Financial Literacy Gifts + Estate Planning

Protecting Your Digital Assets

BY Kelli Maxwell | Mar 31, 2022

Did you know that the average American has over $55,000 in digital assets? If you are a business owner who doesn’t own a website or work at a typical corporate job, you may think you don’t have any assets online, or worse, you don’t have digital assets. This type of thinking can be detrimental to protecting your digital assets. The truth is that you do have digital assets, even if you are seemingly unaware of what they are. Even something as simple as an email address and password can open a world of possibilities for cybercriminals.

Email addresses, usernames, and passwords can fall into the wrong hands. If they do, your personal information can be breached. You could wind up in a situation that results in colossal financial loss, unnecessary stress, and the hassle of calling banks, credit card companies, and other institutions.

So what is a digital asset, exactly? They don’t necessarily have to be something that is bought or sold. A digital asset is any information stored online or in a cloud. A few common examples are social media accounts, emails, your business’s website, online banking apps, and photos stored on iCloud. Digital assets should be viewed the same as physical assets. Think of them as “the crown jewels” that can easily be stolen by someone smart enough to breach security.

Digital assets are important because they have value, whether sentimental or monetary. Like any other asset, it’s essential to have a procedure for handling digital assets if you become incapacitated or pass away. Digital assets are not always accounted for in documents such as a will, resulting in restricted access to your social media pages or online accounts for your loved ones when you die.

What can you do to protect your digital assets? Here are a few tips to keep your assets and information safe.

One of the easiest ways to keep your digital accounts safe is to write a letter of intent.

The letter will be written to your personal representative, trustee, beneficiaries, or other loved ones of your choosing and will explain how to access your digital accounts. While the letter of instruction is not a legal document, it can help them access some of your basic information and instructions on logging into your online accounts. You can also include your digital assets in your estate plan, which will inform your family of your final wishes regarding access to your digital assets.

A second way to safeguard your online assets is keeping track of your usernames and passwords.

This includes your email addresses and passwords to those accounts, usernames and passwords to any online platform or social media site you have access to, and a list of website addresses you log in to. Some simple ways of doing this are making a handwritten list, an excel spreadsheet, or using a digital password manager app such as Keeper or LastPass, which allows you to keep your information protected and organized all in one place. If you use a password manager app, make sure that you include the login credentials in your letter to access your digital accounts. 

Lastly, it’s essential to meet with an Estate Attorney to discuss your estate plan and protect your digital assets. New laws regarding digital assets have been introduced in recent years, including assigning a family member or trusted financial advisor access to all of your online accounts. This process explicitly states that your heirs have access to your digital assets upon your death.

Protecting all of your assets should be at the top of your financial planning to-do list. We all have digital assets that are valuable in more ways than one. Your money, memories, and other digital items can be compromised in the wrong hands.

Spectrum Wealth Management, LLC is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. Additional information about Spectrum’s investment advisory services is found in Form ADV Part 2, which is available upon request. The information presented is for educational and illustrative purposes only and does not constitute tax, legal, or investment advice. Tax and legal counsel should be engaged before taking any action. The opinions expressed and material provided are for general information and should not be considered a solicitation for purchasing or selling any security.