Protecting Your Digital Estate After Death

Protecting Your Digital Estate After Death

Estate law has roots that go back a thousand years into the British legal system, but the changes in technology are flipping these laws on their ear. The average American’s digital footprint is valued around $55,000, notes the Loyola University New Orleans College of Law. The majority of people do not have a plan for their digital assets and the laws are too antiquated to handle the process. This lack of forethought leaves the deceased at risk of posthumous identity theft, loss of transferable assets, and digital fraud.

What Is A Digital Estate?

In the Science Technology Law Journal, researcher Jamie Patrick Hopkins defines a digital estate as anything that only exists in a binary form of numeric encoding. These include uploaded photographs, electronic documents, emails, and software. These are all potential intellectual properties that are floating around the Internet after death. Intellectual properties can be big money. A report by the National Bureau of Asian Research shows intellectual property fraud in the United States can exceed $300 million. Digital estates hold many of these intellectual properties, but the decedent often does not plan to secure and bequeath the property. Instead, these properties become part of an inadequate legal system.

Laws Governing Digital Property

Out of 50 states, 31 have no laws on the books that specifically govern digital estates, reports Everplans. Other states, like Delaware, have enacted legislation that allows fiduciary access to digital accounts. The implications of these laws are huge. Imagine a hotly contested inheritance between spouse and children. One claims there is a picture on the dead person’s phone that will prove the case. The states that have these new laws on the books will give legal status for people to get account passwords and information that would be the deciding factors in cases like this.

The National Conference Of Commissioners On Uniform State Laws is trying to codify this patchwork system throughout the states. It is called the Fiduciary Access To Digital Access Actand the draft gives guidelines on how the states will release digital information to attorneys, trustees, and beneficiaries of an estate.

Protecting Your Digital Estate

All estate planning has one rule: start when you are still alive. Yes, there is a certain amount of obviousness to the rule but the newness of digital laws makes this even more important. You no longer have the luxury of allowing the established laws to handle your estate. Include all of your intellectual and digital property in your will, including passwords. Internet security company LifeLock recommends changing your password often. This is good information for protecting your electronic assets, but make sure to give permission to access your accounts after your death.

Digital assets need to be enumerated in your will or trust. Some of the specifics need to include file names and descriptions of intellectual properties, account permissions, and image usage criteria. Also remember that wills are public record so a trust may be a safer way to transfer digital rights.

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Do You Need a Digital Estate Plan?

Will your estate executor have access to your digital estate? Do you know what is involved in a digital estate plan? It’s more than signing your paper will.

Is it enough to leave your email password on a notepad beside your computer?

Sorry, no. You need to learn more digital dos and don’ts.

Digital assets are various online or electronic files with your personal information. They include financial resources and social networks. Digital assets can include personal data with high emotional value. You could also have digital business property with monetary value. Digital assets can be stored electronically, online, in the cloud or on physical devices.

Passwords Can Control Access

Access to your online information or electronic storage is vital. Who should have access to your passwords?

When you make a will, you can appoint a digital executor. You can authorize your executor to hire experts to handle digital assets. You must, however, share passwords and login information to manage such assets.

Executors face a dilemma; in some cases, you may not have ownership of some digital property. Instead, only a non-transferrable access license may exist. Social media user agreements may only permit network access with a personal password. There is nothing to own or sell.

But executors have a duty to collect estate assets. Will they have to hunt for your passwords and usernames?

What about your material in the cloud, on social media or video sites? You can create a digital estate plan and specify your preferences. How is your executor to handle your digital accounts? Should files be closed, maintained or memorialized?

Secure Devices

Estate trustees must be aware of their duties to secure devices with digital information. This includes cell phones, tablets, laptops and computers.

Documents, photos, videos, text messages can be personal or business materials. Executors may not be able to distinguish between these.

Digital assets may have emotional and personal connections for your survivors. This may not translate to monetary value to calculate probate or income tax. However, the loss or expiry of a business domain name or blog can affect online sales and value.

Customer subscription lists and shopping carts can be stored online for businesses. Trademarks, copyrights and creative work can be considered assets and intellectual property. What about the value of an unpublished manuscript or musical composition?

Your online financial accounts may automatically pay utilities, credit card bills, income taxes or loan payments. Your digital estate property can include:

  • blogs
  • domain names
  • online photos and music
  • memorial websites
  • shopping networks
  • loyalty and reward programs

Credit card agreements may impose deadlines for the transfer of rewards or membership points.

