Digital Assets to Include in Your Estate Planning

Digital Assets to Include in Your Estate Planning

Not too long ago, Americans wouldn’t even consider including their online assets in their estate plans. Today, however, families and individuals would be making a big mistake not to include thorough plans for how their digital assets are managed after their death.

In this modern age, we conduct more and more of our financial, work, social, and creative activities on computers and the internet. We store a huge amount of information on the web, from our personal files and documents to banking information to our Facebook accounts. Online assets are as valuable as our other property and financial information—in fact, studies have found that the average person today has more than $54,000 worth of digital assets stored on the web and computers. According to the National Association of Unclaimed Property Administrators, state treasurers have more than $32 billion in unclaimed bank accounts and other online assets.

What will happen to your digital assets after you die? If you want your online financial accounts, commercial accounts, and social media accounts to be left in the hands of someone you trust, it’s highly advisable to include your digital assets in your estate plan. Below, we’ve included a step-by-step guide to creating an estate plan for your digital assets.

Step One: Determining Your Digital Assets

First, make a list of all your digital assets. This could include computing hardware such as computers, flash drives, smart phones, and cameras. Include your online accounts, such as email accounts, social media accounts, online storage accounts, and bank accounts. After compiling a list, your attorney can help you to store login and password information in a safe place, along with information describing where computers and smart phones are located.

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Step Two: Determining How These Assets Should Be Handled

Depending on the type of account and your own personal preferences, you may want some accounts to be archived and saved, or deleted and erased. Others, you may want to transfer into the hands of family, friends, and trusted associates. Your estate planning attorney can help you determine an appropriate method for handling each asset in a way that accommodates your wishes, and assist you in documenting instructions for your digital executor.

Step Three: Choose a Digital Executor

You should choose someone you trust to designate as your digital executor. This person will be in charge of carrying out your wishes pertaining to the management of your digital assets.

Step Four: Store the Information with Your Attorney

It’s important to store the sensitive, valuable information outlined in your estate plane in the hands of a trusted attorney. Tell your digital executor or someone you trust about the plan so they are aware of its existence, and give them the name of your attorney so they know where to find it in the event of your death.

If you own a computer and use the internet regularly, there’s a good chance that you have quite a bit of important information and assets stored online. After you die, you’ll leave behind a digital legacy accumulated over your entire lifetime. To reduce stress and confusion for your survivors during a difficult time and ensure your wishes are fulfilled, you should update or create an estate plan for your digital assets. To begin, contact a skilled estate planning attorney at WintTer & Associates, P.A., who will be able to guide you through the process and safeguard important information until the time comes to release it to your designated beneficiaries.

Social Media: Planning Your Digital Estate

Social Media: Planning Your Digital Estate

Have your done your digital estate planning?

This was the subject of a recent Smart Company article, titled The business of digital life and death.” According to the article, some 70% of 65-74 year-old Americans are on Facebook, and there are 30 million accounts belonging to folks no longer alive. Not surprisingly, a growing concern among those wishing to properly manage their estate is making proper plans in the event of “digital” death.

The notion of digital death raises questions like what is an “asset” or a “special relationship,” let alone how to balance privacy and security with passing on relevant information. The article cites several factors to consider when dealing with digital assets. For example, there are no international standards on digital assets or for how to address them via estate planning.

Again, social media has not been a burning issue in estate planning as of yet. On the other hand, as younger generations begin to plan for the future, then it will become more relevant for them as they already are prolific users (owners?) of digital assets. How many more with the have over their lifetimes?

It seems every social media platform has a different approach to dealing with the death of one of its users.

Take Facebook, for instance. It protects the privacy of the deceased by securing the account and permitting a family member to request the account be removed or memorialized. In an attempt to balance sharing and privacy, Facebook has introduced a Look Back feature that can create a video of favorite moments that may be viewed but not shared.

For its part, Twitter is open to dealing with an immediate family member or estate representative to deactivate an account. Google developed an “inactive” account manager. This gives an individual access to your Google account if you die. In addition, it allows you set up a deadline in the event you do not use your Google account for a period of time. If that deadline passes without account activity, then Google will notify and allow your designated inactive account manager to access select parts of your account.

In an attempt to prevent illicit use of real accounts, social media platforms are typically moving to policies that validate family members with certified copies of death certificates, so a loved one can account for those assets and close the account.

Despite clear instructions and policies about digital closure, the original article warns that it can be a laborious task. Work with your estate planning attorney to get the most up-to-date information on digital assets and how to coordinate them with your estate planning documents. In the very least, leave an up-to-date list of accounts and passwords for your estate representatives … and let them know where you keep the list.

Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.

Is Your Digital Life Ready for Your Death?

Don’t take PINs and passwords to your grave

A brush with a scammer spurred Kieran Clifford to write down his passwords and give them to his daughter. Photo: Brandon Thibodeaux/New York Time

Bob Ginsberg, a retired production manager for an educational publisher, is worried that he does not know any of the logins and passwords for online accounts belonging to his partner or brother and they do not know his. At 72, he said his concern was not about Facebook or email. It was for their financial lives, which have migrated online, making paper account statements anachronistic. Now, when people die without disclosing their financial affairs to anyone, there is often no paper trail for heirs to follow.

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“You’d never know someone else’s financial arrangements, but if it was paperwork you’d have a clue,” Mr Ginsberg said.

“I’m entirely comfortable doing absolutely everything online. But if I have to take over for my brother or my partner, I don’t have any of their information.”

In its annual Wealth and Worth study, released last month, private bank US Trust said 45 per cent of the high-net-worth people it polled had not organised passwords and account information for their digital lives in a place where heirs or an executor would find them. (By contrast, the bank said that 87 per cent knew the location of important documents and most had a will.)

Much has been written about how family members struggle to get access to the email and social network accounts of loved ones who have died. They have sentimental value much the way photo albums and personal letters do. But far less attention has been paid to the logins, passwords and answers to security questions that will give access to an online financial life. In an era when far fewer records are kept on paper, spouses and children may not even know that some accounts exist. Think of savings accounts that are only online, or a rollover retirement account that hasn’t been touched in years.

“It’s not only something that needs to be addressed with an individual dying,” Chris Heilmann, chief fiduciary executive at US Trust, said. “If an individual becomes incapacitated, people typically plan for someone to have a durable power of attorney so someone can step in and handle your affairs. But now you’re finding the attorney has to deal with your digital issues. They have to access your computer; they have to pay bills for you.”

Safe deposit

Sharing the combination of letters or numbers that give access to a person’s most important financial details is turning out to be a lot harder than telling loved ones that everything they need to know is in a safe deposit box. What can people do?

There are many websites and tools that allow people to upload their accounts and passwords in so-called digital vaults. They promise security and a one-stop shop for disparate digital lives. But they often go unused — just as there are a lot of lawyers around but not everyone has an estate plan. People need to record their account information and passwords just as they need to make an appointment to draw up a will. And that seems to be the problem.

Joel Feldman, a retired garment manufacturer, said he had an estate plan but he had been reluctant to write down all of his logins and passwords and give them to his son. He also does not use a financial adviser, who would know some of that information.

“It does concern me,” Mr Feldman said. “I keep saying I’m going to make a CD of my bank statements and put it in my safe deposit box, but I don’t do it.” He said he figured that his son could probably find everything on his computer. One reason people say they put off drawing up a list is that passwords are constantly changing. But that doesn’t seem to be the reality for many in retirement now.

Mr Feldman said he has only two or three different passwords because he would forget more than that. Kieran Clifford, a retired vice president for finance from Lucent, said the password to his Gmail account was recently stolen. By combing through past emails, the hacker found a Fidelity statement, got the account number, and emailed his broker at a separate firm to transfer $250,000 to a bank in Hong Kong. Everything had the same password — his initials and date of birth.

“The email said I’m going out to a meeting and you won’t be able to contact me so go ahead and do the transfer,” Mr Clifford said. Fortunately, his financial adviser called him before doing anything, and they now have an agreement that any move must be confirmed by phone. Like many things, it sometimes takes a scare to get people to act.

After the incident, Mr Clifford, 65, said he wrote down his passwords and gave them to his daughter. What remains to be seen is how vigilant he will be in keeping his passwords different from each other and updating the list his daughter has. For people who are not highly organised and pragmatic about their estate plans – and that is most people – it seems that short of a crisis they need a persistent adviser to push them.

Digital plans

Mr Heilmann said that when his firm reviewed traditional estate plans with clients it got them to draw up digital plans as well. This is where wealthier people have a leg up: someone else to do the kind of boring data entry that few of us want to do.

Mr Heilmann said people needed to think about five things to ensure that everything goes smoothly with their digital financial lives if they become incapacitated or die: they need to maintain a list of their digital information; send the information to someone they trust; make sure other people know who has the information; leave instructions for how everything should be handled; and note all of this in an estate plan and update it regularly. While time-consuming, this advice is straightforward. But advisers said that for many who are considering these steps, another issue arises: a fear that someone else has access to their financial life.

