Passwords and Powers of Attorney: Your Digital Estate Planning Options

Passwords and Powers of Attorney: Your Digital Estate Planning Options

Senior woman using laptop computer
Digital planning sites encourage you to discuss end-of-life issues with your family, record your wishes and then make it easy for family members to find them when necessary.

We don’t like to talk about the end of our lives, but it’s something that is important to plan for, both for ourselves and for those we leave behind.

These days, estate planning includes not only who will inherit our worldly goods when we die, but also what will happen to our digital legacies. While the digital passwords of our lives may be needed by our heirs after our deaths, it’s not exactly practical to update our wills every time we add a new password.

New companies are springing up to help us make plans and gather all the information our heirs will need in one place. Not only do the services provide a digital value, they provide prompts to encourage us to think about issues we haven’t put in writing, such as what music we would like playing in our final hours.

“I can’t tell you how important it is to have all this information in one place,” says Abby Schneiderman, co-founder of Everplans.com, which started out as a content site and then grew into a planning platform after her brother’s death in a car crash in 2012. “It helps people get together all of the important information and documents the family needs in the event of an emergency or, even worse, a death.”

Everplans is one of several companies that allow you to create a digital repository of your wills, health care directives, funeral wishes, plans for your pet, desires for your Facebook page, what you’d like to see in your obituary, family photos and even your grandpa’s cherished spaghetti recipe. You can enter information during your life that you want your family to find when you die or share information with family now.

Steve Byrne, co-founder of FinalRoadmap.com, says many of his clients are baby boomers who are struggling to figure out what their parents want. They don’t want to put their children into the same position. The sites drill down into much more detail than you would typically include in a will or an advance health care directive, down to what interventions you want and who you want in the room while you’re dying.

If you’re in an accident, for example, who has the power to make decisions for you? If you’ve given your sister that responsibility, how will your doctors know, and does she have a copy of the document?

“People say I don’t want to be a vegetable, but what does a vegetable mean?” Byrne says. “Our mission is to encourage people to think about, to document and share end-of-life wishes.”

Everplans and Final Roadmap are two among a number of sites that provide this type of service, including The DigitalBeyond.com, PlannedDeparture.com, AfterSteps.com and PrincipledHeart.com.

All sites encourage you to discuss end-of-life issues with your family, record your wishes and then make it easy for family members to find them when they’re needed. “What we try to do is not only have a place for everything, but guide them through those questions,” Byrne says. “There are people still years after they’ve made decisions wondering if they did the right thing because it was just a guess.”

You can designate whom you wish to see specific information and whether you want to share it now or not until after you’ve passed.

“I try to make this as easy as possible for people to have this all in one place,” says Byrne, who founded the site with his wife, Kerry Shannon, a health care consultant. “We want people to do this while they’re healthy, while they still have the faculties. … We try to tell people this is not about dying, this is about planning ahead.”

The sites provide places to upload wills, trusts, health care directives, powers of attorney and even appraisals of valuable items you may own. You may also be asked to record the location of notarized and signed copies of documents and the contact information for your estate planning attorney.

Users can add all kinds of details, from records of their pets’ health, to family genealogy, to password for online accounts to instructions on how elements in the house work. “I guess you could call it a smart vault,” Schneiderman says.

Everplans charges $75 a year, while Final Roadmap charges a one-time fee of $249, with discounts for multiple users. The services also have options for sharing all the aspects of your digital life, from passwords to bank accounts to the message you want sent to your Twitter followers after you’re gone.

“I consider [digital estate planning] in this day and age traditional estate planning,” says Wendy Goffe, an estate lawyer who is a partner at Stoel Rives in Seattle. “Your digital life is a big part of your life. For some people, that’s the biggest part of your life.”

Goffe cautions that everyone’s situation is different and no online service can replace the advice of an experienced attorney who understands your situation. “You don’t know what you’re not getting,” she says. “A program only gives you what you ask for, and you’re not always asking the right things.” Your digital life may include valuable intellectual property, for example, which requires more planning than what to do with your Facebook status updates.

The other issues people need to be aware of with online repositories, she says, are security and what will happen to your documents if the company goes under. One option for customers might be to print out copies of everything they place online and let a family member know the location of those paper documents.

Here are seven factors to consider when doing your end-of-life planning:

Legal documents. Most people need a will and some would benefit from a trust. You probably also want to designate a health care surrogate and leave an advance health care directive. Exactly which documents you need may vary by state and situation, so consulting with an estate planning lawyer is advisable.

Digital legacy. What do you want to happen with your online accounts when you pass on, and how will your heirs find all the passwords? If you own intellectual property such as e-books, photos or other copyrighted material, you may want to consult an attorney.

Business future. If you own a business, what will happen to it when you die or are unable to run it? Would someone be able to find everything they need to run your business temporarily if you were in an accident? Once you die, does someone inherit the business or will it be shut down?

End-of-life wishes. A health care surrogate and an advance directive will cover your legal bases, but you may want to give your family, especially the person who will make decisions for you, more details about when you would like heroic measures taken and when you would prefer no interventions. Do you have specific ideas on who you would prefer to be with you and what you want the atmosphere to be when you’re dying?

Funeral plans. Do you want burial or cremation? Are there specific readings or songs you want at your service or people you would like to have speak? What do you want included in your obituary? How will your family know whom to contact with the information that you have passed?

Assets. If you died tomorrow, would your heirs be able to find all your assets? Is all your beneficiary information current on your retirement accounts and life insurance? Do you need to leave passwords to access accounts?

Day-to-day details. Will you heirs know how to pay the water bill, the mortgage and other home chores? If you rent, will they know how to contact your landlord? These items will need to be handled while your home is waiting to be sold or occupied by another family member.

