FeatureImage Protecting Your Digital Assets Requires More Than a Trust

Protecting Your Digital and Financial Assets Requires More Than a Simple Firewall and a Family Trust

The average person's number of digital assets has increased, raising questions about what happens to these assets upon a person's death or incapacitation. These assets may have a definite economic or sentimental value, from online gaming items to digital music to client lists. Yet, few laws govern fiduciary rights over digital assets.

The average person has over 25 different logins in today’s increasingly digital world. Wealthy investors likely have even more digital assets, such as e-commerce businesses, domain names, blogs, copyrights, trademarks, and patents.

Given the scope of the online digital landscape, some individuals fail to recognize the depth and complexity of the assets and information they hold on the internet. Because of this, many do not adequately protect the assets they have acquired throughout their lives, nor do they plan for their effective administration, protection, or ultimate transfer. Because the online world is a relatively recent phenomenon, laws are rapidly developing to address the realities of digital asset management and disposition.

Digital assets should be constantly tracked, and estate planning should be reviewed to align with the asset owner’s wishes and current laws. Unlike an investment account, these assets do not reside in a bank, nor can they be stored in a safe deposit box.

Why Protecting Digital and Financial Assets Is Important

The laws governing the rights to digital assets at death, incapacity, or otherwise are constantly changing. 2014 marked the completion of the original Uniform Fiduciary Access to Digital Access Act (UFADAA). The Revised UFADAA law has not yet been enacted in all states, but it has been adopted quickly across the nation.

By early 2017, two-thirds of states had implemented the UFADAA or were considering it, and this widespread implementation is encouraging for all parties involved. Because of the inconsistencies and uncertainties between states, it can be difficult for individuals to work with digital assets effectively. The best way to mitigate this challenge is to take steps to protect and manage all wealth through a comprehensive asset protection plan which accounts for digital and physical assets.

A case in point was in February 2019 when, at 30, Gerry Cotten, founder of Quadriga, Canada’s largest cryptocurrency exchange, passed away. His $250 million in cryptocurrencies was left on an encrypted laptop to which no one held the password. His wife, Jennifer Robertson, stood to lose everything. This case, and others like it, underscores the need for more than a simple firewall and a family trust to protect those assets.

Naming a Digital Fiduciary

“It is essential to name a digital fiduciary or executor in a will, someone who will manage the digital assets for an estate. That is not common yet, but it is getting more mainstream to see people plan to put digital executors in their wills.” says William R. Simon, Jr. Founder & Chief Counsel, Sollertis.

Besides creating the document, Sollertis’ attorneys will help asset owners understand how state law affects digital assets. The Fiduciary Access to Digital Assets Act, also called RUFADAA, has now been adopted by most states.

The average person’s number of digital assets has increased, raising questions about what happens to these assets upon a person’s death or incapacitation. These assets may have a definite economic or sentimental value, from online gaming items to digital music to client lists. Yet, few laws govern fiduciary rights over digital assets.

Many individuals who own digital assets do not consider what will happen to their online presence once they can no longer manage their investments. They may not have explicit plans about how their digital assets and electronic communications will be handled in case of death or incapacity. However, even when they do, their instructions may conflict with the custodial terms of service.

Consider the Terms-of-Service

Although some Internet service providers have explicit policies regarding what happens when an individual dies, others do not. Even when these policies are in the terms-of-service agreement, consumers may not fully understand how these provisions affect them, or how a court might resolve a conflict between such provisions and a will, trust instrument, or power of attorney.

As far as fiduciaries’ access to digital assets is concerned, the situation is hazy. It depends on the state’s laws on computer crime and privacy, and state laws on probate. Only a few U.S. states have passed legislation on fiduciary access to digital assets, and many other states have considered such legislation. The legislation currently in place differs regarding the digital assets covered, the rights of the fiduciaries, the categories of fiduciaries included, and whether the principal is protected.

For courts, Internet service providers, fiduciaries, and users of Internet services, a uniform approach will provide certainty and predictability. The revised UFADAA offers many states precise, comprehensive, and accessible guidance concerning a fiduciary’s right to access electronic records of a decedent, protected person, principal, or trust.

Using a Digital Inheritance Service to Specify a Hierarchy of Beneficiaries

Secure digital vaults offer the ability to catalog and store assets in encrypted environments while also controlling who has access to what information and when. As such, a digital asset owner can choose to share information about their assets only with the closest members of their family, such as their spouse or children, and with extended family members only under emergency scenarios.

