Ten years ago, I’d never have thought about writing about digital legacy planning. But when I think about my digital assets (photos, documents, music, blogs, business records, etc.) and my digital accounts (emails, bank accounts, subscriptions, etc.), I know I’ll want to provide for someone to handle them (1) […]
8 Documents That Are Essential to Planning Your Estate
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If you want loved ones to remember you fondly, tackle your estate-planning tasks. Your heirs will thank you for not leaving a legal mess to sort out.
Many of us want to get going on this planning, but don’t know where to start. Here’s what you should know about eight documents that can help you get your affairs in order.
If that sounds like a lot of paperwork, don’t worry: You probably won’t need every document. And if you’re wondering where to find the documents you do need, not to worry: Just head to our partner Rocket Lawyer, where you’ll find everything you need cheap.
1. Last will and testament
A will gives you the power to decide what is in the best interests of your children and pets after you’re gone. It also can help you determine what will happen to possessions with financial or sentimental value. It typically names an executor — someone who will be in charge of following your directions. Finally, you can include any funeral provisions.
Use your will to name guardians for those under your care, including minor children and pets. Designate any assets you are leaving for their care.
If you’re married, your spouse needs a separate will, AARP says.
In the absence of a will, a probate court will name an executor — typically a spouse or grown child — for your estate. Probate proceedings are a matter of public record. So keep private information — passwords, for example — out of your will, as that information could become part of a public document.
2. Revocable living trust
A living trust is another tool for passing assets to heirs while avoiding potentially expensive and time-consuming probate court proceedings.
You name a trustee — perhaps a spouse, family member or attorney — to manage your property. Unlike a will, a trust can be used to distribute property now or after your death.
If you have substantial property or wealth, a trust can provide tax savings.
ElderLawAnswers further explains the differences between trusts and wills. Creating a trust is not a do-it-yourself project. Get an attorney’s help.
3. Beneficiary designations
When you purchase life insurance or open a retirement plan or bank account, you’re often asked to name a beneficiary, which is the person you want to inherit the proceeds when you die. These designations are powerful, and they take precedence over instructions in a will.
Keep beneficiary designation papers with your estate-planning documents. Review and update them as your life changes.
4. Durable power of attorney
This document allows you to choose someone to act on your behalf, financially and legally, in the event that you can’t make decisions.
Don’t put off this chore. You must be legally competent to assign this role to someone. Older people worried about relinquishing control sometimes put off the task until they are no longer legally competent to do it.
5. Health care power of attorney and living will
To ensure that someone can make medical decisions for you in the event you become incapacitated, establish a health care power of attorney — also called a durable health care power of attorney. This is different from the previously mentioned durable power of attorney for financial and legal affairs.
A living will lets you explain in advance of your death what types of care you do and do not want, in case you can’t communicate that in the future. It’s strictly a place to spell out your health care preferences and has no relation to a conventional will or living trust, which deals with property.
“You can use your living will to say as much or as little as you wish about the kind of health care you want to receive,” says legal site Nolo in a detailed article.
6. Provision for digital assets
Decide what to do with your digital assets, including your computer hard drive, digital photos, information stored in the cloud, and online accounts such as Facebook, Yahoo, Google and Twitter. Be sure to include a list of your passwords.
“What Happens to Your Email and Social Media After You Die?” explains how to make these decisions.
7. Letter of intent
For instructions, requests and important personal or financial information that don’t belong in your will, write a letter. Use it to convey your wishes for things you hope will be done. For example, you may have detailed instructions about how you want your funeral or memorial service to be performed.
No attorney is needed. The letter won’t carry the legal weight of a will.
8. List of important documents
Make certain your family knows where to find everything you’ve prepared. Make a list of documents, including where each is stored. Include papers for:
- Life insurance policies
- Pension or retirement accounts
- Bank accounts
- Divorce records
- Birth and adoption certificates
- Real estate deeds
- Stocks, bonds and mutual funds
Another item helpful for your heirs is a list of bills and accounts, including contact information and account numbers for each, so your representative can settle and close these accounts.
Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.
Get Your Digital Accounts Ready In Case of Death
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Antonio Giovanni Pinna
On March 7, 2019, Myrna M. DeLeon passed away, days before her 65th birthday. “Her death was completely unexpected,” said her daughter and my brother-in-law’s wife, Casey. In the emotional aftermath for the family, one thing made the grieving process less stressful: Myrna’s “in case of death” preparations. She had filed important documents in a safe and kept a categorized “little black book of information.”
“She was a nurse who was organized in the operating room, and she took that skillset of organization and advanced thinking into our home life as well,” Casey said. “For example, ‘B’ was not for people with the last name starting with B, but for banks and other financial institutions. It listed account numbers for policies and phone numbers to call for claims.”
Casey and her brother had set up their mom’s phone and email, so they knew her passwords for those, which proved essential. “All of her contacts were in her cellphone, and I needed those to inform them of Mom’s passing. I also needed to ask her colleagues how their union benefits worked so I could get answers as quickly as possible.”
Preparing for your eventual demise is a gift your loved ones will appreciate even as they mourn your loss — and it will give you peace of mind in the present, too. Most people have thought about setting up a will and doing other estate planning, but you should also arm your family with the most essential information they’ll need in the immediate days and weeks after you’re gone, preferably in one easy-to-access place. Here’s how to set up a digital version of Myrna’s “little black book” for simple and secure information sharing with family members and trusted friends.
Step 1: Share your account logins and other secure information with a password manager
Everyone should use a password manager, software that securely and conveniently stores all your account logins as well as notes you want to keep under virtual lock and key. With 1Password or LastPass, Wirecutter’s favorite password managers, you can share the critical information your family will need to know after you’re gone, such as important contacts and insurance details. The individual plans offer basic sharing features, but for these purposes a family plan is better because it provides accounts for your whole family.
With 1Password for Families ($60 per year), up to five people get their own account, you can easily move or copy items across accounts, and a designated person can help someone else in the plan recover their master password. LastPass Families ($48 per year) offers similar features for up to six people. Wirecutter prefers 1Password for its combination of security, compatibility with various devices, and ease of use, but if you want to save a few bucks a year, LastPass is a good option.
To share vaults in 1Password for Families or folders in LastPass Families, the process is roughly the same:
- Click People in 1Password or Manage Family in LastPass, and invite members via email.
- Once they accept your invitation, each family member creates a master password for their account and gains access to the shared vaults or folders.
- Each family member can then add passwords, secure notes, bank info, contact info, files, and more in the shared vaults or folders.
To access all this information, the only thing each family member needs to remember is the one master password they set up for their account.
Step 2: Record and save emergency info
In addition to passwords, you should make other personal information readily accessible. These items include:
- Instructions in case of death: Be sure to include details such as burial or living-will wishes.
- Important logins or security codes that aren’t website logins: List your computer password, your phone PIN, the code to the fireproof safe, and so on.
- Important contacts: Indicate who to contact at your workplace, as well as your lawyer, accountant, will executor, and insurance agents.
- Locations of valuables and critical papers: Note the whereabouts of wills, passports, Social Security cards, birth certificates, and any other legal documents that are difficult to get copies of.
- Recurring-bills details: Specify when the bills are due and how they’re paid (if they’re autopay or where to send a check).
- Financial account details: List your retirement and investment accounts, insurance policies, bank accounts, and credit cards.
You can create a secure note in your password manager for each of the items above. Or, if you want a free option or if some family members aren’t likely to use a new app, you can create a password-protected spreadsheet that contains this information. We’ve created an emergency-information template as an Excel spreadsheet (which you can import into Google Sheets following these instructions from How-To Geek) for you to get started.