Who will get your iTunes when you die?

An electronic immortality

Human fascination with immortality stretches back to the time of Greek mythology with history littered by charlatans, oddballs and megalomaniacs either claiming or seeking the secret to eternal life.

However, the modern tech-savvy generation has discovered, quite by chance, that an immortality of sorts is now freely available via the digital footprint they leave should they meet an untimely end.  It’s estimated that on Facebook alone, more than 30 million accounts belong to people who are deceased.

As if the pain of coping with the death of a loved one isn’t difficult enough, friends and family must now consider the implications of the deceased’s online life to go with their material existence.

Your online footprint
Think for a moment about your own digital presence.  You’ll almost certainly use online banking and shopping facilities, perhaps an online wallet like PayPal, email accounts, a frequent flyer program, a social media presence via Facebook or Twitter, along with potentially thousands of personal files, receipts and photographs.

Most people already understand the importance of estate planning to help pass on worldly goods such as housing, savings and mementos to their beneficiaries.  But how will your heirs even gain access to your computer and your passwords?

Like so many laws relating to the digital world, many are outdated or irrelevant, and several online services have already established their own policies.  For instance, Twitter allows family or friends to download a copy of your public tweets and close your account.  You need to nominate someone in advance to provide their name and contact details, their relationship to you, your Twitter username and a link to or copy of your obituary.

Digital executors
No laws currently exist in Australia to grant a Will’s executor automatic access to someone’s social media accounts.  However, there are still several options available to help decide on how your online legacy is managed.

The first step is to create a Digital Will.  In addition, you will need to select a trustworthy digital executor to handle arrangements for your digital assets and digital legacy once you are gone.  Similarly, if you run your own business, it will have its own digital incarnation and its own digital legacy to maintain.  Some Australian Will makers offer Digital Wills so people can ensure their online legacy lives on – or fades away – in accordance with their wishes.

Online vaults for safe storage
An increasingly popular alternative is to store important documents and passwords in an online vault.  The likes of SecureSafe, Legacy Lockboxor Assets in Order pledge to provide secure online storage of passwords and documents.

Password management accounts can be set up using software such as Norton Identity Safe while Google recently introduced a new program called Inactive Account Manager, which enables you to choose in advance exactly what you wish to have done with all your Google data – from Gmail accounts to YouTube videos.

Considering how much of our communication takes place online these days, it’s worth investing some time thinking about your digital footprint and what is required to manage it when you’re gone.  A good time to do this might be when next reviewing your Wills and Powers of Attorney.  With a little thought and preparation, you can leave a lasting legacy to your loved ones, well beyond photos or videos, and avoid complications associated with your ‘digital immortality’.

The importance of digital asset planning explained

5 Ways to Avoid Estate Planning Disasters

So much can go wrong in estate planning. Financial accounts can be frozen for lengthy periods. Conflicts can arise among heirs over disbursement of property and assets. Blended families can experience trauma as tensions arise between step-siblings, step-parents, and natural heirs.  Taxes can take a huge chunk of a family’s estate.

And all of these problems occur as a family is grieving the loss of a significant person in their lives.

As a financial advisor, you are on the front lines of helping families avoid estate planning disasters which will lessen the chance for survivor disputes, and allow the family to more fully heal.

Here are 5 specific ways you can help families succeed:

  1. Build rapport with both spouses. A death is no time for the surviving spouse to get to know you. Having a relationship with you will help the survivor feel more confident after the death of their loved one. Even if it seems a little forced at first, have both spouses involved in the estate planning process as much as possible upfront. Have candid discussions about legacy wishes, including the transfer of assets to step-children.
  2. Get to know the next generation. Connecting with your clients’ heirs and communicating your client’s legacy wishes is vital to avoid estate planning issues. Consider an open house or family legacy planning retreat where you gather as many of the heirs as possible to discuss wealth transfer and values. You should also explain your process so the next generation will feel more comfortable with your advice, and see you as a trustworthy guide.
  3. Devise a transfer plan for non-beneficiary accounts. Accounts such as trusts and IRAs with named beneficiaries transfer quite easily after a death. But gaining access to a brokerage, checking or savings account can be difficult once the custodian is notified of the death. Make sure you have a plan to re-title or transfer accounts immediately upon the death – or place the accounts within a revocable trust. This will help heirs avoid awkward disruptions in disbursements, or being frozen out of checking accounts.
  4. Coordinate with allied professionals.Get to know your clients’ other advisors by offering to send copies of their statements and insurance policies to their attorney and CPA. Ensure that all the estate-planning details are covered, including:
    • Naming of trustees, administrators and healthcare proxies.
    • Designation of beneficiaries on life insurance policies, retirement accounts, and annuities.
    • End-of-life planning such as medical and health directives, and issues of incapacity with durable powers of attorney.
    • Funding of revocable trusts to control all assets not previously assigned through beneficiary designations, including real estate.
    • Re-titling of clients’ home, rental property, securities, and personal property into the revocable trust.
    • Charitable gifting plans.
    • Business-succession plans, including buy-outs and life insurance.
  5. Become more knowledgeable. Estate planning can be complicated. But the good news is you don’t have to know everything to serve as a valuable facilitator for your clients. Find two or three well-regarded estate planning lawyers in your general geographic area with whom you can start doing work. You can find them through client referral, the American College of Trust and Estate Counsel, local estate planning councils, or the state bar association. Find CPAs, as well, through client referral, or the American Institute of Certified Public Accountants. Educate yourself about estate planning basics on Elder Law Answers, so you can familiarize yourself with the various kinds of trusts and tax exemptions.

By taking these steps,  you’ll help clients minimize their tax burden, avoid probate, as well as avoid intra-family disputes. That’s a win-win situation.