Some digital inheritance services also allow clients to designate beneficiaries in a hierarchy. Digital inheritance services are built on the ability to detect unforeseen events. It is usually done through e-mail and phone confirmation to avoid false notifications to beneficiaries and often integrates with social networks to detect “alive” signals, such as when someone logs in.

A significant advantage of digital inheritance services is their unique capability to ensure that beneficiaries are informed about the designated assets. This includes e-mail notifications and phone calls to the beneficiaries to ensure they have received relevant information, which will enable them to identify and locate assets.

Inheritance services provide additional protections for assets and loved ones. For example, beneficiaries can access legal representation while claiming assets. Families that are financially challenged may benefit from legal packages as they will receive the necessary support without incurring any additional costs.

Keeping Information About Digital Assets Safe but Easily Accessible

Generally speaking, you can securely store this type of information in one of three ways:

  1. With the help of an attorney
  2. Through an online service that allows you to organize, store and securely share your digital assets
  3. In a lockable cabinet or safe

Asset owners should ensure someone knows where to find the digital estate plan. It’s a good idea to inform one or two trustees—a spouse, the adult children, or the digital executor, for example—where the plan is located and how to access it. This means:

  • Sharing attorney details with trustees
  • The name of the online storage company
  • The location of keys or the combination to the safe

This way, the people who need to access the plan can do so at the right time.

Drafting an Instruction Letter Detailing What Happens to These Assets

In what manner should assets be handled? Digital properties are managed differently depending on their nature. Some digital assets may be archived and saved; some can be deleted or erased, while others should be transferred to family members, friends, or colleagues.

The asset owner should specify how their Digital Executor wishes to handle each account or asset. The executor should know what to do despite conflicts with certain companies’ terms of service.

An asset owner may want to instruct the executor on handling monetary assets if any assets have an economic value. For example:

  • It may be necessary to transfer revenue-generating assets to individuals who will maintain the accounts in the future
  • Credits or points, or cash values may be redeemed
  • If assets still generate revenue, it is essential to consider what will happen to that money and who will access it

Intellectual Property Law Can Protect Digital and Financial Assets

Online brands and eCommerce businesses are highly susceptible to their creative assets being plagiarized. It is easy for other companies to replicate designs, branding, or different IPs and make money using the internet. It has happened before: a popular retailer named Zara faced intense scrutiny in 2016 after allegations that it had stolen and profited from the artwork of artist Tuesday Bassen.

Digital content is an important business asset and should be protected. Digital asset owners can protect their designs and content using IP law and applying patents and copyright protections. They will cover the owners of IP theft, and ensure that they own and are not stealing IP from other businesses.


Copyright law protects the ownership and the ability to profit from the creative work of publishers. Achieving this level of protection is relatively easy. First and foremost, all original creative works are protected from their inception under copyright law. A copyright doesn’t consider the merit or value of the work, unlike a patent.

Moreover, one can register copyrights to license and protect certain words and designs in specific markets. Clothing and textile companies may register copyrights for their brand name or a derivative for clothing and textiles. They would be protected from infringement and could prove ownership of the word in their IP.


A trademark can protect a brand’s established symbols. As part of this process, the symbol must be a recognizable symbol of the brand identity, including words, phrases, or other indicators such as a logo. Trademarks reduce confusion in the marketplace and protect consumers from businesses that exploit other businesses’ positive reputations.

Brands’ digital assets, as well as their overall assets, can be protected by trademarks. The lawsuit between TurboSquid (a company that offers digital models of physical, branded goods) and BMW illustrates how trademarks are helpful. TurboSquid sold digital models of BMW cars in video games, movies, and other digital content. BMW successfully argued that their trademarked designs confused the models’ source.

Another effective method of protecting digital assets is applying for a design patent. Design patents are among the ways UI/UX (user interface/user experience) designers protect their work, since designers cannot use the usual design patents to protect graphic designs or 2-dimensional visuals. Apps and websites are designed with an aesthetic experience in mind, and UI/UX designers patent this end product.

Protecting Digital and Financial Assets is an Essential Part of Owning Assets

Understanding digital assets, and the laws that govern them, requires expertise to navigate this complex landscape. Definitions are constantly changing and are subject to differing interpretations. An increasing number of investors, entrepreneurs, and business owners have a significant amount of their financial lives online.

The data they would accumulate if they made a list of every account created, loyalty program joined, username, and password they have used in the past would be staggering. HYPR found that 78% of people forget their passwords every 90 days.

If that’s the case, accessing all digital and financial assets when the asset owner is unable to can be daunting for loved ones without a proper digital and financial asset protection plan. If you don’t have any of this information readily available, now might be the time to get your digital assets organized. Contact Sollertis for expert assistance in protecting and distributing your assets.

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