Digital Estate Planning, Here Is Why It Is Important

Today’s money is controlled through online banking accounts, investing applications, trading platforms, and cryptocurrency exchanges.

However, as the saying goes, you cannot take it with you.

What happens to the funds in your online accounts when you pass away? Who receives it, and how does that function?

Not making arrangements for your digital assets might cause your loved one anguish and sorrow. They may have difficulty accessing the money you meant to leave them or lose precious goods such as photographs and movies.

Even if you have a traditional estate plan in place covering your house, automobiles, and retirement funds, digital estate planning minimizes unexpected lapses.

Here is the information you need to fill in the digital gaps.

What Is an Electronic Will?

A conventional estate plan specifies the final disposition of your possessions, property, and funds.

The core of a digital estate strategy is your online accounts and assets.

It is not a legally enforceable document like a will, but rather a list of your numerous online accounts, login credentials, and specific instructions for maintaining them after your death.

A digital estate plan is vital since it may facilitate the following for your family:

  • Find and log into your online accounts.
  • Determine if your digital property has any monetary worth that must be declared (or submitted to probate).
  • Distribute or transmit digital materials to the appropriate individuals.
  • Remove your online accounts.
  • Safeguard your digital assets from identity theft, hacking, and fraud.

A digital estate plan relieves your loved ones of the burden of locating and managing your internet accounts after death.

How to Establish Your Digital Will

Follow these procedures to make instructions and plans for your internet assets after death.

  • Take Stock and Become Organized
  • Creating a list of all your online accounts and digital property

Digital estate planning may be broadly divided into two categories:

  1. Things of monetary worth
  2. Items with an emotional worth.

Some accounts have simple monetary worth, such as your bank account, while others may have sentimental value, such as the family photographs stored on your iCloud.

Create a document or spreadsheet with the details of your digital accounts. Each account should include your username, password, answers to security questions, and instructions for administering the account after your death. (If you don’t feel comfortable listing every account’s password, simply store them in a secure location that a selected family member may access.)

Included among digital financial accounts and assets are:

  • Savings accounts
  • Accounts for investments and brokerage (including investment apps like Acorns and Robinhood)
  • Accounts for money transfers such as PayPal, Cash App, and Venmo Cryptocurrency (stored on an exchange or in a digital wallet)
  • Loyalty incentive programs (airline miles, credit card points, etc.)
  • Websites and domains that are profitable

This digital asset inventory list can be provided to an attorney or licensed financial planner for inclusion in other vital estate planning papers, such as your will.

Alternatively, you may print your list of digital assets and store it in a secure location at home. Ensure that a member of your family or a close friend understands how to locate it after your passing.

According to Barbara O’Neill, certified financial planner and proprietor of Money Talk: Financial Planning Seminars and Publications, “if you don’t tell others what you’re thinking and where the paperwork is, it won’t benefit anyone.”

When you die, what happens to your cryptocurrency? How are your Robinhood funds faring? The answers are intricate and extremely vital to know.

Additionally, O’Neill advocates maintaining numerous digital versions of your list. She explained that you might want one duplicate on the cloud and another on an external hard drive or USB that you store in your home’s safety.

Include the password or login key for your cell phone and/or computer, particularly if they are required for two-factor authentication.

You may wish to set up a password manager, which allows you to store everything in a single location and safeguard it with a single master password. Numerous password managers incorporate sharing functionality.

Remember that digital estate planning extends beyond bank accounts.

You should also examine the following digital assets:

  • Social media accounts
  • Blogs and website addresses
  • Email services
  • Cloud storage services
  • Online gaming accounts
  • Subscriptions to streaming and other digital services (Spotify, Netflix, Hulu, etc.)

If you operate an internet company or produce an income online, you should specify how your digital accounts will be handled after your death.

Establish Beneficiaries for Your Online Financial Accounts

You can designate beneficiaries for various financial accounts, including retirement and brokerage accounts. Beneficiary designations eliminate probate, a lengthy (and frequently expensive) legal process. This will be a tremendous benefit to your family when you pass away.

With beneficiary designations in place, your loved one only has to notify the financial institution of your passing and complete the necessary paperwork (like the death certificate). The funds are then sent promptly to the recipient.

Beneficiaries may be established with most major online brokerage firms, including Fidelity, Charles Schwab, TD Ameritrade, Merrill Lynch, and others.

For bank accounts, you must choose the transfer on death (TOD) or payment on death (POD) option (POD). The funds in the POD account stay yours and under your control while you are alive, then flow outside of probate to the beneficiary of your choice upon your death.

How Do You Select a Recipient?

Typically, these forms may be found in the account settings of online bank accounts. You must mention the beneficiary’s name, date of birth, relationship to you, and, in some cases, their Social Security number.

Beneficiary forms are often brief and simple to complete.

Principal beneficiary designations include:

Primary beneficiaries: are the individuals who will inherit your assets first.

Conditional recipients: These are essentially alternative recipients. They will only inherit an asset if your primary beneficiary predeceases you or declines the inheritance.

You may name as your beneficiary any living person or organization, including a charitable organization or trust. You can also (often) name several beneficiaries.