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Step 3: Set up dead-man switches and assign custody for your digital accounts
A dead-man switch is a security feature on trains that requires operators to hold a handle on a control board so that if they let go, the switch applies the emergency brakes. A dead-man switch in non-transit terms notifies loved ones and can disable your accounts if you fail to respond to prompts. This feature is especially useful for people who live alone, because you want others to notice you’re gone as soon as possible. Google is perhaps the most important account you might want this feature for, if you use Gmail or store files in Google Drive: You can instruct the Inactive Account Manager to either delete your data or share your Google accounts with someone you trust after a period of inactivity.
Pick one person to manage your social media accounts to either preserve your memory or delete those accounts. Facebook, LinkedIn, Tumblr, Twitter, and other social media accounts all offer options for enabling your loved ones to manage your accounts, but you’ll need to change those settings before you die, of course.
Step 4: Drill practice — teach your loved ones how to survive without you
After you’ve done all the above, you should share the details with your family (you can also share select information in the password manager with a power of attorney or a trusted friend). Make sure they accept the password manager invite, install the apps, and know how to use them. Set up a calendar reminder to update your info at least once a year. And since no one likes talking about death, have that talk while you’re healthy so that your family won’t worry unnecessarily. Reassure them that all this preparation is a “just in case” measure, and you’re doing it for everyone’s peace of mind.
[ If you are having thoughts of suicide, call the National Suicide Prevention Lifeline at 1-800-273-8255 (TALK) or go to SpeakingOfSuicide.com/resources for a list of additional resources. ]
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A version of this article appears at Wirecutter.com.
An estate plan is a cornerstone of any comprehensive financial strategy. On a practical level, it can help ensure that your assets are distributed in keeping with your wishes. It can also provide you with a significant emotional benefit. Simply knowing that your affairs are in order can give you peace-of-mind that your legacy will be carried out the way you intend, without creating needless legal or administrative burdens for your loved ones.
Traditionally, estate plans have involved creating wills, naming beneficiaries for various financial accounts and establishing trusts. In today’s world, there’s an additional estate planning concern — determining how to manage your digital assets.
The growing importance of digital assets
Think about how much of your life is connected to your computer, mobile phone and other devices. Your digital footprint may be as basic as an email account or a social media page. But, if you’re like a growing number of consumers, your virtual assets may also include digital purchases made (books, music, movies), financial accounts, website domains and perhaps even cryptocurrencies like Bitcoin.
Now imagine what will happen to your digital assets when you pass away. Will your loved ones have access to those assets and accounts or know how to manage them in line with your wishes?
If the answer is no, now’s the time to address this gap as part of your estate plan.
New legal solutions
In the past, it may have seemed sufficient to simply list out usernames and passwords and make sure that list was available to a trusted individual. However, if a third party had access to your login information, it didn’t necessarily mean they were recognized as an authorized user of the account. Their attempts to access your accounts could result in unintended consequences (i.e., they could be accused of hacking).
Recently, new legal solutions, such as the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), have emerged to address this issue. RUFADDA, which applies in most states (check here to see if your state is included), allows individuals to designate a fiduciary to legally access their digital assets after their death or before their death if they lose the ability to manage the account. You can grant this authorization through a will, power of attorney or trust.
Meanwhile, some digital providers have started to offer ways for you to name authorized users within your account. For example, Google has a tool referred to as “Inactive Account Manager,” through which you can authorize another individual to access your account information in the event that you are no longer living or able to. Facebook has a similar feature that allows you to choose a “legacy contact” to take control of your account after you pass.
These are just some of the measures that make it easier for you to account for your digital assets as part of your estate plan.
Tips to get started
It will take a proactive approach to get your digital estate plan in order. But it’s well worth the effort. Here are five steps you can take to get started:
- Take inventory of all of your digital assets. Include any online accounts, no matter how basic or complex.
- Make sure you have username and password information documented in a secure place. You may want to consider using a password management tool. Designate a trusted individual who will have the ability to access to your login information after you die.
- If RUFADAA is applicable in your state, determine if online accounts offer a way for you to spell out your legal custodians and, if so, complete any required electronic forms.