Do Not Store Passwords in Wills

You need to store your digital information somewhere other than your will.

Once probated, your will and any password information become public. This could lead to fraud, cybercrime and identity theft.

Many online services store passwords and access codes. These may promise confidentiality. Their guarantees may be short-lived when such businesses fail. Also, digital laws will likely change and courts can order disclosure of such records.

Executors must be aware that online fees can continue to be charged and go undetected. Credit card payments or debt service accounts may have been set up for automatic payments. Without paper statements, executors may be unable to track them.

Digital worlds often have no paper trail to follow. User agreements may prohibit the transfer of passwords and access to anyone other than the registered user.

Can your executor answer your secret questions?

When asked, “What is your favourite bar beverage?” my answer is, “who’s buying?”

Digital Assets

Digital Assets and Death

Death is emotionally difficult enough without discovering that you have no idea what digital assets a person had or what they wanted done with them.

A growing concern among those wishing to properly manage their digital estate is “digital death,” which questions what is an asset or special relationship—and how to balance privacy and security with passing on relevant information. A recent Smart Company article, titled The business of digital life and death,” reports that 70% of 65-74 year-old Americans are on Facebook, and there are 30 million accounts that belong to individuals no longer alive. The article cites several factors in 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; however, as younger generations start to look at planning for the future, it will become more relevant as it will be more common and because the legal treatment of digital assets after death is clearly defined.

It seems every social media platform has a different approach to dealing with the death of one of its users. Facebook 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 people are able to view but not share. The original article notes that 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 that you do not use your Google account for a period of time. Google will then notify and allow the person you have named 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 that 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.

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Do You Have a Plan for Your Digital ‘Estate’?

When a close family member of mine passed away back in the spring, no one was surprised that this meticulous planner had left his financial affairs in good shape. The family’s longtime financial advisor coached his wife about how to open an inherited IRA to stretch out the tax-saving benefits of the vehicle, and the family attorney got to work on tying up all of the other loose ends, both financial and legal. But not every aspect of his estate has been attended to, almost six months later. His  LinkedIn (LNKD) profile is still up, as is his old  Facebook (FB) page. In the scheme of things, the fact that those accounts are still live may not seem like a big deal. But that may not have been what he had wanted, either. Because he never specified his wishes for those accounts, his family doesn’t really know. My relative’s situation illustrates that even people who think they’ve ticked off all of the usual boxes on their estate-planning to-do lists may have overlooked an increasingly important component of the process: ensuring the proper management and orderly transfer of their digital assets after they die or become disabled. Just as traditional estate-planning relates to the management and transfer of financial accounts and hard assets, digital estate-planning encompasses your digital possessions, including the tangible digital devices (computers and smartphones), stored data (either on your devices or in the cloud), and online user accounts such as Facebook and LinkedIn. The basic idea is to knit these digital assets in with the rest of your estate plan. “We need to do the next step in planning,” says James Lamm, an attorney who coaches other attorneys on the importance and specifics of digital estate planning. “Who should get the data? And more importantly, are there things we don’t want others to have?” ‘The New Reality’
As we’re all spending more and more time pecking at our phone screens and transacting online, digital assets are taking up an increasingly important role in all of our lives. “The new reality is that our lives are largely digital, and the artifacts of our digital lives have value, from both sentimental and financial standpoints,” notes Evan Carroll, co-founder ofTheDigitalBeyond.com and co-author of Your Digital Afterlife, a book about digital estate planning. At first blush, making plans to allow your loved ones to gain to access your digital property may not seem like a pressing concern–certainly not on par with issues like who should inherit your financial accounts or look after your minor children. Lamm concedes that many digital assets have little or no financial value. But he also notes that “there can be significant value if you know what to look for.”  An obvious example of a valuable digital asset would be a manuscript on the PC of a best-selling author. But domain names and advertising from Web pages and blogs may also have financial value. Downloaded assets such as digital music and book libraries may be worth something, too. And even if they don’t have monetary value, digital assets may have sentimental worth. If you don’t specifically outline what should happen to such assets when you craft the rest of your estate plan, Carroll notes that “The implications could be that your wishes are unknown to your heirs and they won’t have access to precious family mementoes or important documents.” Logistical Hurdles Abound
Digital estate planning is, in many respects, more complicated than traditional estate planning. Whereas finding and managing financial and hard assets after a loved one has died or become incapacitated isn’t always straightforward, identifying and gaining access to the digital assets of a loved one is apt to be an even more cumbersome process. Lamm says that unless the owner of those assets has left specific guidance about the existence and whereabouts of the digital assets, the deceased or disabled individual’s fiduciaries may not even be aware of their existence. Additionally, those digital assets may not only be password-protected or encrypted, but they may also be covered by data-privacy laws or criminal laws regarding unauthorized access to computer systems and private data. Fiduciaries may be able to unearth passwords and gain access to their loved ones’ online accounts, but they may not be doing so legally. The field of digital estate planning is also evolving rapidly, as are digital providers’ policies on what should happen to digital assets that are left behind. For example,  Google (GOOG) has created an Inactive Account Manager, which allows you to name a trusted person who can gain access to your data once your accounts have been inactive for a certain period of time. Facebook, meanwhile, does not currently allow others to gain access to data stored on the social media firm’s site. Digital assets are also governed by a complex web of rapidly evolving laws, both at the state and federal levels. The fact that state and federal laws and digital providers’ rules are so piecemeal, notes Carroll, should serve as an impetus for individuals to “take a few minutes and get their plans in order.” Here are several key steps to take. 1) Conduct a Digital ‘Fire Drill’
Lamm thinks a good first step in the digital estate-planning process is to conduct a digital fire drill, which tends to jog clients’ memories about what digital assets they deem important. He urges his clients to consider the following questions:

