The question of designating a trustee specifically for digital assets within a trust is becoming increasingly relevant as our lives become more intertwined with the digital world. Traditionally, trusts encompassed tangible property like real estate, investments, and personal belongings. However, today, substantial value often resides in digital assets—email accounts, social media profiles, online photos, cryptocurrency, domain names, and even loyalty points. While it’s not typically a formal, separate trustee designation, a trustee can – and should – be granted the authority to manage these assets within the broader scope of the trust document. Roughly 85% of adults now have some form of digital footprint with valuable assets attached, highlighting the growing need for this consideration (Source: Digital Estate Planning Council). The core principle is ensuring accessibility and proper management of all assets, both tangible and digital, according to the grantor’s wishes. The legal framework is still evolving, but most estate planning attorneys in San Diego, like Steve Bliss, recommend explicitly addressing digital assets in a comprehensive estate plan.
What exactly are considered ‘digital assets’?
Defining “digital assets” is the first step. It’s more than just cryptocurrency, though that’s a significant component. Digital assets include any file or content that exists digitally, to which you hold rights, and that has value. This includes photos, videos, documents stored in the cloud, online accounts with financial value (PayPal, Venmo), and even digital art (NFTs). Importantly, terms of service agreements for many platforms often dictate how accounts are handled after death, potentially overriding a trustee’s authority if not addressed proactively. For example, a social media platform might deactivate an account upon notification of death, requiring the trustee to prove legal authority to maintain it. Steve Bliss emphasizes the importance of creating a detailed inventory of all digital accounts and assets, including usernames, passwords, and recovery information, kept securely with the trust documents. This inventory is crucial for the trustee to effectively manage these assets.
Can a trust even cover property that didn’t exist when it was created?
This is a valid concern. Traditionally, trusts were drafted to address existing assets. However, modern trust documents are drafted with flexibility in mind, utilizing language that encompasses both currently owned assets and any assets acquired in the future. A well-drafted trust will include a “catch-all” provision that covers all property owned by the grantor at the time of death, regardless of whether it was specifically listed in the trust. This provision, combined with the trustee’s broad powers to manage trust assets, allows the trust to cover digital assets even if they didn’t exist when the trust was created. Think of it like insuring your home; you don’t list every single item inside, but the policy covers all of your personal property. It’s also critical to periodically review and update the trust document to reflect any significant changes in asset holdings, including the acquisition of new digital assets.
What powers does a trustee need to access digital accounts?
Granting the trustee the necessary powers to access and manage digital accounts requires careful consideration. The trustee needs the authority to create, access, monitor, and even close digital accounts. This authority should be explicitly stated in the trust document. Many platforms require specific legal documentation, such as a death certificate and a court order, to release information to the trustee. The trustee may also need to provide proof of their authority as trustee of the trust. Some states have enacted laws to address digital asset access, but they vary significantly, making it important to consult with an attorney familiar with California law. Steve Bliss often recommends including a “digital asset management” clause in the trust, outlining the trustee’s powers and responsibilities in this area. This clause should also address the trustee’s ability to obtain necessary documentation from platform providers.
What happened when Mr. Abernathy didn’t plan for his online gaming account?
Old Man Abernathy, a retired marine, was a fierce competitor in an online strategy game called “Kingdoms at War.” He had spent years building his virtual kingdom and invested a considerable amount of money in in-game purchases. He never mentioned this to his estate planning attorney, assuming it wasn’t important. After he passed away, his daughter, Sarah, discovered his account but was unable to access it. The game company, adhering to its privacy policy, required a court order to release the account, which Sarah found incredibly frustrating. The account contained valuable assets that represented years of dedication, but she needed to go through a lengthy and expensive legal process. This illustrates the importance of including all assets, even seemingly insignificant ones, in your estate plan. The frustration for Sarah could have easily been avoided with a little planning.
How did the Johnson family avoid a digital disaster with a proactive trust?
The Johnson family, anticipating the increasing importance of digital assets, worked with Steve Bliss to create a comprehensive estate plan. They created a detailed inventory of all their digital accounts, including usernames, passwords, and recovery information, stored securely with the trust documents. The trust document explicitly granted the trustee the authority to access and manage all digital assets, and the family pre-approved a list of trusted contacts for account verification. When Mr. Johnson passed away, the trustee was able to seamlessly access his accounts, close any unnecessary ones, and distribute the digital assets according to his wishes. His family even kept the beloved family photo album he had curated on a cloud storage account, which provided comfort during a difficult time. This highlights the importance of a well-planned trust in preserving memories and assets in the digital age.
What about the legal challenges of accessing encrypted accounts?
Encryption adds a layer of complexity to digital asset management. If an account is encrypted and the trustee doesn’t have the encryption key, accessing the information can be impossible, even with legal authority. This is a significant concern, particularly for accounts containing sensitive financial or personal information. It’s crucial to securely store encryption keys with the trust documents, and to periodically review and update them as needed. Some estate planning attorneys recommend using a password manager with a secure sharing feature, allowing the trustee to access passwords with appropriate authorization. However, it’s essential to choose a reputable password manager with strong security features and a clear policy on data access after death. The lack of access due to encryption can render otherwise valuable digital assets useless.
Is it possible to create a separate digital asset trust?
While it’s not typically necessary, it is possible to create a separate trust specifically for digital assets. This can be useful if the digital assets are substantial in value or require specialized management. However, it also adds complexity and cost to the estate plan. Most estate planning attorneys recommend including digital asset management within the existing revocable living trust, as this is generally more efficient and cost-effective. The key is to ensure that the trust document is drafted broadly enough to cover all types of assets, both tangible and digital, and that the trustee is granted the necessary powers to manage them effectively. A separate trust may be warranted if the grantor anticipates significant legal challenges or disputes over the digital assets.
About Steven F. Bliss Esq. at San Diego Probate Law:
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Feel free to ask Attorney Steve Bliss about: “What is a trust restatement?” or “How can I find out if a probate case has been filed?” and even “What triggers a need to revise my estate plan?” Or any other related questions that you may have about Estate Planning or my trust law practice.