Louise Gunderson, a managing director at UBS wealth management, said she encouraged clients to upload their information to a secure system that allowed whoever they designated to see the account information but not to move the funds. “We come up with a solution, but it depends on who acts on it,” she said. “Some parents say, ‘I don’t want my kids to know anything.”‘

For the less wealthy, whose children need to know everything to care for them, advisers warn the children not to use the passwords to log into accounts as their parents. Doug Lockwood, president of Hefty Wealth Partners, said that to have any legal standing – and to ensure that other relatives don’t accuse them of wrongdoing – caregivers needed to have a power of attorney while their parents were alive and to know the rules when they die.

“I get calls asking, ‘If I have online access, am I allowed to trade?”‘ he said. “I say, ‘Absolutely not.’ As the executor, you would be in violation of all kinds of rules.” As for people who do not get around to organising their digital accounts, Mr Heilmann said it would cost heirs additional money, time and anguish.

“We may know this person is receiving certain statements digitally from financial providers,” he said. “Now the executor has to go to those institutions with a death certificate and certain court appointment papers. It’s not easy and it’s not fun.”

Mr Ginsberg said a hard drive that crashed recently had financial data for his accounts and those of his 96-year-old aunt, whose affairs he manages. He said at first he could not remember her login information for an online-only savings account he had set up for her.

“I knew nothing about the account other than its URL,” he said. “I thought, what was I going to do?” That highlights one warning that advisers give: Do not go totally paperless, however tempting it may be. But even that scare was not enough to prompt Mr Ginsberg to ask his partner and brother for their digital financial information. “I’m not really that comfortable saying ‘I want to have all your financial information in case you die,”‘ he said. The alternative, of course, is to try to piece everything together after they’re gone.

Digital Estate Planning

Digital Estate Planning

By Ryan Johnson, IT Director

A news story circulated not too long ago about a lawsuit brought by Bruce Willis against Apple involving the star’s right to transfer ownership of his vast iTunes collection to his heirs when he dies. Though the story was ultimately debunked by his representatives, it raised an interesting dilemma surrounding the ownership of digital assets and the transferability of those assets posthumously.

In our increasingly digital world there is a greater need to protect the digital assets we amass over time. Digital content can be any information that is published or distributed in a digital form, including data, photographs, images, text, sound recordings, images, video, or software. Digital assets include this type of content along with one’s online persona (including passwords to and content on social media sites). Currently, there are only five states that have laws governing digital estate planning.[1] As a result, an overwhelming majority of jurisdictions lack any direct statutory guidelines governing digital asset bequeathment, leaving loved ones in a vast gray area of the law. So while traditional estate planning plays a major role in protecting both tangible and intangible assets alike, the law has been slow to evolve with emerging technology.

Traditional Estate Planning

Essentially, one’s estate amounts to anything a person owns, tangible or intangible. Traditional estates are defined as a person’s interest in land or other property and consists of items that are owned and have value.[2] As such, traditional estate planning primarily involves a three-step process to posthumously dispose of property: (1) a consultation to consider an individual’s present and lifetime needs, (2) a thorough plan designed around meeting those needs during the client’s lifetime, and (3) the creation of a unified estate plan that balances the client’s needs during his/her lifetime with the needs of his/her estate after death.[3] Our increasingly digital world has added complexity to this process by creating a whole new class of digital assets that traditional estate planning tools may not be equipped to handle.

Digital Estate Planning

Digital estate planning has other benefits beyond the ability to successfully transfer digital assets to your heirs. It also makes life easier for the estate’s executor and family members, impedes identify theft, protects the decedent’s intellectual property interests, and preserves a decedent’s digital legacy.[4]

Currently, there is no uniform standard to bequeath one’s digital estate, however digital estate planning can be something as simple executory guidelines to one’s executor listing important URLs, usernames, passwords, security codes, and other information needed to access online accounts.[5] Among the most common digital assets are licenses, which are fully transferable within a trust. To facilitate such transfers, author Joseph M. Metrek suggests providing clients with a “Digital Asset Revocable Trust” (DART).[6] Essentially, the DART, like a traditional trust, will retain ownership of digital assets beyond the life of the grantor. Consequently, a trustee would have the authority to manage and transfer authorized licensing agreements to a client’s heirs based on the needs established when the estate was created.

