Tips for Planning Your Estate for the Digital Age

Tips for Planning Your Estate for the Digital Age

As we spend more of our lives online — banking, collecting credit card rewards points, playing virtual reality games, creating photo albums, emailing, tweeting — it’s increasingly important to consider how beneficiaries can access those accounts and any assets they hold, once we’re gone.

“It used to be when someone passed away, there were all these clues — a paper trail around the house about what the deceased person owned and owed,” says Karin C. Prangley, an estate attorney at Krasnow Saunders Kaplan & Beninati in Chicago. “Now there is no more paper trail. All of that is digital. It’s a big deal because it’s hard to get at that digital information.”

Ignorance can be costly. “If you can’t get into this person’s email account, if you have no idea where this person banks … the [deceased] person may have a million dollar account at Fidelity, but you just don’t know, says Prangley. “Maybe the person had an insurance policy, maybe the person had an online store selling a specialized product, maybe there was some sort of business you as the heir don’t know about. The money goes right to the grave.”

Not having access to the deceased’s online accounts or email alerts could mean that bills normally paid online go unpaid. Since the estate is responsible for existing debt, missing those payments could cause headaches as you straighten out the problem, says Deborah L. Jacobs, author of “Estate Planning Smarts.” “If you don’t find credit card accounts quickly and bill paying is delayed and finance charges are assessed, you can most likely get the credit card companies to forgive the finance charges,” Jacobs says. “But you may have to fight them.”

The opposite situation is also a problem. Recurring bills that are on auto-pay may continue to be paid even after the product or service is no longer needed. “We’ve seen instances where someone has been dead for years and they’re still paying for The Economist online,” says Jacobs.

Finding financial accounts
Without a list of financial accounts, finding them can be tricky, but there are steps you can take. The easiest: check the person’s wallet, pocket, desk and drawers for the receipts, Jacobs says. “Even if you’re doing almost everything online, those receipts may be in their pockets.”

To find open accounts, such as credit cards that aren’t regularly being used and generating receipts or bills, you can get a copy of the deceased person’s credit report from one or all of the three consumer credit reporting agencies, TransUnion, Experian and Equifax. But you’ll need documentation, agency representatives say.

For example, all three require a copy of the death certificate and proof that you have power of attorney or are executor of the estate.

In addition to banking and investment accounts, many people access their airline, hotel and other rewards programs online, says Glenn C. Williamson, CEO and founder of WebCease Inc. in Portland, Ore., which helps heirs track down those digital assets. “I personally have half a million Hyatt points, valued at $35,000 to $45,000,” Williamson says.

The potential dollar loss goes beyond financial accounts and rewards programs to items you may not think of immediately, Prangley says. “What’s the cost of losing a lifetime of photos? What happens to unique weapons held by a World of Warcraft master? What about wins in offshore, online poker accounts?”

North American respondents to a survey by security giant McAfee valued their digital assets at an average of $54,722 with listed assets including music downloads, photos, emails, financial and health records, career information and contacts, and hobbies and creative projects.

Even a great-grandfather may have digital assets if he’s been online, says Williamson. “We did one 91-year-old guy who didn’t even have an email address and he had hotel points,” he says. Another man in his 80s had a separate Facebook account for selling RVs — news to his family, Williamson says.

Finding assets online can be time-consuming. First, heirs have to know an account exists. Second, they have to be able to gain access to that account via usernames and passwords.

“People are grieving,” says Jacobs, the author. “This is adding an extra hardship.”

Williamson estimates it took him 25 hours to find his mother’s online accounts after she passed away, which gave him the idea for WebCease. WebCease routinely searches about 60 nonfinancial online accounts, including photography sites such as Flickr, hotel and airline rewards programs, social media sites and e-commerce sites including Amazon, PayPal, Netflix and eBay.

WebCease researchers will personalize the search and look for additional accounts when necessary, Williamson says. For instance, in the case of the RV enthusiast, they searched various campground websites to see if the deceased had a membership with valuable rewards or resale potential. “We wouldn’t typically search on those, but when my researchers make a correlation they will go further than our standard list.”

WebCease lets its clients know what it finds, and then gives them each site’s policies and information on how to transfer the digital assets and how to shut down the account, Williamson says.

Rescuing vital records
Passwords are the next hurdle. Even if you as the executor or heir have written permission from the deceased account holder to access accounts, without the proper passwords, online providers may not give you the content, says Hazel Sanchez, estate planning attorney at the Law Offices of Rhonda H. Brink in Austin, Texas.

“Each one has different procedures,” says Sanchez. “Some online providers, if they were to find out the account holder is deceased, would simply close the account and delete all the information on it.”

Sanchez recommends that if you do have access to usernames and passwords, you print out hard copies of financial information so that even if the accounts are later deleted, you’ll have the information you need.

Technically in these cases, you could be liable for unlawful access of data, but it’s not likely an heir would be prosecuted. “They talk about liability of unauthorized access, but nobody ever enforces it,” Sanchez says. “It’s more important for the fiduciary to gain control of assets and prevent deletion of information before anything happens.”

