Knowing which assets will have to go through probate can help you avoid complications with your estate planning and can help ensure they get to your chosen beneficiary. Some of your digital assets can avoid probate, which will help you to save money on taxes.
Establishing a Beneficiary
Your non-probate assets need to have a beneficiary named on those accounts. You can get a form from the institution that manages the account. FreeWill mentions that if the beneficiary dies before you do, the assets in that account will go through probate unless you update and name a new beneficiary.Items Subject to Probate
When probate is necessary, some assets must go through the process. TrustandWill says that these assets include:- bank accounts
- investment accounts
- real estate
- businesses
- personal property
- household items
A Digital Will Is Not a Legal Document
To control where your digital assets go after you die and who has access to them, you must create a digital-assets plan. Different states may vary slightly on how to word your will to disperse these assets and who will control them.Although you can put much important information into a digital-assets plan, it is not considered a formal legal document. Instead, it is an informal document that provides instructions on how you want your digital assets disbursed and information on how to access them.
A digital-assets plan must contain the usernames and passwords necessary to access those accounts. Barrons mentions that beneficiaries of digital wallets must have the keys to them, or they may never be able to access the money in them.
The digital-assets plan, which contains your usernames and passwords, should not be put into your will. Once the estate is settled, a will becomes public information, and anyone can read it.
Barron’s also mentions that beneficiaries not only need to be given the authority to manage an account—but the document must also give them access to its assets. Language in most estate-planning documents may not include this access. The executor of your digital assets should know where to find the list of passwords.
Digital Assets That Can Be Passed Through a Will
Digital assets that have monetary value or that you own are a part of your estate and should be included in your will. WillMaker says these intangible assets may include:- Money in a Paypal account
- Funds in online stores such as Amazon or Etsy
- Cryptocurrency accounts
- Miles and points on credit cards (if permitted by the company)
- Photos and digital music
Handling Cryptocurrency Accounts
If you have considerable assets in a cryptocurrency account, you may want to put it into an irrevocable trust. When you do, you will no longer own the account and cannot control the assets in it, but it also takes it out of your taxable estate.Power of Attorney
If you become incapacitated, a will is not going to help you. As part of your estate planning, you need to have a financial power of attorney document made in advance that designates someone you trust to take care of your financial matters and digital assets when you cannot. They will need to get access to some accounts to manage them properly, which requires giving them usernames, passwords, keys, PIN numbers, and access to cell phones you use for verification purposes.Several Ways to Avoid Probate Court
Probate court is necessary in most cases, but a simplified or summary probate can be obtained in most states. This procedure avoids the full probate process if the estate is considered small in the state where you live. Probate court can take eight months to several years to settle, but a simplified or summary probate procedure is often settled in less than six months.Digital assets can also avoid the probate process by putting them into specific types of accounts. SuperLawyers say they include a trust, having a beneficiary named on an account (payable on death), or joint ownership. A trust has the benefit that assets are usually dispersed right away.
Some Online Accounts Have Special Protections
Online accounts may have special online tools that can let you give access to another person. CCHaLaw states that when you use an online tool provided by the website where you have the account to name a beneficiary, it will override any estate planning document such as a will, power of attorney, trust, or any other document. If the tool is unused, the estate planning document will govern.Appointing a Digital Assets Executor
You can also use your will to limit your named estate planning Executor from accessing certain accounts. You just need to name a separate executor of your digital assets in the will, and it will prevent access. Kiplinger suggests that you choose someone who has experience with crypto to ensure better handling of the account.
Creating a will that satisfactorily controls your digital assets and gives them to your appointed beneficiaries needs the help of an estate planning attorney. The laws governing the dispersal of digital assets are rapidly developing, but it is still only in the early stages. A lawyer familiar with this field can help ensure that your will and other documents can meet current laws.
The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
