The Digital Inheritance: Passing on Your Online Assets in Retirement

People’s lives are increasingly intertwined with digital platforms and online assets. Even if you might not realize it, you probably have a huge Internet footprint. Everything from your bank accounts to social media profiles holds value and contains essential information.

The question is, what happens to all of your virtual assets during your golden years? More importantly, where does all of it go when you pass on?

It’s vital to think about what will become of your digital assets when you’re gone. Here’s everything you need to know to make the most of your retirement.

What Are Online Assets?

A digital asset is any online or electronic resource you own or control. Some common examples include online bank accounts, cryptocurrencies, and investment portfolios. All of these items have a clear monetary value.

Digital assets aren’t limited to financial tools and accounts. Social media profiles and email accounts are also considered digital assets. After all, they contain photos, videos, and important documents that might provide monetary or sentimental value to your loved ones.

Your online assets require the same level of consideration in your estate planning process. Just because you can’t touch or hold virtual assets doesn’t mean they aren’t worth something to you or your loved ones.

The Challenges of Digital Inheritance

Digital inheritance planning can be complex for several reasons. Here are some of the obstacles you might encounter while deciding what happens to your virtual assets:

Terms of Service Agreements

Each online platform has unique terms of service. Contractual agreements may include clauses limiting when and how digital assets can be transferred.

Privacy Concerns

Privacy concerns are another major issue. You must ensure that sensitive information is handled securely and can only be accessed by those you trust.

Technological Barriers

If your heirs aren’t tech-savvy, they may have difficulty transferring control of your digital assets to our accounts. Choosing someone you trust to oversee the transfer of your digital assets is vital. Make sure they’re both technologically skilled and reliable.

Emotional Considerations for Heirs

Don’t let these barriers discourage you from planning for the future. Dragging your feet is one of the biggest retirement planning mistakes you can make, and it could cost you and your loved ones big time.

Digital Estate Planning 101

Retirement isn’t a time to stop learning. It’s a prime opportunity to continue your lifelong learning journey and familiarize yourself with the nuances of digital estate planning.

Here are a few simple steps to help you start your next chapter on a positive note while ensuring your wishes for each online asset are honored.

Create an Inventory of Your Online Assets

Understanding where you invested money will help reduce risk in your retirement portfolio. Likewise, taking stock of your inventory of online assets decreases the chance that something important will get lost in the shuffle when you pass on.

With that in mind, you should create a digital asset inventory. Make a list of every account or platform you use, which may include:

• Financial institutions
• Trading platforms
• Retirement management firms
• Social media accounts

Your inventory will serve as a reference during the planning process. Ensure every asset listed is addressed in some way in your estate plan.

Decide What Will Happen to Each Asset

Next, determine what you’ll do with each online asset during retirement and when you pass away. Decide who gets what and how you’ll transfer your virtual assets.

Some resources, like the money in your savings accounts, can be transferred via a will. However, passing along the photos and videos on your social media account can prove much more difficult.

Keep in mind that not every asset has to be passed along. You could also specify that some accounts, such as your email or social media profile, get deleted after your death so that hackers don’t use these to scam people with your accounts.

Choose a Digital Executor

Determine who will see that your wishes are carried out. A digital executor will need a power of attorney to manage and distribute your assets per your requests.

Gather the Appropriate Documents

Obtain and execute all necessary documents, which include a will and a power of attorney. Without these forms in place, it will be difficult (or potentially even impossible) to honor your wishes after you pass on.

How to Manage Your Online Assets in Retirement

Here are a few tips to keep up with your financial and social assets during retirement:

Review and Update Your Inventory

Make it a point to update your inventory of digital assets anytime you create a new account or profile. For example, if you switch financial institutions and open a new online savings account, you’ll want to add that information to your list.

While you don’t need to include everything, it’s vital to add any relevant accounts. For example, let’s say you create a new email address to fill out online quote requests and keep spam messages out of your primary account. Your loved ones probably won’t want your spam email address, so you can safely omit that from your inventory.

Secure Miscellaneous Accounts

Take care to safeguard all of your accounts, especially those that provide access to your financial assets. Use strong passwords and enable two-factor authentication to provide an extra layer of protection. Enable alerts and push notifications to discover unauthorized attempts to access your accounts.

