Written by Peter Gatt, Business Development Manager – Majestic Computer Technology.
Imagine waking up to find all your digital accounts and cloud-stored memories inaccessible. Now, picture your family or business facing this after you’re gone, struggling to piece together your digital life without guidance. This scenario is increasingly common, making digital estate planning essential. Proper management and transfer of your digital assets are crucial for your family's wellbeing and your business's continuity.
Some background
We’re all familiar with wills and estate plans, but have you considered your digital estate? Many people don’t realise they need a handover plan for digital assets, which can create complications for their loved ones or business when they pass away or become incapacitated.
If you have not considered digital estate planning, rest assured you’re not alone. Data tells us, that around 76% of adults lack a proper estate plan, and less than 3% have a digital estate plan. Moreover, almost no one regularly tests their digital plan to ensure effectiveness.
What is digital estate planning?
Our online presence and digital assets are as important as physical ones. Even when digital assets form part of the plan, we often find it falls over in execution. Digital estate planning involves organising and passing on access to your digital assets, such as online accounts, cryptocurrencies and data stored on devices and cloud services including documents and photos. It also requires setting up specific measures for different cloud service providers.
So, what are the steps to create a digital estate plan?
- Start by identifying all your digital assets. This is a process that will take time.
- Plan how to transfer access securely. Think of it as giving your loved ones a treasure map, but without the pirates. Use two-factor authentication and password managers to protect your information.
- Decide who will receive access to your digital assets. Like any asset, someone you trust to handle your digital legacy responsibly.
- Clearly communicate your digital estate plan. Make sure inheritors understand how to access and manage your digital assets and have access to additional technical assistance if required.
- Use Dead Man’s Switches. It’s like a digital “just in case” button. These are mechanisms that automatically transfer access, without delay.
- Finally, regularly review and update your digital estate plan to reflect any changes. This is not a set and forget task.
Include a plan for the inheritor
With each passing year, our digital footprint grows in size and complexity. We open new accounts and place more value on the ones we log into and use every day. Creating a plan is one challenge. Figuring out what to do with someone else’s is another. Maybe you’ve inherited one or know a family member or business partner who plans to give you their accounts after they’ve passed away. Regardless, it’s important to also have a strategy before logging into anything that was once owned by someone else.
Handling Crypto digital assets in your plan
If you own any virtual currency, what will happen to it after you’ve passed away? Would your friends or family know what you owned? Or how to access the funds? If your answer to these questions is “no”, consider this specifically in your plan. Something your loved ones can follow without being crypto experts.
Understanding Cryptocurrency storage
First, understand what you’re trying to hand over. Cryptocurrencies are stored in one of two ways: hot or cold wallets. Many people hear the word “wallet” and assume that the data detailing their funds are held inside, but that’s not the case. A cryptocurrency wallet simply contains the encryption keys required to access assets on a blockchain. It’s the blockchain, a digital ledger held by many people rather than a single entity, that verifies every transaction and keeps track of who owns what.
The handover process
So, if you want to give someone your assets, you must figure out how to give them the keys. The handover process will depend on the type of wallet or wallets you own. The first step is to check whether your preferred exchange or wallet developer has published any guidance on digital estate planning. If yours hasn’t, it is a good idea to reach out and ask. The company might have a formal process that isn’t on their website, or they may require something you haven’t considered or prepared yet.
Exchange policies
Every exchange is different, however most have a similar stance. They often don’t have a menu or settings page where you can list a preferred inheritor. Instead, they expect your loved ones or business colleagues to contact them and supply several documents.
Final thoughts
Importance of planning
Our digital life is inextricably intertwined with our identity and most of the things we do. Nowadays, we are managing numerous passwords and accounts. While we keep our passwords secure during our lifetime, it’s important to have a plan for sharing them after we’re gone. Without a plan, handling digital death can be more difficult than necessary. Not to mention the significant business continuity challenges that can present, when time is of the essence. Loss or unplanned incapacitation is difficult enough in itself for your business to deal with, let alone having to contend with scrambling for access to critical information.
Choosing the right technology partner
Most adults understand the importance of tax planning and legal advice. I assure you that the same applies to advice you receive around technology. Your technology partner should have deep understanding of the relationship between your family and your business. That understanding should influence their own thought process, how they structure their services, and ultimately how they advise and work with family and business clients. Choose wisely and start your digital estate planning today.
Majestic Computer Technology is a Digital Innovation Advisory and Consulting firm, that works with senior leaders, helping them embrace the most appropriate technologies to optimise operations, retain great talent and attract beneficial relationships. Majestic delivers outcomes across IT managed service, business automation, cybersecurity, software development and AI, to practically every industry sector. In addition to being an FBA partner and an Australian Family Business, Majestic is also the IT service provider for FBA.
