Digital Assets and Estate Planning in New Mexico

Quick Summary: Digital Assets and Estate Planning in New Mexico

• Digital asset planning ensures that valued digital property, including cryptocurrency, is included in your New Mexico estate plans.
• Registered intellectual property (IP), cryptocurrency, and certain contract-based digital assets can be transferred like regular property using a will, trust, or other estate planning device
• New Mexico has passed the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which enables you to assign a fiduciary who can access and control digital accounts after your death.
• Part of digital asset planning involves leaving instructions so that your personal representative or another trusted party knows how to access your accounts and what you want done with any important digital assets.

Need immediate help? Contact New Mexico Financial & Estate Planning Attorneys.

Over the past few decades, digital technology has embedded itself deeper within our lives. Media like films, music, video games, and even books are more likely to be enjoyed as digital files rather than physical, tangible artifacts. 

We also live more of our lives online than ever before. Many people now regularly share thoughts, ideas, art, and other content online with their digital community. On top of all this, digital assets like cryptocurrency are now being treated in a way that is legally similar to physical ones.

Wills and trusts can be used to manage some of these digital assets in the same manner as physical property. However, much of our digital lives still exists outside the jurisdiction of traditional estate and property law. If we fail to fully account for our digital assets in our estate plans, we risk leaving a substantial part of ourselves behind when we pass on.

New Mexico Financial & Estate Planning Attorneys can help you avoid having cherished, valuable, or important digital assets disappear into the electronic ether. We can also help you maintain privacy and dignity if you wish for some of your digital presence to be put to rest after your passing.

From estate planning for cryptocurrency to assigning someone to act as a custodian for your online accounts, we can help you cover all the bases and ensure that nothing important is forgotten or left behind. Find out more during a confidential, no-obligation appointment. Call (505) 503-1637 or contact us online to schedule your consultation with a digital estate planning attorney in New Mexico.

What Assets Are Affected by NM Digital Asset Estate Planning Laws?

When seeking to protect your digital legacy in New Mexico, it helps to first understand what assets might be involved:

• Intellectual property rights, such as copyrights and patents, are contractual rights that are treated very similarly to ownership rights over real property. These can be included in a will, trust, transfer-on-death contract, or other traditional estate planning mechanism to transfer ownership to the desired party. Verify that the ownership status is registered and up-to-date, and mention these when meeting with your digital estate planning attorney in New Mexico.

• Cryptocurrency and other tradable digital assets are treated as investment property by the IRS. This means they can be transferred using traditional methods, including by listing a beneficiary for brokerage accounts that include crypto assets. The cryptocurrency receives a step-up in basis at the time of the original owner’s death, but the heir recipient will owe appropriate capital gains taxes on any appreciation in value since that date. Instructions on how to access the cryptocurrency should be left in a document separate from a will.

• Digital files on a physical drive can be inherited along with the hardware itself. Again, those engaging in estate planning should include separate instructions along with an inventory, which brings attention to files that are important, valuable, or have special meaning to the original owner or their heir.

• Digital files attached to an account, such as a Google Drive, Dropbox, or Facebook, have different rules depending on the platform. Account owners should look into the platform’s policy and see if they are able to assign a digital steward or custodian who has legal permission to archive and manage the files after their death.

• Digital accounts can range from email addresses to banking logins to services like Adobe Creative Cloud. Many service-based accounts are technically non-transferable, as they involve limited, highly restrictive licenses. Others exist mainly as a customer access point. Still others offer a platform that combines file storage with online services, which is the case with email. Review the licenses that apply to the platform, and include instructions to your estate fiduciary (i.e., a trustee or personal representative) to help them understand which accounts they should access, how to access them, and what they should do with them once they have access.

• Digital media and other content are often provided under an exclusive, non-transferable license to another user. Some platforms allow digital media file owners to bequeath them as part of their legacy, whereas others consider access by another person to be a violation of their terms of service. Again, review the platform’s policies, especially around licensing, and determine how you would like a survivor to handle the corresponding accounts.

• Other digital content can include the footprints we leave behind as we use our devices, such as our browsing history and the privacy settings we select when we visit certain sites. Decide how you want these dealt with (which can include ignoring them or deleting them wholesale) as part of your digital legacy planning, and leave instructions to ensure that your wishes are clear and can be followed.

What Is the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) in New Mexico?

The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) is a set of uniform laws that allow digital product, service, and platform users to give an official fiduciary representative permission to access their accounts with the exact same rights and privileges they would have.

The main components of the RUFADAA to be aware of when estate planning for digital assets are:

• A governing instrument, such as a trust instrument or power of attorney, can give an officially designated fiduciary, such as a trustee, personal representative, agent with power of attorney, conservator, or guardian legal permission to access an account and its contents.
• An account owner can also bar future access by a fiduciary or any other party. This preference can be selected on the platform or communicated to the service provider (e.g., Snapchat), which will restrict access to an account even if a fiduciary requests it. 
• Most platforms have online tools available to select preferences, including whether a platform should avoid disclosing the existence of an account to a fiduciary. Some platform providers, such as Google, even have specialized services that allow someone to access online accounts after death in New Mexico through an alternate set of credentials.