In addition, an executor or fiduciary can mitigate the amount of personal hardship and grievance associated with digital estate planning by following a simple set of guidelines.[7] Experts recommend that fiduciaries implement the following crucial steps when administering a decedent’s digital estate:

  • “Seek the assistance of technical help if necessary.
  • Work on consolidating virtual assets to as few “platforms” as possible (e.g. have multiple e-mail accounts set to forward to a single e-mail account.
  • Obtain statements (or data) of the prior twelve months of the decedent‘s important financial accounts.
  • Consider notifying the [individuals] in the decedent‘s e-mail contact list and other social media contacts.
  • Change passwords to those that the fiduciary can control (and remember).
  • Keep all accounts open for at least a period of time to make sure all relevant or valuable information has been saved and all vendors or other business contacts have been appropriately notified, and so all payables can be paid and accounts receivable have been collected.
  • Remove all private and/or personal data from online shopping accounts (or close them as soon as reasonably possible).
  • The fiduciary should plan on archiving important electronic data for the full duration of the relevant statutes of limitations.”[8]

Conclusion

Sadly, many will not implement traditional or digital estate plans, leaving their loved ones to sort out unfinished details of their lives. Estate planning traditionally has been a service primarily utilized by the elderly, however increasing awareness among tech savvy clients can reduce the ambivalence towards estate planning.  Essentially, digital content owners face two distinct issues; (1) whether they really own their online digital content and if so, (2) how they can pass that ownership or the use of that content on to their loved ones. One thing is for certain – without digital estate mechanisms,  such as DARTs or executory guidelines, even Bruce Willis would not be able to ensure his loved ones were legally entitled to his vast collection of blues albums.

Make Sure You Know Who Will Inherit Your Twitter Account

Make Sure You Know Who Will Inherit Your Twitter Account

Who gets access to your Facebook, Google and Twitter accounts after you die? The WSJ’s Eva Tam finds out.

People draft estate plans that carefully detail how their money and property should pass to their heirs after they become incapacitated or die.

But what about our so-called digital assets, such as an iTunes account containing thousands of songs, or a Twitter account with hundreds of followers? Can people pass those on as well? And how do they ensure that heirs get access to password-protected bank and trading accounts that exist only online?

Questions like these are popping up with more frequency—and for good reason. A popular blog or Web domain, for example, can have great, or potential, value as a business. But if the owner doesn’t take the proper legal steps ahead of time, their heirs may lose the rights to those assets. Photos, videos, email and contents of social-media accounts also may be lost.

Make a List

Justin T. Miller, national wealth strategist in the San Francisco office of BNY Mellon Wealth Management, a division of Bank of New York Mellon Corp. , says that clients often react with surprise when advisers ask about their plans for passing on things like online financial and social-media accounts. Even the technology executives he counsels, Mr. Miller says, have given little thought to how to provide their heirs with access to some of their online assets.

Katherine Dean, managing director of wealth planning for Wells Fargo Private Bank, San Francisco, says one couple worth around $20 million seemed abashed when she asked them to detail their digital assets in making a comprehensive financial and estate plan. She gave them a one-page checklist seeking information about such assets as photo and social-media accounts, Web-based games, and online-only banking and brokerage accounts.

“They said, ‘Oh my gosh, we’ve got to go online to get this,’ ” says Ms. Dean. “Whenever we hear that, we take the time to have the conversation that this is very important.”

The most important thing, estate attorneys say, is to establish procedures for protecting and granting access to passwords and for transferring assets and account ownership. The rules can vary widely depending on the vendor. While there is nothing in Twitter’s company rules and conditions that says one of its accounts must close if the owner dies, Apple Inc. ‘s iTunes says it doesn’t have a policy that allows anyone to will or inherit an iTunes account.

But even where limits exist, by placing the license and necessary passwords in a trust, access to such accounts can be preserved, says Naomi R. Cahn, a professor at George Washington University Law School.

Ms. Cahn explains: Many digital assets are owned through a license that is limited to the account-holder and nontransferable. The license may cease to exist when the account-holder dies, so it can’t be transferred in a will. But by placing the license in a trust, it is possible that the license will survive the death of its creator.

Wills play an important role, too, Ms. Cahn says, mainly in stating who should receive any digital property that is capable of being inherited. A will can also designate who will have access to digital accounts, although this may not be legally binding.

Estate advisers caution against listing digital assets and passwords in a will because the will can become public. Such information instead should go into a separate letter, says Lesley Moss, an attorney at law firm Oram & Moss in Chevy Chase, Md.

Looking for Legislation

A group of states is interested in drafting a law that would make it easier for consumers to bequeath online property by giving fiduciaries the right to manage and distribute their clients’ digital assets.

Lawyers, judges, legislators and law professors from the Uniform Law Commission, a group appointed by state governments to draft and promote new state laws, met this summer to discuss such a proposal.

Currently only Connecticut, Idaho, Indiana, Oklahoma and Rhode Island give fiduciaries this right.