  • What valuable items would you lose if your computer was lost or stolen today?
  • If you were in an accident, would your loved ones be able to gain access to your valuable or significant digital information while you were incapacitated?
  • If you were to die today, to what valuable or significant digital property would you like your loved ones to have access?

2) Take an Inventory of Your Assets
The next must-do is to create an inventory of the digital assets you named during the fire drill. Document the item/account name as well as user names and passwords associated with that item. Among the items to document in your digital inventory are:

  • Digital devices such as computers and smartphones
  • Data-storage devices or media
  • Electronically stored data, including online financial records, whether stored in the cloud or on your device.
  • User accounts (Facebook and LinkedIn accounts, for example)
  • Domain names
  • Intellectual property in electronic format (a book you’re working on, for example)

As with the “master directory” I’ve discussed in the past, this document is chock-full of sensitive information, so keeping it safe is crucial. A printed document will tend to be the most vulnerable, unless you store it in a safe or safe deposit box. A password-protected electronic list of your digital assets and instructions on how to gain access to them is a step in the right direction, but it, too, will need to be updated on a regular basis as passwords change. Lamm is a fan of software programs such as LastPass and Dashlane, which securely store your online account information and passwords on your computer and smartphone. Web-based services such as LegacyLocker and AssetLock aim to take the extra step of making this information available to your fiduciaries, after a verification procedure. Lamm recommends a hybrid approach for most individuals. Maintain an electronic list of digital property and passwords, protected with strong encryption and a strong password and backed up in the cloud (as opposed to on your computer and smartphone alone). From there, he advises creating a master password for the electronic list, storing the password in a safe deposit box or home safe, and providing fiduciaries and family members with instructions about how to gain access to it. 3) Back It Up
We’ve all been schooled on the importance of regularly backing up digital assets, and Lamm points out that estate-planning considerations make it doubly important to do so. Even if a specific device malfunctions, storing digital assets on another storage device or in the cloud helps ensure the longevity of those assets. Moreover, online account service providers may voluntarily disclose the contents of electronic communications, but they’re not compelled to do so. If you want to help ensure that your loved ones have access to the information in your online accounts, backing it up on your own device is a best practice. 4) Put Your Plan in Writing
Experts also recommend formalizing your digital estate plan. That means naming a digital executor–someone who can ensure that your digital assets are managed or disposed of in accordance with your wishes after you’re gone. If your primary executor is savvy with technology, there’s probably no need to name a separate digital executor. But if not, or if you have particularly valuable or special digital property, such as intellectual property, Lamm advises a separate fiduciary/executor for digital assets.  Depending on the type of property, the fiduciary may also need special powers and authorizations to deal with specific assets. “Because of the complexities of criminal laws and data-privacy laws,” Lamm says, “you need the right kinds of authorizations in place.”  He also advises individuals to mention specific digital assets in their wills. “If you don’t want to pass it on, that’s fine. But if I had something valuable I wanted to pass on, I’d put it in my will.”