Organize and Back-Up Personal Data

Consider backing up important personal data, such as legal documents and photos, in case of an emergency. You can use backup files to recover critical information if your primary accounts are hacked.

Manage Financial Accounts

Your financial accounts are your primary tool for passing wealth to your heirs. Make sure you manage them wisely.

Keep your accounts secure with strong passwords, and consider opting in for alerts from your financial institution. You’ll want to know as soon as possible about any unusual activity on your accounts to prevent fraud or theft.

Consider Your Social Media Accounts

Don’t forget about your Facebook, Instagram, or X profiles. While these accounts probably don’t offer much monetary value, they could hold important memories your family wants to save. You might want to designate someone to manage or memorialize your profiles after you’re gone.

Tools and Services for Digital Asset Management

Does managing your digital assets sound like a full-time job? It can be. The good news is there are plenty of great tools and services to help make the process easier. Here are a few resources to consider:

Password Managers

A password manager secures your login credentials for all of your accounts. It can help eliminate the need to remember all of those different passwords. If you decide to save your passwords in one place, make sure to use a reputable application. Less robust solutions might expose your login data and lead to a data breach.

Digital Vaults

Digital vaults offer a secure space to store important documents and sensitive information. You can use one to give your digital executor access to your virtual assets. These solutions are easy to use and quite secure, offering peace of mind while consolidating important data.

Online Asset Backup Services

Online backup services periodically create duplicates of your accounts and information. These services are provided by third-party entities, which are responsible for ensuring that your information is secure. They’ll also monitor your data and notify you of an issue.

Digital Estate Planning Platforms

Digital estate planning platforms can help you organize and manage your virtual assets. These solutions can be a valuable addition to your overall estate plan.

Keep in mind that there aren’t any one-size-fits-all tools or services. To provide comprehensive protection for your digital assets, you’ll need a combination of solutions.

If that sounds overwhelming, consider partnering with an estate planning firm specializing in digital inheritance management. They can help you decide what to do with and how to pass on your physical and virtual assets.

What Does the Law Say About Digital Inheritance?

The legal landscape surrounding virtual inheritance is muddy. Here are a few important pieces of legislation to be aware of:

RUFADAA

The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) provides a framework for managing digital assets in estate planning.

The majority of states have adopted some version of RUFADAA. However, each jurisdiction has slight variations regarding the act’s scope and how it applies these laws to the estate planning process.

State-Specific Laws

Some states have specific laws that govern digital inheritance. You must account for these regulations and RUFADAA when determining how to pass along virtual assets. Consult an estate planning professional to ensure that your will is legal and enforceable within the state in which you reside.

Factors You Should Consider as a Retiree

Retirees need to pay close attention to several types of digital assets. Focus on retirement-specific accounts that you manage online. These accounts likely hold most or all of your financial assets, making them essential.

While you want to ensure that these accounts and resources are accessible, be careful not to compromise digital security. If you’re concerned about your ability to manage your online assets, consider working with a digital consulting service or estate planning firm.

Additionally, inform your heirs about your virtual assets and what you want to happen to them after you pass on. Create a will and ensure that it’s legally sound and respects your preferences.

What’s Next in the World of Digital Inheritance?

Cryptocurrency will likely play a significant role in digital inheritance planning in the coming years. Bitcoin and other popular cryptocurrencies remain go-to investment tools for up-and-coming generations.

While you may not have many (or any) shares of Bitcoin, there’s a good chance that the next generation of retirees will. Millennials and Gen Zs are more open to adding these tools to their portfolios, making digital inheritance planning even more important.

Another exciting development in the world of digital inheritance is artificial intelligence. AI technologies are leading to improved physical and virtual security across a wide range of fields, including social media and finance.

Blockchain technology is another solution experts are optimistic about. Blockchain can be used to create immutable records, making it a highly useful tool for passing on digital assets.

Should You Plan to Pass on Your Online Assets?

Absolutely. Digital inheritance planning is critical. By being proactive, you can pass on valuable social media content, such as photos and videos, financial assets, and other virtual items or files that your family members prize.

Digital inheritance planning is just one part of the retirement prep process. You’ll also need serious financial planning to make the most of your golden years.

Don’t wait until you exit the workplace to think about tomorrow. Start now and enjoy peace of mind for your life after work.

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