How to avoid one of the biggest mistakes in your estate plan – failing to account for digital assets

A client told me during a recent intake interview for preparing her Will that she had no digital assets. At the end of the 90-minute meeting, she mentioned her PayPal account – that was the lightbulb moment. Most of us have digital assets now.

Digital Assets in Estate Planning Under Pennsylvania Law

Estate planning has traditionally focused on tangible assets such as real estate, bank accounts, and personal property. However, in the modern digital age, individuals own a variety of digital assets that must be accounted for in their estate plans. Pennsylvania law recognizes the importance of digital assets and provides a legal framework for handling them upon an individual’s death. Understanding how to incorporate digital assets into an estate plan ensures a comprehensive and effective strategy for asset management and distribution.

Understanding Digital Assets

Digital assets encompass a wide range of electronically stored information, including but not limited to:

• Financial Accounts: Online banking, investment accounts, and cryptocurrency holdings.
• Social Media Accounts: Facebook, Instagram, Twitter, and LinkedIn profiles.
• Email Accounts: Gmail, Yahoo, and Outlook accounts containing personal and professional communications.
• Intellectual Property: Domain names, copyrighted materials, and digital business assets.
• Stored Data: Cloud storage accounts such as Google Drive, Dropbox, and iCloud.
• Digital Subscriptions and Rewards: Streaming services, airline miles, and loyalty program points.

Legal Framework in Pennsylvania

Pennsylvania has adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which governs how fiduciaries—such as executors, trustees, and agents under a power of attorney—can access and manage digital assets after a person’s death or incapacity. Under RUFADAA:

1. User Direction Takes Priority: If an individual has used an online tool provided by a service provider to designate a beneficiary or grant access to digital assets, that directive prevails over other estate planning documents.
2. Legal Documents Matter: If no online directive exists, the provisions of a will, trust, or power of attorney will determine the fiduciary’s authority to manage digital assets.
3. Service Provider’s Terms Apply: In the absence of explicit instructions in legal documents, the terms of service agreements with digital platforms dictate access.
4. Court Orders May Be Required: If there is no prior authorization, fiduciaries may need to obtain a court order to access or manage certain digital assets.

Incorporating Digital Assets into Estate Planning

To effectively manage digital assets within an estate plan, individuals should consider the following steps:

1. Create an Inventory of Digital Assets

A thorough list of digital assets, including account credentials, should be maintained. This inventory should include:

• Account names and URLs
• Usernames and passwords
• Security questions and answers
• Backup authentication methods This list should be stored securely and separately from a will to prevent unauthorized access.

2. Use Legal Directives to Grant Access

Individuals should explicitly authorize fiduciaries to access their digital assets in estate planning documents, such as:

• Wills and trusts
• Powers of attorney
• Letters of instruction This ensures that fiduciaries have the necessary authority to manage, transfer, or delete digital accounts as needed.

3. Utilize Online Tools Provided by Service Providers

Many digital platforms, such as Google and Facebook, allow users to designate legacy contacts or establish account management directives. These tools override any conflicting instructions in estate planning documents and should be updated regularly.

4. Consider Privacy and Security Issues

Providing access to digital assets must be balanced with privacy concerns. Sensitive personal or financial data should only be shared with trusted fiduciaries, and encryption or password management tools should be used for security.

5. Review and Update Estate Plans Regularly

As digital assets evolve, estate plans should be reviewed and updated periodically to reflect changes in asset ownership, service provider policies, and relevant laws.

For Informational Purposes only and not for legal or tax advice.

About the Author – Marie Feindt, JD 

Marie Feindt is the Planning Specialist – Estate Attorney at Members’ Wealth, a boutique wealth management firm that offers a comprehensive and holistic approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of estate planning experience, Marie and the Members’ Wealth team thrive on bringing clarity and confidence to clients’ unique situations. She believes everyone, young adults and older, need the essential documents to conserve and preserve and transfer assets accumulated during lifetime to the next generation.

Marie received her JD from Widener University School of Law, her bachelor’s degree from Penn State University, University Park and is currently enrolled in the Villanova University Charles Widger School of Law Graduate Tax Program.

Marie is an Adjunct Faculty at the Villanova University College of Professional Studies Paralegal Professional Certificate Program where she teaches Estates & Trusts and Civil Procedure & Litigation and Torts & Personal Injury Law.

Marie volunteers for a monthly legal clinic at The Salvation Army in Chester, PA facilitated by the Christian Legal Clinic of Philadelphia. She has served on the Women’s Commission of Delaware County and as a Board Member for the Delaware County Literacy Council.

Marie enjoys biking, reading, yoga and walking in her free time with her husband and three children.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

You can learn more about how we serve our clients by tapping the button below.

Investment advisory services are offered through Members’ Wealth, LLC., a Registered Investment Advisory Firm.

Registration with the SEC does not imply a certain level of skill or training. We are an independent advisory firm helping individuals achieve their financial needs and goals

Members’ Wealth does not provide legal, accounting or tax advice. Please consult your tax or legal advisors before taking any action that may have tax consequences.

This commentary reflects the personal opinions, viewpoints and analyses of the Members’ Wealth, LLC employees providing such comments, and should not be regarded as a description of advisory services provided by Members’ Wealth, LLC or performance returns of any Members’ Wealth, LLC client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Members’ Wealth, LLC manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results

Copyright © 2023 Members' Wealth LLC