It’s true that you can’t take your wealth with you when you die. But what you can do is take measures so that it lives on after you, helping and supporting your loved ones in a way you no longer can.
However, this dream is impossible to fulfill if you don’t do a little intentional estate planning.
But with portfolios getting more and more complex these days —digital assets, anyone? — it’s hard to be sure what you need to do today to protect your wealth for your progeny.
So let’s talk through that and get you some peace of mind. First, we’ll cover all the different types of digital assets you need to remember to account for, what estate planning looks like and why it’s so critical, and finally we’ll share some key tools to make sure your entire estate is well accounted for.
What is Estate Planning?
Estate is just a simple way to say “all the stuff you own that has monetary value.” Within the typical estate you’ll often find an investment portfolio with some stocks and maybe even some digital assets (more on those later), real estate such as a personal home, maybe some collectables like art or heirlooms that have been passed down through the family, and so on.
That makes estate planning the process of planning and documenting how you want these elements to be managed after your death. You may choose to dole assets out to loved ones, leave contributions to the charities of your choice,, continue to hold the assets within the estate so that it continues to create value for beneficiaries, and about a million other things. Estate planning is typically done with help from a professional, such as a lawyer who's studied estate law, and documented using trusts, wills, etc. We’ll dive into the details on those more later on.
What are Digital Assets?
The field of digital assets just keeps growing. So much so that most modern investors have at least one type of digital asset in their portfolio.
But what are digital assets?
At their core, digital assets are virtual items, tokens, and accounts that investors can own ( in this case, they own the access to the asset rather than a physical entity) and exchange for value in some way.
Cryptocurrency is one of the most clear examples right now. This type of digital asset is a digital currency that a person can own, has an assigned value, and can be sold or traded.
There are tons of of other types of digital property:
- Domain names
- Websites and blogs
- Trademarks
- Mobile applications
- Digital commodities
- SaaS platforms
- Online stores or businesses
- Cryptocurrencies
- Non fungible tokens (NFTs)
- Online accounts: gaming and social media accounts, email accounts, etc.
- Online banking accounts and other digital accounts
Why Should You Prioritize Digital Asset Estate Planning?
Estate planning is pivotal in influencing how your assets will be used once you’re no longer around to manage them.
Often, digital assets are overlooked when it comes to estate planning because they are hard to see and therefore easy to forget about. But when digital asset estate planning is overlooked, you have no control over their future.
And this is a real shame when you consider how, today, digital assets are becoming some of the most lucrative elements of well diversified portfolios!
Neglecting to Account for Assets Will Cost Your Estate
When any asset, from heirloom art to NFT art, isn’t accounted for at the time of your death and your next of kin can’t reach a decision about what to do with it, typically its fate falls into the hands of a probate court. This court oversees the distribution of property posthumously. For the average estate, the probate process can take up to two years and cost as much as 8% of the value of the estate, thanks to attorney fees and other expenses.
Continue to Support the People and Causes You Care About
But digital asset estate planning isn’t only about maximizing the value of the portfolio that you worked so hard to build. It’s also about making sure you’re taking care of the people you intend to take care of after you’re gone. It’s about supporting the causes you believed in while you were here on earth, since you don’t need the wealth anymore. It’s about creating a legacy that lives on and makes the time you spent living and acquiring assets all that much more worth it.
Relieve End-of-Life Stress With Proactive Planning
Estate planning can help you feel some control over an element of life that none of us have any say in. In addition, planning out your asset allocation now will also help take some of the stress off your family members later on when they’re already dealing with other end-of-life tasks.
Tools for Digital Asset Estate Planning
So estate planning sounds pretty important, right? What that doesn’t mean is that it has to be confusing, scary, or even all that expensive.
In this section, we’ll walk through the key tools for digital asset estate planning that protects your legacy and your loved ones.
Support from a Professional Estate Planner
Perhaps most important of all when it comes to estate planning is engaging with a professional who has estate management credentials in your locale.