Remember that you can alter your designations at any time. Experts recommend reviewing beneficiaries once or twice a year.

As a result, these designations trump your voluntary actions.

If your ex-husband is still designated as the beneficiary of your former 401(k), he will receive the funds upon your death, not your current spouse or children.

How are digital assets transferred after death?

There are four primary methods by which assets are transferred to heirs.

Beneficiary designation: Most bank accounts, 401(k)s, life insurance plans, and brokerage accounts allow you to choose one or more beneficiaries to receive your assets upon death.

If you have a joint account or jointly own property, the survivor becomes the sole owner of the account or property following your death.

Trusts: are intricate legal arrangements that let assets put in a trust to avoid probate. However, you need an attorney to establish one, and attorney expenses can range between $1,000 and $2,000.

Will: For anything else, you need a will that specifies who will inherit your property.

Suppose you are a single person just starting, do not own property, and just have a bank account and 401(k) with beneficiary designations. In that case, you may not need a will, Life Planning Partners director Carolyn McClanahan says.

But for most people, it’s a good idea to have one, she added, particularly if you’re facing a serious illness, approaching retirement, or have a spouse or children.

Why Creating a Will Is a Smart Decision

To get assets without shared ownership or beneficiary designations, your family must undergo probate, a time-consuming and frequently expensive legal procedure.

This is typically important regardless of whether you have a will.

However, having a will allows you to determine who will inherit your money and property after your death. Consider it your voice after you have passed away.

Otherwise, state law will determine who receives your property.

It will also save your family money. McClanahan stated that going to court without a will can cost thousands of dollars.

It is possible to draft a will online for $100 or less, but experts advise against doing so on your own. Consultation with an estate planning attorney is the greatest method to guarantee that your will is properly drafted but at a higher expense.

Assign a Digital Executor

You should appoint a digital executor in your will. A digital executor is the one charged with managing your digital assets after your death.

An executor is the one who assumes legal responsibility for paying your final bills and transferring any remaining assets to your beneficiaries.

Choose this individual with caution.

Communicate with your preferred digital executor and outline their responsibilities. You must give your digital executor specific authority to log in using your credentials and act on your behalf.

Andrew Park, the founder of Anthony S. Park PLLC and a Manhattan-based estate planning attorney, stated that accessing a person’s financial accounts to move money out before probate is prohibited.

According to Park, just because you have access to the account does not imply you are entitled to the money. Moreover, it is immoral.

“It’s the equivalent of taking all the money from a bank account just because you know their ATM PIN,” Park added.

Unknown to you, your loved one may owe money to the IRS or have other obligations. Transferring money out of their accounts to escape probate is a criminal act. Park stated probate stinks, but it’s essential. Trying to evade probate this way might land you serious trouble.

When a person dies without a will, what happens?

Intestacy is the legal term for passing away without a valid will.

Each state has unique intestate succession rules that decide who inherits a deceased person’s possessions. It can be an arduous procedure that takes months or even years. After the court pays off your obligations, your remaining assets are distributed to your heirs, as determined by the state.

The inheritance pecking order varies by state in the event of incapacity, although your spouse is often at the top of the hierarchy.

Your offspring.

Your parents.

Your relatives.

Depending on your status and location, the person who receives your Robinhood account, bitcoin, and any other assets may not be the person you choose.

Note to unmarried cryptocurrency investors: Do you want your parents to inherit your fortune? Would they value it and make an effort to obtain it? On the other hand, your younger brother or cousin may value and understand how to get such an inheritance. Without a will, you do not influence such decisions.

Develop an iPhone and Facebook Legacy Contact

Cash is not everything. The $900 in your Robinhood account may be less valuable to your family than your social network accounts, Word papers, and iCloud images.

Some platforms make it simple for your loved ones to access your digital accounts after death. Apple, Google, and Facebook are the three largest companies. But assess your digital accounts carefully. You can make them accessible to others after your death and include them on your list of digital assets.


Facebook allows you to assign a legacy contact to your account who will assist in managing your memorialized page after your passing.

A memorial account allows others to upload memories to your profile but disables other services (such as notifying your friends that it’s your birthday) after you pass away.

After you pass away, your legacy contact will not be able to view your messages or post as you. You may also choose not to establish a legacy contact and request that your online account be erased after death.


Apple released its Digital Legacy program in late 2021, allowing users to choose up to five contacts who can receive their data in the case of their death.

These individuals can contact Apple to acquire a copy of your images, videos, voice memos, and other valuable digital assets saved in iCloud and iCloud Backup.

Before Apple can grant access, your legacy contact must accept the invitation and produce a copy of your death certificate. Then, your trusted individual may access the data on Apple’s Digital Legacy website and retrieve the information they choose.

Legacy Contact requires the most recent version of your operating system’s software.

To Create a Legacy Contact on iPhone:

Open your Settings app.

Tap your Apple ID profile at the top of the Settings menu.

Tap on Security and Password.

Tap Legacy Contact, located at the bottom of this menu.

Important: Your legacy contact will not receive the iPhone unlock code for your home screen after you pass away. They will also be unable to access your Keychain, preventing access to your usernames and passwords.


The Inactive Account Manager function of Google allows users to share portions of their account information after an inactive period.