- Update your will, trust and power of attorney documents to authorize the individuals you would like to serve as fiduciaries to access your digital assets. Indicate who will have access to what.
- Enlist the support of professionals to help you manage the estate implications of your digital assets. An estate planning attorney and a financial adviser can work together to help you develop a comprehensive plan that matches your legacy wishes.
While none of us will live forever, our digital lives can, theoretically, continue indefinitely. Taking these steps can help you create a legacy consistent with your wishes and values.
Ameriprise Financial Services Inc. Member FINRA and SIPC.
Marcy Keckler is the Vice President of Financial Advice Strategy at Ameriprise Financial. She also oversees the Confident Retirement program. Marcy has been with Ameriprise Financial (formerly American Express Financial Advisors) for 21 years in a variety of positions in financial planning, marketing and interactive development.
Comments are suppressed in compliance with industry guidelines. Click here to learn more and read more articles from the author.
Using one of the popular personal finance apps intended to help you manage your money requires a step that causes some people to pause: when the app or site asks you for the passwords to your bank accounts and credit cards.
How safe is it really to turn over the password to the Bank of You? Aren’t we all constantly advised to do just the opposite, as in, don’t ever give anyone your password to anything or you will be inviting digital death and destruction?
We live in an era of data breaches, identity theft and online fraud. Heck, we’ve even cautioned against posting something as innocuous as your mother’s maiden name on Facebook because you’d be giving away the answer to a popular bank security question.
But platform developers and managers of these personal finance apps say they need your confidential information in order to help you manage your money. They promise they can find ways to reduce your bills, help you pay off debt, sock more away in savings, and learn how to invest wisely. Plus, they promise to protect your private data with multiple layers of encryption and security best practices.
Online security experts have strong thoughts about the wisdom of giving out your personal security information to third parties. It’s a game of “who do you trust?” they say. And, as with every online platform we use, it’s a matter of balancing the risk you’re taking against the potential reward.
And yes, there is undeniably a risk.
Find the sweet spot.
If a platform is claiming it is unhackable, well, just run, said Stephanie Carruthers, a “white hat” or ethical hacker known as Snow, whose clients include Fortune 100 companies as well as startups. Nothing is unhackable, she said.
While Snow recommends against any money-management platform that asks for your security information, she told HuffPost that “most of these apps have value and can be beneficial.”
The trick is to find the sweet spot, where the benefit justifies the risk. Carruthers suggested reading an app’s terms of service agreement to know how the information you provide will be used and the responsibility of the data collector. In other words, if the information you provide is compromised, what risk is there to you and your money?
Ilian Georgiev is a co-founder of HiCharlie, a relative newcomer to the personal finance management-by-app niche. He compares using his platform to the level of trust we already show when we shop on Amazon or anywhere else online. “Each time you hit the order button and implicitly believe that what you ordered will actually be delivered, you are showing trust,” he said.
For a business like his, Georgiev told HuffPost, a security breach would be the kiss of death ― an end to the company. Financial management platforms use multi-level security protection steps, he said, because to do otherwise would flirt with disaster.
So when you give HiCharlie your bank information, no live person ever actually sees it, he said. The service cannot move your money or transfer it out of your control to another account. The real-world equivalent, he said, is that someone gets into your trash can and finds a bank statement that doesn’t have your name on it. They would see a transaction record, but not know whose it is.
Georgiev said that a user’s bank credentials (e.g., username and password) never go through HiCharlie’s system, which only gets a list of a user’s transactions that is stored using bank-level 256-bit end-to-end encryption, in anonymized encrypted databases, with very strict access controls.
When you enter your bank credentials, you are actually doing so on a form provided by a third-party bank data aggregator called Plaid. It’s a system used by most personal finance apps, like Venmo, Robinhood and Acorns. Plaid, in turn, is trusted by a long list of banks and credit unions. HiCharlie never sees your bank credentials; Plaid does. HiCharlie simply gets bank transaction logs from Plaid, Georgiev said.
