Digital Assets in Estate Planning in Arizona

Many of us do not realize the breadth of digital assets we own. Digital assets can extend far beyond things like cryptocurrencies or data files, as they may include assets such as email, social media, cloud storage, and rewards program accounts. Digital estate planning in Arizona can help you protect and pass on valuable property and wealth. Contact Pennington Law, PLLC for a free initial case review to learn more about the benefits of a digital estate plan.

What Are Digital Assets in Estate Planning?

Many people own a considerable amount of digital assets. As we move more of our lives online, we often accumulate various digital assets, such as:

• Email accounts
• Social media accounts (e.g., Facebook (Meta), Instagram, TikTok, YouTube, X (Twitter), LinkedIn)
• Digital music from iTunes, Google Music, or Spotify
• Digital photos and videos stored on cloud services
• Frequent-flyer miles or credit card reward points
• Online marketplace (e.g., Amazon, eBay, Etsy) accounts
• Non-fungible tokens (NFTs)
• Digital currencies, like cryptocurrency
• Online banking accounts
• Digitized intellectual property, such as music, artwork, or literature
• Streaming subscriptions

With so many assets owned online, it’s essential you consider plans for your digital legacy.

Why Digital Estate Planning is Crucial for Arizonans

Many people do not consider addressing digital assets in their estate plans because they do not fully appreciate what those assets entail. However, incorporating digital assets into estate planning can ensure that you can pass along the value of these assets to your loved ones or beneficiaries. For example, allowing a loved one to take control of your social media accounts after your death can help avoid vandalism or hacking of your accounts. Without proper legal authority, your estate executor may not be able to take steps to protect your sensitive information.

Similarly, passing control of cloud storage accounts after your death will allow your loved ones to continue enjoying the photos, videos, and other media you’ve stored. Finally, digital assets like frequent flyer or credit card rewards, NFTs, or cryptocurrencies have inherent financial value that you may want to pass on to your loved ones with the rest of your wealth.

As technology and your digital life expand, your need for comprehensive estate planning increases. Modern estate planning should consider all your assets, including online accounts and digital property.

A digital estate plan can help manage your digital assets during your lifetime, allowing you to efficiently grow the value of assets like cryptocurrencies and pass those assets and wealth to loved ones or trusted individuals after your death.

A knowledgeable Arizona estate planning attorney from our law firm can help you leave specific instructions and create a digital estate plan that expresses your preferences for your digital accounts.

How Do I Know If I Have Digital Assets in Arizona?

As you begin to craft your estate plan, evaluate your online presence and activities to identify the digital assets you may have. For example, consider what email, social media, banking, and cloud storage accounts you may have. You should also identify your frequent flyer, credit card, and other reward and financial accounts. Check all your electronic devices and external storage devices to identify any photos, videos, or other digital files or documents stored in them. Finally, you should check your investment accounts or digital wallets for cryptocurrency holdings.

Arizona’s Uniform Fiduciary Access to Digital Assets Act (RUFADAA) & How It Works

In Arizona, the Uniform Fiduciary Access to Digital Assets Act establishes a formal legal process for transferring access to and control of digital assets or accounts. Under the act, a person may use online tools to direct online service providers or custodians of digital assets to disclose those assets to a designated recipient. This person is sometimes referred to as a digital executor, but any designation that explains that this person should have authorized access to your social media profiles and online accounts can help create a smoother transition in the event of death or disability.

The law also allows individuals to use a will, trust, power of attorney, or other record to direct the disclosure of digital assets to a fiduciary in the absence of online tools that enable individuals to designate recipients to service providers or custodians.

Under the act, a custodian or service provider may do one of three things when disclosing digital assets:

• Grant a designated recipient or fiduciary full access to the asset or account
• Grant a designated recipient or fiduciary partial access to the asset or account sufficient to allow them to perform tasks required by their role
• Grant a designated recipient or fiduciary a copy of a digital asset or account as of the date the custodian or service provider received the requests for disclosure

The law further permits individuals to direct service providers or custodians to disclose digital assets or accounts partially, provided that segregating the asset or account would not impose an undue burden on the custodian or service provider.

Finally, the law requires a service provider or custodian of digital assets to disclose an asset or account to the personal representative of the user’s estate if the user gave consent before their death or as directed by a court, provided the personal representative provides required information, including:

• A written request for disclosure
• A certified copy of the user’s death certificate
• A certified copy of letters testamentary, a small estate affidavit, or a court order

A custodian can also request the personal representative provide:

• Login credentials, a number, a username, or another unique account identifier used to identify the user’s account
• Evidence linking the account to the user
• An affidavit affirming the reasonable need for disclosure to assist with estate administration

Our Approach to Incorporating Digital Assets in Your Estate Plan

At Pennington Law, PLLC, our estate planning attorneys in Arizona take the time to get to know you and thoroughly understand your objectives. That way, we can help you develop a comprehensive estate plan that includes provisions for your digital assets. We can explain your options for managing your digital assets during your life and after your death through effective estate planning documents. Our firm can also review and revise your estate plan throughout your life as you gain, transfer, or dispose of digital assets so that your plan remains up-to-date.

Common Pitfalls to Avoid in Digital Estate Planning

Below are some common mistakes that people make when undertaking digital estate planning:

• Failing to identify all digital assets, including email accounts, social media accounts, or digital files contained in storage accounts or electronic devices
• Not providing consent to service providers or digital asset custodians to disclose assets to a designated recipient, fiduciary, or personal representative after the user’s death
• Failing to consider the tax implications of distributing valuable digital assets via an estate plan, such as cryptocurrency

An experienced attorney can help with proper planning to avoid these pitfalls and advise you of the unique challenges posed by digital assets.

Safeguarding Your Digital Assets with Pennington Law, PLLC

Contact Pennington Law, PLLC today for a free, confidential consultation with our estate planning attorneys in Arizona to discuss your legal options for managing, accessing, and passing on your digital assets.