There has been a lot of discussion in the news lately about NFTs. Short for “non-fungible token,” the term refers to digital assets that can’t be replaced with something else – even something of equal value. While you might be able to exchange a $20 bill for two $10 bills, NFTs are uniquely valuable. Rather than being an actual object you own, NFTs are a signed digital certificate of ownership.
You have probably heard a bit about the art associated with NFTs. While it is easy to assume you are buying priceless art, the images actually serve as a representation of the transaction. Unlike traditional art, NFTs can be viewed by anyone with a certificate attached explaining ownership.
If you are considering venturing into the world of NFTs, it’s important to protect your investments. With enough forethought, you can include NFTs in your estate plan and ensure your heirs one day gain ownership. Putting NFTs in a trust is one thing; it is just as important to understand how intangible artwork can be accessed down the line, as that is the only way NFTs can be passed down.
It is impossible to physically hand over an NFT to a loved one. While you can pass the digital art through a will or trust, it is a more complicated process than you might expect. That is because NFTs can only be accessed with a password or personal key. That is true even if a judge orders the inheritance during probate. If your heirs do not have the password associated with your NFTs, they will never be able to access them after you are gone.
Digital assets are becoming more and more popular. The rise of cryptocurrency and NFTs has led many people to wonder about how to best protect their digital legacy for the long haul. Your email account, social media profiles, loyalty program benefits, and online accounts for utilities can all be factored into your estate plans.
By creating a digital estate plan, you minimize the stress your family and loved ones experience at the time of your passing. A written plan that includes important passwords and instructions for how digital assets should be managed can be incredibly helpful during their time of grief. The creation of such plans can also guard against risks like identity theft, fraud, and hacking.
To protect your NFTs and other digital assets, start by taking inventory. Consider every account, username, and login you might want your loved ones to have access to. Then create a list with the information, making sure to include the password to each account. It is also a good idea to include the security questions associated with a given account and, of course, the answers to those questions.
Once you have got a master list assembled, consider to whom you would like to grant access. Maybe you want assets of value to be passed onto your children, while your login to your digital photo albums might be reserved for your spouse only. If you run any online accounts linked to your business, it is a good idea to grant access to your business partners. That is especially true if you have a presence on e-commerce sites like Amazon or Etsy. Would you really want your shop placed in the hands of your spouse upon your passing, or would you prefer a trusted business partner to take over? The answer to this kind of question can help guide you through the process.
Finally, consider appointing a digital executor to handle your assets on your behalf. This person will have access to all your accounts and be in charge of distributing or destroying assets. You can appoint anyone you would like, but many people choose an attorney or friend to limit the stress placed upon grieving family members.
If you are unsure about how best to protect your digital assets, it is a good idea to meet with a trusted estate planning attorney as soon as possible. An estate planning professional can guide you through recommendations and important next steps to take. Given how quickly the world of cryptocurrency and NFTs is evolving, it is crucial to stay in the loop and follow recommended estate planning best practices.
To schedule a complimentary strategy session to discuss how Hegwood Law Group’s experienced attorneys can help you protect your digital assets, call us at (281) 885-8826 or schedule online today.