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Estate Planning for the Digital Future

Technology is adding another layer of complexity to the planning process.

Estate planners are increasingly incorporating digital assets into their clients’ estate plans, potentially adding another level of complexity to the planning process, according to a recent survey of estate planning professionals conducted by TD Wealth.

As interest in digital assets increases, so too does the need to properly plan for it. "People want their financial planning to advance alongside their day-to-day use of technology and digital integration," said Donna Walton, Wealth Strategist at TD Wealth. 

More than half of the planners surveyed said they’ve incorporated bitcoin and other cryptocurrencies into their clients' estate plans in 2022. Digital wallets go hand in hand with digital assets, with 68% saying they also included passwords as part of planning. Digital content, such as blogs, social media and email accounts, is also regularly making its way into plans.

It’s not only clients going digital—professionals are increasingly relying on digital tools (more than 80% of those surveyed), such as estate planning software and online wealth and/or estate planning platforms, to support the planning process.

Designation of Beneficiaries

Digitization isn’t the only factor complicating matters when it comes to estate planning. As modern family dynamics become increasingly complicated year over year, designation of beneficiaries is becoming the leading cause of family conflict, with 34% of respondents citing the designation of beneficiaries as the leading cause of family conflict in 2022, up from 17% in 2021 and 14% in 2020.

It appears that lack of communication may be leading to the conflict. Discussing the estate plan ahead of time with family members may help mitigate family disputes and conflicts, yet only 15% of respondents reported that their clients directly raised the importance of involving family members and beneficiaries in estate planning meetings.

Other Planning Challenges

As mentioned, the reliance on technology, and planning for it, is adding complexity to the planning process, as planners learn to navigate their way through digital assets and tools. Document management is also becoming increasingly complex with estate planners reporting that the most difficult to upkeep include powers of attorney, current wills, and guardian and beneficiary designations. Ironically, digitization may offer some relief, as more and more professionals begin to embrace digital storage and electronic execution of documents.

The financial effects of the COVID-19 pandemic also continue to be felt, alongside inflation, rising interest rates and geopolitical conflicts. As a result, market volatility has emerged as the No. 1 threat to estate planning in 2022, up slightly from 2021. "In this current economic environment, people are wary that market risks may upend existing plans. Many believe that inflation could devalue assets or business and employment challenges could threaten expected income and reduce the size of the estate left to loved ones," says Walton.

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