Everyone Needs a Digital Estate Plan

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Everyone’s received notifications via email or social media, reminding you to wish someone a happy birthday or anniversary long after you know they’ve passed. Often, this is the result of internet accounts being left online after someone has passed away. This may seem like something trivial, but it speaks to a much larger issue.

While the importance of estate planning for assets such as bank and brokerage accounts, your home and other investments is widely recognized, too often overlooked is your holding in so-called digital assets.

This category includes similarly important items including   access to online bank accounts, cryptocurrency, subscriptions, digital wallets, and even social media profiles.

According to online password management company NordPass, the average American had an astounding 168 internet accounts in 2024. However, a recent survey by Bryn Mawr College discovered that while Americans estimate the average value of their digital assets to be nearly $200,000 ($191,1516), a majority, 76 percent of respondents admitted that they had little to no knowledge of what, if any digital estate planning they need to engage in.

These assets can possess financial or even sentimental value but are so regularly overlooked when it comes to planning to pass on control of your estate.

Ignoring the curation and planning around your digital assets comes with risks ranging from preventable hassle, significant delays in accessing and passing down the value within these holdings to legal complications for estate heirs.

Being locked out of online accounts can lead to account abandonment, or preventable legal battles over ownership.

Douglas Boneparth, founder and president of Bone Fide Wealth, a financial  firm, explained this nuance of estate planning to Investopedia.   He advises all his clients to take three steps to modernize their estate planning.

Create a Digital Inventory

Boneparth encourages all clients to maintain a complete and thorough inventory of their digital assets. This includes records of the associated platform, web address, username and password. The inventory should further detail how the deceased wants these assets handled. If something should happen to you, who will they belong to.

While some of these may seem mundane, such as canceling a costly monthly or annual subscription or deactivating a social media account, others can have real financial consequences, such as naming an heir for cryptocurrency assets.

When the CEO of Canada’s largest cryptocurrency exchange, QuadrigaCX, unexpectedly passed away at the age of 30, he unwittingly took $190 million worth of digital currency deposits with him, as he was the only one with the password to access them, ultimately leading to the dissolution of the company.

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This phenomenon also occurred with the death of Matthew Mellon. Mellon, an heir of the famous Mellon family that founded BNY Mellon, Carnegie Mellon University and the National Gallery of Art, which possesses a net worth of  $14.1 billion, passed away in 2018, but no one knew the password to his cryptocurrency accounts, leaving his heirs locked out of an estimated $500 million in assets.

After you pass on, do you really want your Facebook, or LinkedIn account still communicating without you.  If you do not enable your heirs with the right to manage that digital presence, then it is abandoned.

Appoint an Executor

Boneparth further counsels naming an executor specifically for digital assets. He recommends appointing a technologically proficient individual who understands how to implement a client’s wishes.

Incorporate Digital Clauses into Legal Documents

Finally, consider including digital assets and instructions on how to handle them within future drafts of wills and trusts to prevent future legal disputes.

The bottom line is that in our digitally integrated world, so much of what we deal with has become digitized, your medical records, access to your bank accounts, the 401K retirement plan and its holdings, or ever the “old school” paper U.S. Savings bonds you may have received or given children and grandchildren as gifts.  Generally, to cash them in today, requires an online account at the U.S. Treasury, in the name and Social Security number of the holder.

As technology had brought about these evolutions, so too must estate planning must evolve with it. Whether financial or sentimental, these assets should be included in estate planning to guarantee that they are cared for and prevent unnecessary legal entanglements for your heirs.