Technology has increased the quality of life, and daily tasks have become more accessible. Communicating with a person living afar was challenging, but today you can communicate with people within seconds. Technological advancements in the medical field continue to save many people.
The best thing about technology and its continuous progress is that ordinary people make the most of it through the digital world. From in-person meetings to online meetings, the digital world has become an inseparable part of our lives.
Even banks have introduced Online Banking facilities. Customers can transfer money from one account to another and use other banking services such as creating fixed deposits, paying bills, or paying taxes.
Digitalization has made Cryptocurrency popular because it gives people greater control of their money. With all the digital assets at your disposal, it has become very convenient to perform actions that were once unimaginable. This is why the need of digital estate planning for your digital assets has become more prominent than ever.
Why It's Important to Have a Digital Estate Plan?
A Digital Estate Plan allows you to organize all of your online information. With this type of plan, your chosen nominee, i.e., the digital executor, can have the relevant data for managing all of your digital accounts after your passing away.
It is vital to have a Digital Estate Plan. If this plan is not in place at the time of your death, your family will face many challenges in accessing the necessary information. They will not be able to have access to your numerous online accounts. Consequently, it will not be able to pass on the funds available in your accounts to beneficiaries.
Ultimately, the service provider will deactivate the accounts upon non-usage of these online accounts. Digital assets do not just include your online accounts; it also includes your photos, videos, and essential documents. After your passing away, these digital assets need to be secured too. The photos and videos can be misused if it falls into the wrong hands. Similarly, identity theft can occur if the wrong parties get hold of documents, identity theft can occur. Hence, carefully planning your digital estate becomes all the more critical.
8 Reasons to have a Digital Estate Plan
Here are the eight reasons why you should have a digital estate plan.
- To protect young children
- Provide for your family
- Avoid Probate
- Reduce estate taxes
- Plan for if you get incapacitated
- Make your wishes known
- Lessen the burden on the family
- No interruptions in business
What Happens to Your Digital Assets?
Planning a digital estate plan is essential as your online information can be misused after your passing if not done so. Also, your heirs will not be able to access your funds in the form of cryptocurrencies if you don’t have a digital estate plan. To whomever you nominate, you should document your end-of-life wishes to give the nominee complete authority. It will be convenient for the beneficiaries and heirs while they deal with grief.
What is a Digital Estate, and Why is it Important?
A Digital Estate of a person is all the electronic information stored on the internet. In simple terms, it is the complete online information of a person. It will include your online accounts, NFTs, social media accounts, bank accounts, cryptocurrency details, gaming details, digital music, cloud storage services, e-books, online files, etc.
Digital Estate has prime importance in our lives today. Our lives are becoming more digital by the day. According to recent research, each individual in the country has approximately a hundred digital accounts. Come to think of it; the numbers will only increase with time. Also, we store our photographs and videos online, which form our digital estate. Also, we use cloud storage services where we store so much of our important information and documents. Our digital estate, along with our physical belongings, is growing by the day. Hence, it has become an essential part of our lives.
What are the four important estate planning factors?
If you have thoughts on starting work to create your estate plan but are unsure where to start, you can read ahead to get an idea. Below mentioned are the four important estate planning factors.
- Will A will is one of the four important estate planning factors. A will specifies which of your digital or physical assets to hand over to which person. Through a will, you will appoint an executor who shall be responsible for carrying out your wishes. If a person does not leave a will, the state steps in to decide who gets what.
- Trust One can avoid probate if one leaves a trust. Probate is a lengthy process, and individuals should prevent it from occurring. Having trust in place will give you control over your assets. The trust will pay out to your beneficiaries as mentioned by you upon your passing away.
- Power of Attorney The following important estate planning factor is power of attorney. Every individual should have financial and healthcare power of attorney. As the name suggests, the healthcare power of attorney holder will make your healthcare-related decisions if you become incapacitated for specific reasons. Similarly, the financial power of an attorney holder will make your financial decisions if you cannot do so yourself.
- Living Will A living will is the fourth estate plan factor that needs to be taken care of. This type of will is also called an advance medical directive. Through this type, you can state what kind of medical and life-saving treatments you will opt for if a situation arises.
What are the three primary goals of estate planning?
Let us have a look at the three primary goals of estate planning and how they are significant for digital estate planning.
- To Prune Confusion and Conflict in One’s Death It can be chaotic at the occurrence of an individual’s death if a proper estate plan is not in hand. This type of situation can lead to aggravation between the heirs of the deceased, leading to disharmony among the family members. Also, it could lead to a loss in business and have negative financial implications without an estate plan. Consequently, one of the three primary goals of estate planning is to prune confusion and conflict upon the death of an individual.
- To Provide for Beneficiaries With estate planning, you can distribute your wealth and belongings, both physical and digital, to your beneficiaries after your death. Your beneficiaries will benefit from it, and the distribution will be done amicably in the presence of the executor you have appointed. That is the second primary goal of estate planning.
- Selection of Guardians for Minor Children The placement of an estate plan will enable you to name a guardian for your minor children in case of the death of both parents under unfavorable scenarios. If you don’t include this aspect in your estate plan or don’t have an estate plan, the courts will decide which of your relatives or known persons will raise your child. Your kids might also have to live in foster homes if you have not provided the relative information of naming a guardian if you and your spouse/partner pass away untimely.
Create a Digital Estate Plan to Pass Down the Important Digital Assets
Mentioned below are the steps to create a digital estate plan to pass down the important digital assets to your heirs and beneficiaries.
- Create a will
- Leave directions for your healthcare treatment if you get incapacitated not to make your own decision
- Allocate a financial power of attorney
- Name a guardian for your children in the case you and your spouse/partner die untimely
- Name the beneficiaries to whom you want to leave.
- Life insurance nominees
- Understand the estate taxation from your lawyers
- Select a pre-paid funeral service if possible
- Store your documents properly
Catalog your digital assets
If you are questioning what is a digital asset, here is a catalog of the same.
- Digital photos
- Computer files
- Email accounts
- Social media accounts
- Cell phone content
- Online backups
- Digital tokens
- Paid online subscriptions
- Contents of the Dropbox
- Airlines’ loyalty programs/points
- Hotel loyalty programs /points
- Paid streaming services
Now that we know what are digital assets, it is time we ponder upon having a digital estate plan. Many people would think it’s an easy task to create a digital estate plan. You just have to list all your accounts and their passwords, right? Wrong! Digital Estate planning involves more than just listing accounts. It provides security, ownership, and support to you and your family. It can take a long time to plan your digital estate.
Planning for uncertain times is the best way to protect your mental well-being and of your loved ones too. A Digital Estate Plan is the key to protecting and making arrangements to hand over your Digital Assets smoothly to your family after you’re no more. We at Clocr can help you do this by creating the perfect digital estate plan for all your digital assets. This step will take a burden off your shoulders and pass on your digital legacy to your loved ones in the best way possible. Join us today.