But some apps do store user credentials. Acorns, which rounds up your spending transactions to the nearest dollar and banks the difference for you, does get permissions to move money on behalf of the customer.
Still, trust is hard, Georgiev acknowledged. He and his co-founders posted their photos on HiCharlie, as well as the names of the investors who backed them with a list of other ventures those investors previously were associated with.
It’s intentional, Georgiev said. “We want people to trust us. And so we put our faces out there.”
Zouhair Belkoura, founder of the privacy protection suite of apps known as Keepsafe, suggests that before using a personal finance management platform, people should take a hard look at how far the platform is willing to go to stand behind its safety claim.
“Does the service apply the same rigor as a bank to ensure that if fraud or a breach does occur, it will ensure customers are made whole?” Belkoura asked.
The short answer to that last part is probably not. Most don’t. If the platform is hacked and your money misappropriated, the third-party platform will likely not replace it for you. And it’s a point of debate whether your bank will, because the terms of service agreement for your checking account most likely admonishes against giving third-party sites access to your account information. Banks discourage the use of these apps, although some consumer advocates argue that’s because banks just want to be able to market products to you directly and don’t appreciate another business getting between them and their customers.
Banks themselves are protected by the FDIC, which means that if your bank collapses, the federal government insures the money you held in your accounts up to $250,000. Apps and digital platforms, on the other hand, have no such government-backed protection unless it’s an investing app.
Eva Velasquez, president and CEO of the Identity Theft Resource Center, boiled it down to this: “Anytime you share your sensitive PII [or personally identifiable information] with new entities/organizations, you increase your risk surface. The more information you share, and the more organizations you share it with, increase your chances of that information being compromised in some manner.”
Velasquez noted that who you deal with matters. “There are plenty of bogus apps and sites that exist solely to collect your PII and steal your identity, as well as legitimate sites that offer a useful service and have best practices in place,” she said, suggesting that people check third-party reviewers like the Better Business Bureau, organizations such as the National Cyber Security Alliance and her Identity Theft Resource Center for information to help them decide if the risk is worth it.
Know what apps can actually do with your data.
But the internet and e-commerce is filled with risks, isn’t it? Doesn’t this come with the turf?
Catalin Cimpanu, who covers security news for Bleeping Computer, says that as a blanket rule, “giving your password to any third-party is a seriously bad idea.”
“And if I’ve learned anything, it’s that finance management apps are really bad at security,” Cimpanu told HuffPost.
Still, since most banks use multi-factor authentication, your information isn’t stored within the third-party’s interface, and there can be no money transfers without permission, would a data breach really be the end of the world?
By federal law, your maximum liability for credit card fraud is $50. If you report your card lost or stolen, the credit card company generally will close the account pronto and not hold you liable for any fraudulent charges. So you are pretty much safe if someone starts to charge up a storm with your card.
Similarly, money stolen directly from a bank account via a bank transfer is also covered, by Federal Reserve Regulation E, which implements the Electronic Funds Transfer Act. If you indicate that you never authorized a transfer, you will get your money back. Georgiev noted that in practical terms, this type of “hacking” ― stealing money from a bank account ― is a very bad idea.
“Thanks to KYC and AML regulations, there is a detailed paper trail on a global scale. The people responsible will get caught and/or lose access to the funds,” Georgiev said, adding, “That’s why you never really hear of hacks where massive amounts of people lost their bank account funds.”
If funds are stolen from your bank account, would you just have to eat the loss? Chase, Capital One, and Fidelity state on their sites that if you share your information with a third party, you may be on the hook for stolen money. But others disagree. One legal expert told Reuters that the law releasing banks of liability when customers deliberately give power to transfer funds to a third party, such as a family member or business partner, is different from giving credentials to Mint or another money management site that will use it simply to monitor and record the account activity.
Plus, there are laws that limit your liability from theft from your bank account if you report it in a timely fashion. All of which is to say welcome to 2018, where everyone needs to check their bank account every day to protect against fraud.