Digital assets, like cryptocurrencies and online accounts, have become increasingly significant today. To manage them effectively, they require careful consideration and legal planning. Moreover, these assets come with their own challenges, most of which are still considered uncharted territory of the online market.
Particularly concerning probate, it is vital to understand digital assets and their implications during property distribution. Thus, when it comes to will disputes, an experienced attorney is essential in navigating the complexities of digital assets.
The Growing Importance of Digital Assets
Digital assets are any content, media, or data that exists in digital form and has value. In probate, they are considered a type of financial asset inheritance comprised of intangible properties. Some key examples include:
- Cryptocurrencies— Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), etc.
- Intellectual Property— Patents, copyrights, trademarks, etc.
- Online Accounts— Email, social media, digital files, software, etc.
As more and more of our interactions, transactions, and communications occur online, the value and importance of these digital assets grow as well. Consider how often you use digital assets:
- Social media accounts like Facebook or Instagram allow users to digitally share their lives and even generate revenue through ads and sales.
- Communication channels like e-mail accounts allow users to collaborate, share, and store files, conversations, and more.
- File storage accounts like Dropbox allow users to store files, documents, pictures, videos, etc.
- Cloud-based services like GitHub allow teams to collaborate, develop code, build web pages, and update content.
- Intellectual properties allow innovators and artists to earn recognition and revenue while maintaining ownership of their ideas.
The list goes on and on. Although some of these digitized items contain no value, the ones that do encourage the growing significance of digital assets in our increasingly technological world.
This is especially true concerning probate and the laws that govern property distribution. Thus, the importance of creating a clear, comprehensive estate plan for your digital assets must be considered.
The Importance of Having a Will
Digital assets, like physical assets, include a wide array of properties that an owner accumulates throughout their lifetime. The item is not considered an asset if it does not have value. However, digital assets that generate revenue or contain monetary value are considered inheritable property.
Usually, in probate, property owners create a will to effectively manage and distribute their property when they pass away. The will typically contains clear and precise instructions regarding which assets are distributed and who receives them. However, when such instructions are absent, challenges may arise, leading to the process of contesting a will.
In general, creating an estate plan can be a transparent, straightforward process. However, digital assets challenge the simplicity of this process. By nature, these intangible assets prove complicated to manage after the owner’s death. Consider the following difficulties:
- Online accounts have strict security measures, making it difficult to retrieve login credentials from a deceased person.
- Social media platforms like Instagram and Facebook have their own protocols for handling deceased user accounts.
- Digital currencies like Bitcoin operate as decentralized finance, making them difficult to access once the owner dies.
- Determining the value of some digital assets is very complex, requiring a team of diverse professionals to assess their worth accurately.
- Digital assets, by nature, have no geographical boundaries. This makes it challenging to determine what state or court has jurisdiction over the assets.
- In general, laws governing digital assets are still under development. As a result, the current process of effectively managing and distributing these assets remains somewhat unclear.
In probate, these challenges can encourage will disputes to arise and complicate the property distribution process. Thus, proper estate planning techniques are crucial in streamlining the inheritance process. In some circumstances, seeking counsel from a probate lawyer is also advisable.
This includes securing an experienced attorney who can help navigate these challenges, avoid disputes, and fulfill the deceased’s wishes.
Potential Disputes Over Digital Assets
Whether the deceased died testate (with a will) or intestate (without a will), various disputes can still surface concerning the deceased’s digital assets. Consider the following:
- Jurisdiction: Unlike physical property, digital assets have no boundaries. They can be stored, shared, and traded online without physical presence. This makes it difficult to discern which court has authority over the matter, leading to disputes.
- Legal Ambiguity: With the continuous advancement of modern-day technologies, laws governing digital assets are still evolving. As a result, this lack of clarity leads to disputes over ownership, inheritance, and management of digital assets.
- Security Breaches: Digital assets are at a higher risk for phishing schemes, hacking, theft, and loss. Moreover, they can be lost or stolen without a trace, causing disputes over ownership or the loss of asset(s).
- Technical Issues: Some digital assets, like cryptocurrencies, are guarded by powerful blockchain technologies, requiring serious technical expertise. Thus, disputes arise when there are issues accessing and transferring the assets.
- Lack of Awareness: Most people are unaware of the wealth of their digital assets or how to manage them effectively. Without proper estate planning, this leads to disputes over asset ownership or transfer.
- Intellectual property: Disputes arise when digital assets are used without permission or when there is confusion over property ownership.
Furthermore, digital assets are often not covered by traditional wills because many estate plans still need to be equipped to handle digital assets.
Therefore, whether individuals are in the preparation phase of estate planning or contesting a will, an adept attorney is crucial to navigating these challenges successfully.
How an Attorney Can Help
The rise of these technologies creates new legal and ethical challenges for the judicial system. As a result, attorneys are charged with staying informed about the progression of digital assets and their implications when disputes arise.
Thus, probate lawyers are experts at successfully guiding clients through the complicated estate administration process or, if it comes down to it, the process of contesting a will. An attorney can help you:
- Draft a Will: Remember, unlike traditional property, digital assets are much more complicated to outline in a will. They require detailed, specific instructions regarding the asset’s value assessment, disbursement, ownership transfer, and distribution.
- Create a Trust: Trust accounts can work as an alternative to or in conjunction with a will. Essentially, this document is like a will, except that the assets placed in a trust belong to the trust. This means the inheritance process will be executed according to the trust’s terms instead of the court-supervised probate process.
- Create a Power of Attorney: A Power of Attorney (POA) can be written in a will, authorizing someone to act on behalf of another. For example, if you become incapacitated before your death, your will and POA can serve to represent your true wishes when you cannot do so yourself.
- Review Service Agreements: Attorneys use their expertise to review the terms of digital asset service agreements. In addition, attorneys can review or revise other estate plan documents, contracts, or agreements to ensure they are legally sound and enforceable.
- Create a Digital Asset Inventory: Like traditional assets, digital assets must be itemized, assessed, and appraised. Attorneys can help you create a legal inventory of your assets, including login credentials and other required information.
- Create a Digital Estate Plan: Remember, estate planning techniques are still adapting to the challenges of digital assets. Therefore, having a legal expert help you create a digital estate plan is highly recommended.
It is crucial to note that, for estate planning documents to be most effective, they must be legally sound and regularly updated. This provides the most protection for your assets throughout your lifetime and the property distribution process after your death.
Without the help of a legal professional, you could be leaving your estate plan incomplete, encouraging disputes to arise in the future. For this reason, it is highly recommended that you hire an attorney to help ensure your wishes are clear, legally binding, and enforceable.
The importance of digital assets in today’s world cannot be overstated. As these assets become increasingly significant, it is vital to ensure proper estate planning to avoid probate disputes. Doing so increases the possibility of effectively managing and distributing digital assets, regardless of their nature or complexity.
Therefore, an experienced probate lawyer is invaluable in successfully avoiding potential disputes, navigating the ambiguities of digital assets, and securing their future.