After one's demise, destiny remains shrouded in mystery, yet one certainty prevails: Material wealth cannot accompany you beyond the grave.
Individuals typically opt to bequeath their riches to kinfolk or charitable causes close to their hearts. The transfer of most assets follows a straightforward path, especially if meticulous estate planning has been undertaken. Monetary funds can be shifted, and residences can be passed down to successive generations.
However, the realm of digital assets presents a more intricate challenge. A lost password may perpetually bar beneficiaries from accessing their due, prolonging their plight indefinitely!
In dire circumstances, digital assets might vanish entirely, concealed within the shadows of ignorance among loved ones.
To secure the legacy of your digital assets for posterity, it is imperative to establish a concrete strategy without delay.
Let's delve into the intricacies of digital assets, their fate post-mortem, and the methods to ensure their enduring value.
What Exactly Constitutes Digital Assets?
In its broadest essence, digital assets embody a virtual manifestation of worth detached from tangible entities. Digital asset investments encompass virtual articles, tokens, or accounts exchangeable for value.
Prominent examples of digital assets include cryptocurrencies like Bitcoin or Ethereum. Cryptocurrencies solely inhabit the virtual realm, their valuation independent of any regulatory body or national currency. Their ownership is enshrined within the blockchain, a decentralized database tracking transactions. Non-fungible tokens (NFTs) represent another digital asset variant documented on the blockchain.
Although cryptocurrencies and NFTs currently dominate discussions on digital assets, they represent only a fraction of the wider spectrum.
Digital assets encompass diverse entities such as:
- Websites and domain names
- Online commerce platforms
- Software as a Service (SaaS) platforms
- Balances in digital payment systems like PayPal
- Revenue-generating social media profiles
- Digital documents
- Credit card rewards points
The global cryptocurrency market is poised for exponential growth. Digital assets have witnessed a meteoric rise in recent times, with the global market already approaching a $2 billion valuation in 2021. Forecasts project a remarkable Compound Annual Growth Rate (CAGR) of nearly 60% over the next five years!
Deloitte's 2021 Blockchain Survey indicates that financial institutions worldwide view digital assets and blockchain technologies as strategic imperatives. President Biden has even issued an executive order to ensure the responsible evolution of digital assets.
Despite the escalating value of digital assets, are individuals taking adequate measures to safeguard and bequeath them?
The protocol for transferring conventional assets such as real estate, bank holdings, and sentimental family heirlooms is well-established and straightforward, particularly with a testament or trust in place.
Following an individual's demise, the estate undergoes probate, wherein assets, debts, and possessions are inventoried and distributed by the will, if available. The probate process is overseen by the estate's executor, often a designated family member.
On paper, the procedure for digital assets mirrors that of traditional assets.
The conundrum lies in the elusive nature of digital assets. Family members may remain oblivious to their existence, especially in the absence of a centralized record detailing their nature and valuation.
Furthermore, digital assets are shielded by passwords. Even if family members are aware of their existence, without the requisite passwords, these hard-earned investments remain beyond reach.
For entrepreneurs managing online ventures or e-commerce platforms, the repercussions of losing access to online accounts or financial gateways like PayPal can be monumental. Without access, beneficiaries are incapable of remunerating employees or fulfilling customer orders.
Neglecting digital asset estate planning is facile due to their "invisible" nature, yet this oversight relinquishes control over their fate, exacerbating the burden on loved ones during trying times.
The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA)
Legal frameworks often lag behind technological advancements, yet certain statutes delineate posthumous access to digital assets.
The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), enacted in 2015, governs the access to an individual's online accounts following their demise or incapacitation. The legislation empowers the executor of a will or trustee to administer digital assets like websites, domain names, and virtual currencies while safeguarding the privacy of the deceased. RUFADAA also curtails access to personal communications such as email accounts, text messages, and social media profiles unless explicitly permitted in the will.
Estate Planning for Your Digital Assets
Facilitating access to your digital assets for loved ones posthumously is paramount to ensuring the fruition of your investments. To this end, a combination of practical and legal safeguards must be instituted.
Practical Estate Planning
The initial stride entails meticulous cataloging of assets, their locations, and accessibility.
Compile all pertinent information into a singular repository, be it a spreadsheet or a wealth management platform (elaboration forthcoming). Safeguard this repository in a secure location and include directives for accessing it within your will to expedite its retrieval by future estate administrators. Regularly updating this information is advised.
For enhanced security, refrain from storing passwords alongside account information. Opt for a password management tool like 1Password or maintain a separate document containing login details for digital accounts, securely stored apart from other documents. 1Password advocates the creation of an "emergency kit" to be preserved in a safety deposit box. Incorporating this master list into your will is prudent.
Legal Estate Planning
Once a comprehensive understanding of your digital assets and their valuation is attained, drafting a will is imperative.
According to a 2021 Gallup poll, merely 46% of Americans possess a will. The absence of a will can prolong the probate process for months or even years, particularly amidst disputes among beneficiaries or difficulty in locating assets.
Individuals with straightforward estate planning may opt for online tools to draft a will, albeit those grappling with intricate scenarios or apprehensive about potential ramifications should seek counsel from an estate planning attorney. The National Association of Estate Planners & Councils serves as a reputable starting point.
An estate planning professional can assist in crafting a will, establishing trust funds if necessary, and designating an executor for your assets. Optionally, a separate digital executor can be appointed to oversee digital assets exclusively.
Utilize Wealth Management Software for Digital Asset Tracking
While spreadsheets suffice for managing digital assets, they possess inherent limitations: susceptibility to loss, vulnerability to theft, and necessitation of periodic manual updates.
For individuals diversifying their portfolios across myriad digital assets, a spreadsheet proves inadequate. A digital repository offering automatic updates is imperative, facilitating storage, tracking, and access to assets under one roof.
This necessitated the creation of the IronClad Family.
IronClad Family stands as a robust personal balance sheet fortified with wealth management software, enabling secure storage of investment details in a centralized location, thus preempting any loss while facilitating seamless retrieval by loved ones when the need arises.
With IronClad Family, tracking and optimizing the entire portfolio, including cryptocurrencies, NFTs, and domain names, alongside conventional assets like bank accounts, stocks, and real estate, is effortless. Resembling the simplicity of spreadsheet updates, IronClad Family eliminates associated drawbacks.
Upon integration of diverse asset types into the platform, the IronClad Family facilitates the automatic calculation of the Investment Rate of Return (IRR). Additionally, the recap screen furnishes insights into individual asset performance, its impact on net worth, and the broader portfolio landscape.
Crucially, the IronClad Family obviates the arduous task of tracing accounts and information about even the most obscure digital assets during turbulent times.
This assurance emanates from the IronClad Family's streamlined beneficiary management. The "Safe Deposit Box" feature enables secure storage of estate planning documents alongside the portfolio. A designated beneficiary can access digital accounts, assets, and crucial documents once the account holder relinquishes control.
The secure, automated "account manager" grants the named beneficiary automatic access post a predetermined period of inactivity, supplemented by multiple email notifications. Access is granted exclusively at the appropriate juncture.
In the event of the primary beneficiary's inability to access the account, IronClad Family provides the option to designate a secondary beneficiary, granted access only in extenuating circumstances.
IronClad Family furnishes the reassurance that your wealth and assets will be bequeathed judiciously. Enlist today to ensure your family and loved ones inherit access to your digital assets precisely when required.
Furthermore, collaboration with financial advisors, wealth managers, or financial professionals remains feasible. They may request a demonstration to witness the efficacy of our white-label platform in action and comprehend its role in empowering clients to manage digital assets astutely!