Your Digital Legacy Deserves More Than a Password Manager: How AI and Blockchain Are Revolutionizing Estate Planning in 2024

The digital revolution has fundamentally changed how we live, work, and accumulate wealth—but it has also created unprecedented challenges for protecting our legacies. Technology and the digital universe have introduced estate planning complexities and nightmares in recent years. In today’s digital age, the scarcity of physical documents can pose a challenge. It’s crucial to arrange and preserve key personal information for your family. Without this, your loved ones may face increased difficulties and expenses during already tough times.

As we navigate 2024, artificial intelligence and blockchain technologies are emerging as powerful allies in addressing these modern estate planning challenges. A recent McKinsey Global Survey reported that 78% of organizations had already integrated AI into their operations by July 2024. Looking to the future, AI’s momentum and impact are expected to continue, with forecasts suggesting it could add almost $7 trillion to the global economy over a 10-year period. AI is revolutionizing countless industries across the globe, and estate planning is no exception.

The Digital Asset Dilemma

In this day and age, a huge proportion of our lives are online. As a result, most of us now own a dizzying array of “digital assets,” which you can generally classify as anything created or stored online and holds some type of value. In fact, the digital asset market now sits at a whopping $2.5 trillion. Yet despite this massive value, many families struggle to access these assets after a loved one passes away.

Consider the challenges facing modern families: The rise of cryptocurrency ownership has created a new frontier in wealth management, yet a disturbing trend is emerging: digital assets are increasingly becoming inaccessible after their owners’ deaths. Recent cases, such as the $190 million Bitcoin lost by QuadrigaCX investors due to the untimely death of CEO Gerald Cotten in 2018, underscore the urgency of legacy planning for crypto assets. As biometric and cryptographic security measures grow more sophisticated, they also create barriers to inheritance.

AI-Powered Solutions Transforming Estate Planning

Recent technological advancements have rapidly increased the efficiency, affordability and attainability of estate planning, enabling financial advisors to offer these services through convenient online platforms. However, given the sensitivity and complexity of the data involved, it’s critical for advisors to properly vet potential AI-backed estate planning solutions before adopting them.

AI is revolutionizing estate planning in several key ways:

Document Creation and Analysis: AI can be used to increase the speed and efficiency of document drafting, document review, and summarization. So, you could use it to help draft wills, trusts, and all the other estate planning documents- pleadings, briefs, and client communications.
Data-Driven Decision Making: AI is playing a crucial role in personalized and data-driven decision-making in estate planning. Lawyers can leverage AI algorithms to analyze vast datasets, extracting valuable insights that inform strategic decisions for their clients. This includes scenarios and potential tax implications, assessing the financial impact of various estate distribution scenarios, and recommending optimal wealth preservation strategies.
Predictive Analytics: AI can analyze vast amounts of data to identify trends and insights that might otherwise go unnoticed. This ability to work on such a scale can be a valuable tool for advisors and attorneys as they make strategic decisions for their clients based on historical data and trends.

Blockchain: The Foundation of Secure Digital Legacy Protection

Technologies such as blockchain and AI have revolutionized digital estate planning by enhancing security and automating processes. Blockchain, for instance, provides a secure and immutable ledger for documenting digital asset ownership, which can simplify asset transfer after death, reducing the risk of disputes.

SafeTech Labs announced its Inheriti® 2.0, which enables users to create secure, lasting, decentralized digital inheritance plans to pass down digital assets—anything from social media accounts to cryptocurrency to secret family recipes. The product fills a gap in the market where users have more online accounts than ever—an average of 100 according to one report—but no comprehensive means to pass them down to loved ones.

The Human Touch Remains Essential

While technology offers incredible capabilities, the importance of human expertise cannot be overstated. AI may be able to support and supplement the services of estate planning attorneys but would be unable to fully supplant estate planning attorneys. Use of AI alone to craft an appropriate estate plan could result in a plan that does not dispose of an individual’s estate according to his or her wishes, does not minimize or eliminate applicable transfer taxes, and does not consider the nuances of the personal relationships among a client’s family members. ChatGPT may be proficient at taking an exam, but the underlying technology is not presently capable of actual reasoning, providing human compassion, or utilizing creativity to address an individual client’s unique circumstances.

This is where experienced legal professionals become invaluable. At Fratello Law, we love building lasting relationships with clients that span generations! Every client is unique and we take the time to understand our clients’ individual needs. Our law firm has offices located in Smithtown and Syosset, New York. The firm’s commitment to personalized service ensures that while technology enhances efficiency, the human element of understanding family dynamics and individual circumstances remains central to effective estate planning.

Practical Steps for Digital-Age Estate Planning

As we move forward in 2024, individuals should consider these essential steps:

Digital Asset Inventory: Smart devices and AI systems often contain personal data and preferences. Create a comprehensive list of all digital assets, including cryptocurrencies, online accounts, and smart home systems.
Secure Access Planning: Most states have laws covering fiduciary access to digital assets. When authority to access digital assets is not directly provided for in a will or trust, the fiduciary may have to go through the court system to ultimately obtain access, which is costly and time-consuming.
Professional Guidance: Work with an estate planning attorney who understands both traditional estate planning and emerging digital asset challenges.

The Future of Legacy Protection

The future of AI-driven estate planning holds immense promise for stakeholders across the industry, from clients seeking personalized wealth management solutions to professionals striving to enhance efficiency and effectiveness in their practices. By embracing emerging trends, leveraging technological innovations, and adapting to evolving regulatory landscapes, stakeholders can unlock new opportunities for innovation and growth while ensuring the continued relevance and resilience of estate planning practices in the digital age.

If you’re intrigued by the idea of digital estate management, consider including digital management tools in your estate plan. With advancements in AI and blockchain technology, the possibility of comprehensive digital legacy protection will likely become clearer and more attainable in the coming years, paving the way for a future where technology and estate planning intersect.

The digital age has created new challenges for estate planning, but it has also provided powerful tools to address them. As AI and blockchain technologies continue to evolve, they offer unprecedented opportunities to protect and transfer digital legacies. However, the complexity of these technologies and the personal nature of estate planning underscore the continued importance of working with experienced professionals who can navigate both the technological possibilities and the human realities of legacy planning.