The wealth management industry has been increasingly focusing on digital assets – planning how to integrate them into succession planning is one element of this.

As if estate planning wasn’t complicated enough, the ascent of digital assets such as bitcoin or non-fungible tokens have given wealth advisors and clients something else to consider.
 
A new study from TD Wealth, based on 142 responses to a survey, found that more than two-thirds (69 per cent) of estate and financial planners are now incorporating digital tools into their clients' estate plans. The firm polled certified estate planners, estate planning attorneys, trust officers, charitable giving professionals, insurance advisors, elder law specialists, wealth management professionals and non-profit advisors.

The digital content that led the way into estate plans in 2022 included blogs, social media and email accounts (71 per cent), followed by passwords at 67 per cent. The increase in the use of digital content and tools is consistent with an increased interest in digital assets such as bitcoin and other cryptocurrencies (61 per cent).

"In this current market environment, we're seeing a distinct shift to increased digitization, whether that's planning for social media accounts, interest in cryptocurrency, or simply exploring digital wealth planning tools," Donna Walton, vice president, wealth strategist at TD Wealth, said. "People want their financial planning to advance alongside their day-to-day use of technology and digital integration."

The results also showed that 83 per cent of surveyed estate and financial planners said they use digital tools to support clients' estate planning, leveraging estate planning software (52 per cent) and online wealth and/or estate planning platforms (48 per cent), demonstrating that a majority of estate planning professionals are going digital to support their clients' needs efficiently.

The focus on digital assets has been growing. In family offices, for example, this publication has carried this analysis of how these organizations should address these entities. And see this feature on how wealth management is being affected by digital assets.

Beneficiaries and conflict
In other details, the survey found that 34 per cent of respondents cited the designation of beneficiaries as the leading cause of family conflict in 2022, up from 17 per cent in 2021 and 14 per cent in 2020.

To help mitigate family conflicts, 84 per cent of estate planners have encouraged clients to discuss their estate plans with their families and beneficiaries over the past 12 months. Resulting from these conversations, only 15 per cent of respondents reported that their clients directly raised the importance of bringing their family members and beneficiaries into the estate planning meetings, encouraging estate planners to help initiate including their clients' families and beneficiaries in those conversations, rather than the clients themselves.

As individuals and families contend with lingering financial losses ushered in by the COVID-19 pandemic, market volatility emerged as the number one threat to estate planning in 2022 (31 per cent), up slightly from 22 per cent in 2021 and 13 per cent in 2020.

Document management is also becoming increasingly complex for clients and their independent legal counsel, with the following being most difficult to upkeep: powers of attorney (31 per cent), current wills (29 per cent, up from 11 per cent in 2021 and 31 per cent in 2020) and guardian and beneficiary designations (20 per cent, down slightly from 33 per cent in 2021).

TD Wealth commissioned Maru/Matchbox to conduct the survey; fieldwork was conducted in April.