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May 29, 2024

Digital Assets


The information in the podcast is for general information purpose only. Nothing in the podcast should be taken as legal advice for any individual case or situation. The information is not indended to create, and receipt or viewing does not constitute, an attorney-client relationship.

From social media accounts to cryptocurrencies, special attention should be given to digital assets when it comes to your estate and asset protection planning.

Digital assets can include; e-books, music, videos, e-commerce stores, domain names, bitcoin, ethereum, social media profiles, websites and photos.

Digital assets have different characteristics in the context of planning versus more traditional assets like property or a business. Digital assets can be lost forever if proper access information is not stored and there may be no way to recover the assets.

There are considerations that should be made for potential estate taxes on digital assets and privacy is always a concern. You would not want digital access information in the wrong hands.

A good process is to create an inventory of all your assets, URLs, security keys and update them on a regular basis. When you set up a living trust, you can appoint the appropriate person to handle your digital assets.

As an example, maybe one of your kids is more tech -savvy than the others and so you want that child to be in charge of the distribution of your digital assets.

There are legal tools that can be used to protect your digital assets. Certain types of irrevocable trusts can provide a higher level of protection compared to your revocable living trust, for example.

You may want to pass your digital and other assets to your children in an irrevocable trust which can guard the assets from the potential future creditors of your kids.

Specific types of Limited Liability Companies can also be used to hold digital assets. You will need to properly integrate your LLC’s with your living trust and make the appropriate decisions about the LLC such as; who are the managers, what should go into the operating agreement, what jurisdiction should be chosen to establish the LLC, should it be a single member or multi-member LLC.

And don’t forget about the new Corporate Transparency Act law that requires the reporting of beneficial owners of your legal entity to the Financial Crimes & Enforcement Division of the U.S. Treasury.

Similar to other assets, it can be an effective asset protection strategy NOT to store all your digital assets in one place. There are good reasons, for example, not to own multiple rental properties in a single LLC. Consider storing your valuable digital assets in different online platforms.

Take some time to think about your digital assets. Does your estate and asset protection planning account for them? Have you considered tax implications related to your digital assets or how to integrate them with your family trust?