Your digital assets may be just additional instruments for diversification in the present — but they could be the driving your portfolio in the future. Now that industries are undergoing a digital transformation, about one in five Americans are already investing in and trading cryptocurrencies and other digital assets. These assets offer a lot of potential for the future, especially since they offer better transaction speed, privacy, and security.
However, digital assets are often left out of estate plans. Now that digital assets are on the rise, it's crucial to recognize their potential for the future.
Why is it Important to Have a Plan for Your Digital Assets?
There are various digital assets that you need to protect, and your cryptocurrency investments should be one of these. While these investment products are relatively new, a guide to cryptocurrencies highlights the importance of digital assets for the future of financial markets. In fact, the guide emphasizes that accountants are establishing valuation and tax compliance strategies for cryptocurrencies, now that these assets are evolving for payments, privacy, and other services. Without any plan in place, you and your loved ones can lose a financial instrument with a lot of potential value in the future.
Your cryptocurrency investments aren’t the only ones that should be included in your digital estate plan. In fact, former Google executives have highlighted the importance of digital legacies in their book to emphasize that your digital depository of documents, social media accounts, and websites must also be entrusted to your family and friends. This does not just provide access to your precious pictures or writings, it also allows them to protect your important business files and close your premium subscriptions for online services. Indeed, in the era of digitalization, your digital footprint and assets are valuable and must be protected.
How Can You Protect Your Digital Assets?
All your assets—including the digital ones—can be protected through a trust. Our article on the last will and testament clarifies that estate plans allow you to make decisions about your finances in the event of disability or death. Your estate plan includes a Last Will and Testament, which lays down how you prefer to distribute your assets among your loved ones. Additionally, Randal & Bryant offers a Directive Communication Systems (DCS) service, which allows you to leave directions for all of your digital assets, including accounts with passwords.
To start, you need to create a list of digital accounts and online assets that you want your loved ones to have. You can opt to keep your estate plan in a vault, safe-deposit box, or even in a secure password management system online. You should also switch on Google’s inactive account manager and Facebook’s memorialization settings to personalize these accounts for future use.
Estate plans give you the freedom to decide how you would like to distribute your assets to your loved ones. Now that digital assets are increasing in value, make sure that you won't leave these behind in your estate plan.
Post contributed by Glenda Eleanor