy contacts or inactive account managers, whereas others might actually require a court order, proof of death, and legal authority to release information. Simply put, providing explicit legal authorization and integrating account transitions into your estate plan can prevent any issues for your beneficiaries.
Importance of Working With a Certified Financial Planner
Digital financial assets are more important than ever before in estate planning, and the confidence that comes with careful, accurate management is truly priceless. Dunnigan Financial can help you create a secure, legally sound plan to ensure your digital wealth is safeguarded and accessible when it matters most. Contact us today to get started on safeguarding your digital assets!
The information presented is for educational and informational purposes only and is not intended as a recommendation or specific advice. Cryptocurrency and cryptocurrency-related products can be volatile, are highly speculative and involve significant risks including: liquidity, pricing, regulatory, cybersecurity risk, and loss of principal. A cryptocurrency fund may trade at a significant premium to Net Asset Value (NAV). Cryptocurrencies are not legal tender and are not government backed. Cryptocurrencies are non-traditional investments, resulting in a different tax treatment than currency. Federal, state or foreign governments may restrict the use and exchange of cryptocurrency. The use and exchange of cryptocurrency may also be restricted or halted permanently as regulatory developments continue, and regulations are subject to change at any time. Cryptocurrency exchanges may stop operating or permanently shut down due to fraud, technical glitches, hackers, malware, or bankruptcy.
This information is not intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.