It should be noted that RUFADAA involves a relatively new area of the law. As such, the development of the legal framework and case law surrounding this area of ownership rights is ongoing. In areas where a platform’s terms of service (TOS) contradict the expectations of RUFADAA, the platform may still retain the right to take action when someone not explicitly authorized by the platform accesses an account.

One notable example is the Steam content delivery platform for video games. Steam grants users a license to access content on the platform rather than permanent ownership of the content itself. Steam’s Terms of Service do not authorize any transfer of account ownership, including after a death. As such, Valve (the company that owns and operates Steam) may retain the right to delete an account summarily, along with thousands of dollars’ worth of games, if they feel their Terms of Service have been violated.

Fiduciary access to digital assets in New Mexico is an important and ongoing area of estate planning. Refer to an attorney for guidance on planning and leaving instructions behind for someone you trust.

Including Cryptocurrency in Your NM Estate Plan

Cryptocurrency can be inherited just like personal property and other investments, such as stock or bonds. Ownership of the cryptocurrency can be left in a will, trust, or beneficiary arrangement for certain brokerage accounts.

What’s critical to remember with cryptocurrency estate planning in New Mexico is that giving ownership is not the same thing as giving access. Cryptocurrency is, in essence, a set of digital information that can be lost forever if the digital wallet location or access credentials aren’t passed along, too.

To ensure your cryptocurrency doesn’t end up in digital purgatory, provide instructions to the heir inheriting it or a fiduciary (such as your estate’s personal representative) to ensure that they know:

1. Where the cryptocurrency is stored, whether in a digital wallet stored on a physical drive or through an account on an internet-based asset portfolio service
2. How to access the wallet or financial account, including private keys, recovery phrases, and backup credentials for two-factor authentication (TFA) or lost password account recovery

Critically, don’t leave these instructions in a will or other public document. You can mention the asset in a will to transfer its ownership, but include all other instructions on a private physical or digital document. Ensure that your executor (or another person you trust) knows where this file is and that they are capable of understanding what it instructs.

Alternatively, you can include cryptocurrency (and other digital holdings) in a living trust, along with instructions to your trustee for how to pass it along to beneficiaries. For help with cryptocurrency estate planning and setting up living trusts in New Mexico for digital assets, you can refer to an experienced attorney.

How Can I Protect My Rights and Preserve Digital Assets Through Estate Planning?

Making the appropriate arrangements for your digital content, given your specific digital portfolio and legacy goals, requires both conducting your own “homework” and consulting with an experienced New Mexico estate wills attorney.

Here are some steps you can take:

• Take an inventory of all your digital assets. Include every account for which you have a password and/or own a license to access a particular service or a set of content.

• Take special note of assets that can be transferred as regular property, including IP rights, contractual rights, copyrighted works, cryptocurrency, and other digital investments. 

• Find where your End User License Agreement (EULA) and/or Terms of Service (TOS) are located. You may have trouble understanding these documents, but go ahead and identify them and do a quick skim-through before meeting with an attorney.

• Write down who you want to inherit digital assets or take over account management. You can organize this list using the asset categories in the first subsection above.

• Compile all of your passwords and access locations for digital assets in a safe place, such as an encrypted USB drive. Make sure your personal representative, trustee, or another designated party knows of the location of this repository.

• Schedule an appointment with a legal team that’s experienced with digital property inheritance in New Mexico. Your attorney can help you outline goals, set priorities, and form a plan to make all your assets accessible and capable of being managed in the way you would want after your passing. They can also help you verify whether certain content, data, files, or accounts can be transferred, depending on the platform’s TOS.

• Make a plan to use online legacy and preservation tools to your advantage. Google Accounts, for example, have an “Inactive Account Manager” option. Facebook and other Meta products have a Memorialization option. Look into available tools, and be sure to contact the platform provider if you have any questions.

• Create instructions for digital assets, and leave these with your chosen personal representative, a trustee, or someone else you trust. These instructions should tell them what you want done with each specific asset, such as whether you want social media accounts deleted, left intact, or preserved offsite by downloading all available content and data.

• Include high-priority assets in your will, a transfer-on-death contract, or trust document. Note that the latter offers more privacy, as wills are a matter of public record. You can always refer to property categorically in a will and avoid leaving specific disclosures or instructions.
• Revisit and revise your plans semi-frequently. Ensure that your estate planning for social media accounts and other digital assets in New Mexico reflects your current portfolio, situation, and plans. Always update your plans after a major life change, such as your retirement, divorce, a new marriage, or even a transition to a new service provider, such as switching from Android-based services to Apple Cloud.

Get Help Estate Planning for Digital Assets With an Experienced New Mexico Law Firm

New Mexico Financial & Estate Planning Attorneys can help you categorize the digital assets you own, form a strategy to pass them along to the people you care about, and leave instructions to ensure your wishes are understood and can be carried out faithfully.

Learn more about digital asset planning and how it affects wills, trusts, and other estate planning arrangements during a confidential consultation. Call (505) 503-1637 or contact us online to book your appointment with no obligation.