Shutting down fraud
Eventually, though, you’ll want to make sure you close accounts for security reasons. The identities of nearly 2.5 million people are misused every year to apply for credit, according to a 2012 study by ID Analytics.

“You don’t want mom’s profile out there,” says WebCease’s Williamson. “When you die, it’s public record. It’s so much easier to steal a deceased person’s identity.”

To prevent fraud and identity theft, notify credit card companies and other lenders that the person has died, says Maxine Sweet, president of public education at Experian. “They will report the deceased status to the credit reporting companies and it will automatically become part of the file, preventing fraud,” she says. “If the deceased was receiving Social Security benefits, the Social Security Administration also should be notified and [SSA] will also report that information to us.”

Even if you’re not looking for open accounts, you still should contact the credit reporting agencies with a copy of the death certificate, so the credit file can be updated, says Clifton O’Neal, vice president of corporate communications at TransUnion.

You may also want to contact the Direct Marketing Association to have the deceased removed from marketing mailing lists, Sweet says. “Having those arrive in the mail can be painful for the relatives,” she says.

Planning your digital afterlife
You can prevent many of these hassles for your own heirs by making preparations now. A few simple measures can lessen or eliminate the need for your loved ones to become online sleuths after you’re gone.

  • Keep a snail mail trail
    Even if you do business mostly online, elect to receive some paper statements so your heirs will find out about your accounts from mail delivery, says Jacobs, the author. “Even though I favor cutting down on the paper in our lives, this is not the place to do it,” she says.
  • Consolidate your accounts
    Combining financial accounts or at least moving assets to a small number of providers makes them easier to keep track of, Jacobs says. “I know of a number of elderly people who have certificates of deposit at 50 different banks,” Jacobs says.

Finding the records could be sheer luck. Jacobs and her husband went to one bank her mother-in-law used to cash in one of her CDs and the bank officer told the couple she had a second CD that they hadn’t known about.

  • List account information
    Make a list of accounts with the name of the financial institution, account number and how it’s titled and put it in a folder if you’re comfortable having that information at your house, Jacobs says.

If not, make one list of user IDs and a separate list of passwords, Sanchez suggests. Give each list to a different person and tell your executor those people’s names so the two lists can be put together when you pass away, she says.

She acknowledges that keeping the list up to date could be time-consuming, but says it’s necessary. “We think it’s very important for everybody to make a list inventory of what they have,” Sanchez says.

  • Name an online executor
    As you make that list of user names and passwords, consider naming an online executor, who could be separate from your overall estate executor, says Prangley, the estate attorney. An online executor would identify and provide information to your family about your online accounts and digital assets and they could sell what might be useful to others, she says. Further, the online executor could delete any emails or other online communication that might hurt your family members, she says.

“Some people have separate online lives,” she says. “Your executor might delete your online flirting.”

  •  Additional resources
    Am industry has cropped up to cater to today’s digital estate planning needs. For example, Eterniam, founded in 2013, preserves all your digital assets — photos, videos, documents and content from social media sites. You can bequeath each asset to chosen beneficiaries.

The Digital Beyond, created by John Romano and Evan Carroll, is a think tank for digital death and legacy issues. Its website, thedigitalbeyond.com, maintains a list of online services designed to help you plan for the future of your online content.

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Ch II : Planning For The Digital Afterlife

Transferring property, wealth, assets, and family heirlooms from one generation to another has always been a primary focus of proper estate planning. The electronic and technological innovations of the twentieth century, society’s reliance on the Internet and electronic commerce (“e-commerce”), and the growth of cloud computing have given rise to a new digital world of assets which may be accessible across the world through a variety of mediums. Due to their importance in our everyday life, financial and sentimental value, and continuing growth, digital assets should be considered as a part of any estate plan. Digital assets and online accounts have the potential to continue indefinitely. As with any asset that can exceed the lifespan of the original owner, estate planning for digital assets is a vital part of the preservation of one’s legacy and property disposition. Many individuals unknowingly leave a significant amount of digital assets unaccounted for after death. For example, by the end of 2012, over 30 million Facebook users have died, leaving no directions as to the handling of their accounts. Failure to consider digital assets as part of the estate planning can result in loss of items that contain sentimental and financial value for the deceased relatives. According to a 2011 McAfee study, the average Internet user places a value of $37,438 on their digital assets,3 while a U.S.-based Internet user values their digital assets near $55,000.  The growth and development of the digital world has also changed the manner in which businesses operate, store information, market products, and reach consumers. The U.S. e-commerce industry is valued at nearly $225 billion.  Today, businesses often rely on a wide range of digital assets to ensure a strong web presence through online storefronts, e-commerce services, and cloud-based products, as many consumers expect businesses to have both brick-and-mortar locations while offering online access. These digitized assets are crucial to the company’s success and functionality and, at the same time, represent the growing digitalization of business assets. The average business insists that up to 20% of its digitally stored information is critical to operations. This percentage is likely to increase over time as companies continue to rely upon electronically stored information. Accordingly, proper estate planning and business succession plans are needed to protect and manage digitized business assets. Digital assets, without a doubt, add a new wrinkle to the already complex legal practice of estate planning. Digital estate planning can be especially problematic because digital assets are often difficult to locate without proper guidance from the decedent. Without a well-designed digital estate plan, locating and disseminating digital assets is akin to searching for buried treasure with neither a treasure map nor a shovel. Further, accessibility and transferability issues can arise as these digital assets are often spread across various social networks, email accounts, online service providers, and digital devices. Providing access and location information regarding digital assets via wills creates security concerns as their location and passwords may become public.

