/>iThe rise of digital platforms, online accounts, and cryptocurrency has reshaped the role of digital assets in modern estate planning. Digital assets, once an afterthought or a minor footnote in the planning process, now warrant their own conversation entirely. Most estate practitioners have likely become more aware of the need to plan for digital assets.
However, many clients still harbor misconceptions about these assets, which can muddle the planning process, leaving their digital legacies unprotected and their heirs unprepared — and as you know nearly all your clients have digital assets.
Here's a look at six of the biggest misconceptions your clients may have about the digital side of estate planning, and why addressing them is crucial.
1. “My Will Covers My Digital Assets.”
Many clients believe that simply adding a generic clause about “digital assets” to their will is enough. While this is a good start, a clause alone is inadequate for comprehensive planning. Not to mention, wills are public documents, including sensitive digital information in a will such as account logins, private keys, or other sensitive information can create serious security risks.
Notably, without the proper digital asset authorization language included in a will (and other estate planning documents such as Powers of Attorney and Trust Agreements), fiduciaries acting under these documents, including agents, executors, and trustees, may lack legal access to important accounts and information. In addition, clauses in estate planning documents that permit fiduciary access, also must specifically authorize disclosure of the contents of electronic communications (such as email messages), which are subject to heightened privacy standards. Of course, even if estate planning documents provide fiduciaries with the requisite legal access, this does not equate to actual access without preplanning measures.
Proper planning also requires complementary tools, such as digital asset schedules and inventories, secure password vaults, and language that complies with the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), a version of which has been passed in the majority of U.S. states.
2. “Digital Assets Will Automatically Be Handled by the Service Providers After I Die.”
Many clients assume that their digital accounts will simply be managed or closed by service providers after they pass away. However, that assumption is likewise wrong. Most online services, including social media platforms and email providers, do not automatically transfer control of accounts to heirs or legal representatives.
While some providers offer account "legacy" services or offer online tools such as Facebook’s Legacy Contact feature—which allows someone to manage a deceased person’s account—many do not. As mentioned above, access to online accounts and certain digital assets by a fiduciary is governed under RUFADAA. Most clients are not aware of RUFADAA or the need to have specific legal instructions and directives in estate planning documents to access digital assets and accounts, if a service provider doesn’t have an online tool. Otherwise, heirs and legal representatives may be completely locked out or require a court order for access. This can lead to legal disputes, delays, and frustration for families already grieving a loss.
3. “I Can Just Give My Passwords to My Spouse or Kids.”
Some clients think a handwritten list of passwords (or even a shared note on their phone) is a sufficient means of transfer. This approach is problematic for many reasons:
- Information is easily outdated (passwords change frequently).
- How information is stored can create security risks (especially if lost, stolen, or seen by the wrong person, or not transmitted and stored with encryption).
- Sharing passwords and login information violates many laws and terms of service agreements.
Estate planners need to guide clients toward secure and legal methods for granting access to their digital accounts and devices — such as using encrypted password managers, for starters. Clients who own cryptocurrency, NFTs and other more sophisticated or sensitive digital information or IP, need to use even more advanced methods to secure these types of digital interests, such as cold storage vaults, which are a form of digital storage not connected to the internet.
4. “Digital Assets Are Not Subject to Probate.”
Some clients incorrectly assume digital assets automatically bypass the probate process the same way some jointly owned assets or payable-on-death accounts do. But unless those digital assets are titled in a trust or handled via an online tool, which is similar to a beneficiary designation on an insurance policy or retirement account, they often do go through probate — and the process for gaining proper access can be expensive and time-consuming. Moreover, if the requisite legal authorizations were not included in estate planning documents, the information that eventually becomes accessible is more limited and does not include the content of electronic communications.
For digital assets, and for a growing number of traditional assets, it is more common for no paper trail to exist due to the rise in online statements and management. And it is becoming harder to even identify what assets exist unless the client has proactively documented them. Finding utility and subscription information, for instance, can be a daunting process that can cause unnecessary delays if preplanning measures are not in place. As digital assets become more ubiquitous, it’s crucial to ensure that even the most basic online accounts are considered as part of an overall estate plan.
5. “My Digital Assets Are Too Small To Worry About.”
It is common for clients to dismiss the importance of digital assets with the belief that their digital accounts and footprint hold no value after they’re gone. The reality is, even non-monetary digital assets can create significant challenges for heirs and legal representatives at death.
Your clients' digital legacy can hold sentimental value that their heirs may want to preserve — photos, emails, and social media profiles all contribute to a person's digital story. Ensuring these assets are properly managed is just as important as safeguarding tangible personal relics.
Some of your clients may ask, "What’s the big deal if I forget to close my Instagram account? There’s nothing in it." But this is a dangerous misconception. While an online account may not have inherent monetary or sentimental value, it can become an entry point for cyberattacks and identity theft and present significant issues and additional time and expenses for heirs and legal representatives.
In the last few years, identity theft of the deceased has been on the rise, resulting in protracted estate administrations and thousands of dollars in additional fees.
Non-financial digital assets can have hidden costs, and the failure to plan for them can lead to administrative headaches and financial burdens for loved ones that can easily be avoided through preplanning measures.
6. “Digital Estate Planning Is Just for Crypto Investors.”
I hear this one all the time. People think “digital assets” and “crypto” are interchangeable. Therefore, digital asset planning must only be relevant to those with significant cryptocurrency holdings or at least a deep understanding of technology. Estate planning professionals should be addressing digital assets for all clients—not just those who are involved in the tech or cryptocurrency spaces. After all, the average person today has around 168 online accounts, including email, social media, online banking, and cloud storage. That list grows daily, for both tech wizzes and luddites alike.
Remember: even if a client dies with no crypto and a negative net worth, their families can still inherit a complex digital scavenger hunt. That’s why virtually everyone needs digital estate planning.
The Bottom Line
If you're not discussing digital estate planning with your clients in 2025, you’re leaving them — and your practice, potentially — exposed. Digital assets are an integral part of every estate, and planning for them is the only way to ensure a seamless transition of assets, minimize loss, and decrease the likelihood of cybercrimes.
By integrating digital estate planning into your practice, you can provide your clients with the peace of mind in knowing their digital assets are properly protected and will be managed according to their wishes.
This is too important to put off. Don't let your clients fall victim to these and other common misconceptions — help them plan for their digital future today.
