Incorporating Digital Assets Into Your Illinois Estate Plan

In today’s modern world, an increasing amount of our lives are tied to digital platforms. From online banking and cryptocurrency to social media accounts, many of our assets exist in a digital space. Most people think about their homes, retirement accounts, and personal belongings when planning their estate, but it’s just as important to include digital assetsin your Illinois estate plan. If these aren’t properly addressed, your loved ones may lose access to important or valuable parts of your estate. At Orlowsky & Wilson, we understand how crucial it is to ensure that your digital legacy is protected and properly managed in compliance with Illinois laws.

Illinois law provides specific guidelines on how assets are transferred in estate planning, and digital assets are no exception. However, the legal treatment of digital property can be more complex than that of physical or financial assets. We will guide you through the necessary steps to include these digital elements in your estate plan, helping you secure their value and accessibility for future generations.

Understanding Digital Assets In An Illinois Estate Plan

Digital assets can include anything from your social media accounts and online subscriptions to more financially impactful assets such as PayPal accounts or cryptocurrency portfolios. These assets are often subject to terms of service agreements and federal laws that may prevent someone from accessing them after your death without proper planning. With clear instructions, your family could avoid significant obstacles in managing or distributing these assets.

In Illinois, the Fiduciary Access to Digital Assets Act (755 ILCS 70) governs how digital assets are handled after a person’s death. This law allows individuals to designate a digital fiduciary, who will have legal access to these assets if specified in your estate planning documents. Properly drafted estate plans ensure that your digital fiduciary has both the authority and the information necessary to manage or transfer your digital property.

Key Legal Considerations For Digital Assets

When incorporating digital assets into your Illinois estate plan, it is essential to understand the legal framework surrounding them. Here are some critical points to consider:

1. Fiduciary Access – Under the Illinois Fiduciary Access to Digital Assets Act, your digital fiduciary can only access assets if explicitly authorized by you. With this authorization, even close family members may be allowed access due to privacy laws and terms of service agreements.
2. Providing Access Information – Simply naming a digital fiduciary is not enough. Naming a digital fiduciary alone isn’t enough. You also need to provide access details, like usernames, passwords, and security questions. But don’t put this information in your will since it becomes public during probate. Instead, keep it in a separate document or a secure digital vault.
3. Tax Considerations – Some digital assets, like cryptocurrency, have specific tax rules. Illinois law requires that the fair market value of all assets, including digital ones, be reported. If digital assets are not properly reported, it could lead to legal problems for your estate.
4. Estate Tax Threshold – As of 2024, Illinois imposes an estate tax on estates valued above $4 million. If your digital assets significantly increase the value of your estate, it could push you above this limit and result in additional taxes.

Steps To Include Digital Assets In Your Estate Plan

1. Identify Your Digital Assets – Start by making a list of all your digital assets, including financial accounts, online memberships, email accounts, and social media profiles. Remember to include any devices that contain important data or documents.
2. Appoint a Digital Fiduciary – Designate someone you trust to manage your digital assets. This person will need legal authority under the Fiduciary Access to Digital Assets Act, which can be granted in your estate plan.
3. Create a Digital Inventory – Compile access information, such as usernames and passwords, and store them in a secure place, like a password manager or a safe deposit box. This ensures that your digital fiduciary can access and manage your accounts.
4. Include Specific Instructions – You may want certain accounts closed, others transferred to beneficiaries, or personal content shared with loved ones. Be specific in your estate plan to avoid confusion later.
5. Review and Update – Technology and digital assets are constantly evolving, so your estate plan should evolve, too. We recommend reviewing your plan regularly to ensure that all your digital assets are accounted for and that access information is up to date.

FAQs About Digital Assets In Illinois Estate Planning

What Is A Digital Asset?

A digital asset is any information or account stored electronically, such as social media profiles, email accounts, cryptocurrencies, or cloud storage. Digital assets also include financial accounts like online banking or payment platforms like PayPal.

Can My Digital Fiduciary Access My Email And Social Media Accounts?

Yes, but only if you provide explicit authorization in your estate plan. Without legal permission, even your appointed executor may not have the right to access your email or social media accounts. Illinois law requires that access to digital accounts be clearly outlined in your estate planning documents.

How Can I Securely Share My Account Information With My Digital Fiduciary?

The best way to share sensitive login information is through a digital vault or password manager. These tools allow you to store all relevant data securely and grant access only to authorized individuals. We recommend avoiding listing this information in your will, as it becomes a public record.

Will My Digital Assets Increase My Estate’s Tax Liability?

Potentially. Digital assets that hold significant value, such as cryptocurrency or online business assets, can increase the overall value of your estate. If the value of your estate exceeds $4 million, your estate may be subject to Illinois estate tax.

What Happens If I Don’t Include My Digital Assets In My Estate Plan?

If digital assets are not accounted for in your estate plan, your family or executor may have difficulty accessing them. Many service providers have strict terms of service that prevent access without proper authorization, which could result in valuable assets being lost or inaccessible.

Call Our Lincolnshire Estate Planning Attorney For Your Free Consultation

Ensuring that your digital assets are included in your estate plan is essential in today’s digital age. At Orlowsky & Wilson, we help clients across Chicago, Illinois, secure their digital legacies alongside their more traditional assets. If you have questions about how to incorporate your digital property into your estate plan, we are here to help. Contact our Lincolnshire estate planning attorney at Orlowsky & Wilson by calling 847-325-5559 to receive a free consultation. Protect your assets—digital and otherwise—and give your family peace of mind for the future.