The expansive nature of digital assets and the aforementioned issues surrounding this novel area of law triggers the need for more precise and well-developed asset management systems. This Essay defines the scope of digital assets, discusses unique challenges digital assets provide for traditional estate planning, and concludes with a viable strategy for the creation of a well-developed and manageable digital estate plan

What is Digital Estate Planning and Why Do I Need it?

Ch 1: Introduction

Countless people are dying without proper digital estate plans in place, leaving billions of dollars of assets unaccounted for in the digital world. This is occurring in part because individuals are often unaware that traditional estate planning tools and techniques, such as wills, are ill-equipped to handle the unique challenges of digital estate planning. As a result, the majority of Americans are vastly unprepared for their digital afterlife, unintentionally foregoing digital estate planning altogether and leaving their assets trapped in a digital purgatory. With the ongoing growth in our reliance on technology, interaction via social media, digitization of individual’s property, and further advancement of new Internet technologies, the amount and value of our digital assets are growing exponentially.

In response to this immediate need for digital estate planning and management of digital assets, some businesses began to offer their users the ability to plan for the disposition of their digital assets upon their death. However, due to the novelty of this area of law, the business solutions currently afforded often leave more questions than answers about what happens to the individual’s digital assets, raise concerns about privacy and security, and augment disputes over their overall effectiveness in the estate plan. These pages examines the importance and increasing prevalence of digital assets, discusses the challenges facing traditional estate planning in the growing world of digital assets, and suggests a workable strategy for the creation of a well-developed and manageable digital estate plan.

Academic Articles and Papers

Academic Articles and Papers

  • In 2013, an article titled: “Facebook after death: an evolving policy in a social network” by Damien McCallig was published.
  • In 2013, an article titled: “Coping Online with Loss: Implications for Offline Clinical Contexts” by Joanna Pawelczyk was published. Thank you Dr. Carmel Vaisman for sending me the link.
  • In May 2013, Maria Perrone’s article: “What Happens When we Die: Estate Planning of Digital Assets” was published.
  • In May 2013 an article by Jed R. Brubaker, Gillian R. Hayes, and Paul Dourish was published, titled: “Beyond the Grave: Facebook as a Site for the Expansion of Death and Mourning“.
  • paper titled “Digital Afterlife: What Happens to Your Data When You Die?” was published in May 2013, by Stephen S. Wu.
  • In May 2013 a paper titled “Digital Estate Planning: Is Google Your Next Estate Planner?” was published, by Jamie Patrick Hopkins.
  • In April 2013, the paper “Afterlife in the Cloud: Managing a Digital Estate“, also by Jamie Patrick Hopkins, was published.
  • In February 2013 a paper titled “What happens to my Facebook profile when I die?” : Legal Issues Around Transmission of Digital Assets on Death” was published by Lilian Edwards and Edina Harbinja. Thank you Paul Golding for sending me the link.
  • Since September 2012, the article “There Isn’t Wifi in Heaven!” – Negotiating Visibility on Facebook Memorial Pages by Alice Marwick and Nicole B. Ellison is available online for free download. Thank you Dr. Carmel Vaisman for sending me this link.
  • In 2012, an article titled “Grief-Stricken in a Crowd: The Language of Bereavement and Distress in Social Media” was published, by Jed R. Brubaker, Funda Kivran-Swaine, Lee Taber and Gillian R. Hayes.
  • In 2011, the article “”We will never forget you [online]”: An Empirical Investigation of Post-mortem MySpace Comments” was published, by Jed R. Brubaker and Gillian R. Hayes.
  • In 2011, the article “Security and privacy considerations in digital death” was published by Michael E. Locasto, Michael Massimi and Peter J. DePasquale.
  • In 2010, Jed R. Brubaker and Janet Vertesi’s paper “Death and the Social Network “was published .
  • In 2008, the current term “Digital Legacy” was then referred to as “Digital Heirlooms” and an article titled: “On the Design of Technology Heirlooms” was published by David Kirk and Richard Banks.
If you come across any other papers or articles, please be so kind as to send me the link, so I could add them to the list (with credit to you, of course). Email: death.in.digital.era@gmail.com, Facebook page: Digital Dust.