Fundamentals of estate planning and your digital assets
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When it comes to looking to the future, one of the most important steps you can take is forming an estate plan. Unfortunately, because estate plans are meant to be used after your death or disability, it can be uncomfortable to think about estate planning or discuss it with your loved ones.
In addition, estate planning has evolved over the years. What was previously only real estate and tangible assets should now also include digital assets. It might be weird to think about leaving digital assets to your loved ones, but these important pieces of your wealth in today’s financial landscape should definitely be considered.
By learning the basics of estate planning and incorporating digital assets into your plans, you can effectively manage where your assets end up when you’re gone.
Estate planning is a term generally applied to the steps taken to create a roadmap for a person’s assets in the event of death or disability. These steps usually include creating a will that outlines what assets are to go to which parents, what nonprofit donations will be made, and how inheritance taxes are to be paid, among other things. A lawyer usually helps create these plans.
Estate plans are smart because they create a clear and actionable path forward for your family and friends so that your property and other assets can be distributed as you wish. These plans also give your family a sense of security, knowing they will be taken care of after you leave.
To kick off your estate plan, start by taking an inventory of your assets, including real estate, assets such as cars or collectibles, bank accounts, life insurance policies, and investments. Next, think about your priorities for protecting and caring for your family if something happens to you. You will need to choose someone you trust as your attorney and make several other important decisions.
With so much of our life taking place online, it’s increasingly important to include digital assets in your estate plans. Digital assets include your various accounts, as well as movies, music and books, photographs, or cryptocurrency. Any of these can and should be included in your estate plans if you like them and want your family to have access to them.
As with your physical assets, start by taking an inventory of your digital assets, including making a list of your login information. With this list, include notes on what you would like to do with these accounts, whether it means transferring them to someone else, closing them, or any other option. For more complex assets like cryptocurrency, it’s crucial to keep records showing what you own and how to access it. Because cryptocurrency often doesn’t come with a paper trail like a regular bank account, you need to help loved ones keep track of what you own, as well as information on how to access assets. , such as numeric keys or passwords.
All in all, it is a wise and valuable exercise to plan how your property will be managed after your death, both for your peace of mind and for the future safety of your family. Making sure to include your digital assets will allow your loved ones to meet your last wishes in all areas, not just physical. By starting with a few basic steps, you can provide those around you with a clear path to follow once you are no longer with them.
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