Sure, you can certainly get started with an online template if your estate is generally pretty simple. However, we absolutely recommend having a fiduciary — such as an estate planning attorney — look over your documentation at least once. When it comes to the wild west of digital assets, the value of taking this step will outweigh the few hundred bucks it will cost you to acquire this legal advice.
The National Association of Estate Planners & Councils and similar organizations are a good place to start when looking for an estate pro who will prioritize wealth preservation and make sure you’re taking care of your loved ones according to your wishes.
Legal Documentation: Trust, Will, Etc.
A trust is a document as well as a legal entity that can be set up — with the help of a professional, or course! — to manage your estate after your death.
Trusts are not public record and can’t be remanded to a probate court, which makes them an ideal tool if you want to quickly, quietly, and affordably share your digital assets and other elements of your portfolio.
Along with a trust, we also recommend having a will created. A will is different from a trust in that it’s a document where you can create an entire plan for governing your estate, outline your funeral wishes, and develop a care plan for any minors for whom you’re responsible at the time of your death. Will are public documents and can be governed over by a probate court, which is another reason why trusts and wills should be used together in tandem.
A final key legal document to consider is a power of attorney, which can grant someone else authority over your assets and even over you. This document is meant to make sure you and your estate are managed according to your wishes even if you become incapacitated before death. There are several kinds of powers of attorney, so be sure to check with your estate planning professional on what will serve you best.
Digital Asset Management Platform
As we touched on earlier, digital assets in particular can be difficult to work into your estate plan since they’re invisible, and hard to share since they’re often linked with various personal accounts. That’s why a platform that’s built to organize and pass on these types of assets is so important when it comes to digital asset estate planning.
And that’s why we built Kubera.
Kubera is the most safe and secure way to not only share all your digital assets, but also to track them and their real-time value alongside every other asset in your portfolio.
With Kubera’s personal balance sheet, you can track the value of digital assets, of course, as well as bank accounts, credit cards, stocks, fiat currencies, domains, real estate, crypto, vehicles, real estate, collectibles, metals, and more (check out just some of the banks, crypto exchanges, and other accounts we support).
Our new recap screen combined with our clean charts and graphics will help you see how all of these assets are performing individually as well as how they’re impacting your overall net worth.
When you’re done surveying the beauty that is your portfolio, you can tap into Kubera’s totally unique “Safe Deposit Box” feature for beneficiary management. Here is where the magic happens. In your digital vault, you can store all of your important financial and estate planning documents! In addition, you will be able to appoint a beneficiary who will be granted access to these documents, as well as the rest of your entire Kubera portfolio, after you stop logging into your account for a certain amount of time.
As part of our commitment to being your one-stop-shop when it comes to wealth tracking, we also set up Kubera to automatically find the internal rate of return (IRR is a version of ROI that accounts for holding time) on any of your assets — in your preferred currency.
To take advantage of this feature, assets just need a few details: purchase price, current value, and cash flow in or out. Kubera will include holding time in its calculation and instantly show you the IRR of your assets. Again, this is in your preferred currency, which makes a huge impact when you’re trying to understand the return on an NFT you bought using cryptocurrency compared to the return on a piece of art purchased with USD.
To further help you make apples-to-apples comparisons and reach smart portfolio decisions, Kubera also displays the performance of popular indices and cryptocurrencies like the S&P 500 and Bitcoin.
To see Kubera’s automated IRR calculator in action, read our help center article.
For years, Kubera’s easy-to-use, spreadsheet-like interface has worked flawlessly on desktop. But now, you can even get the iOS or Android app for your phone!
When you’re ready to go beyond just estate planning and put the tools in place that will make sure all the assets in your estate will fall into the right hands, that’s when it’s time to sign up for Kubera.
Or, if you work with a financial advisor, wealth manager, or another financial professional, you may be able to access Kubera for free through them when they start using our white-label-ready platform within their client portal. Send Kubera their way and see how we can help them make your financial future a success.
