Tag: bank statements

Digital Legacy And Digital Assets

Digital Legacy And Digital Assets

Eleanore
Digital Assets

Devorah Ormonde, a partner in our private client department, takes a look at how digital assets can be problematic when it comes to making a Will.

When someone dies, the person responsible for dealing with their estate traditionally looks through their bank statements and other financial documentation to identify their assets to enable them to complete the necessary inheritance tax account and to distribute the estate to the beneficiaries. But in an increasingly digital age where many of us have online bank accounts and other financial assets with no paper trail, it can be difficult to ascertain the extent of the estate.

If, as is increasingly the case, many of our assets are only referenced via e-mail, how can a person dealing with the estate be certain that they have found all the assets if they don’t have the deceased person’s e-mail password, for example?

It is not just financial assets that exist in cyberspace. Photographs and all sorts of other valuable family data may be stored in a cloud, and if no one knows where to look these assets might be lost forever.

The Law Society has recommended the completion and maintenance of a Personal Assets Log, including digital assets, and consideration of how to ensure that those dealing with the estate will be able to access those assets. For conscientious advisors when drafting someone’s Will this is now standard practice. But the question remains as to how that information is stored and passed on after the person’s death.

One possibility is to leave a sealed document to be stored with your Will, possibly at your Solicitor’s office. The downside of that is that should you be required at any time to change an important password you would have to remember to update the information in your sealed envelope.

Alternatively there are specifically tailored websites that offer a solution to some of these problems: asset lists can be created online, passwords and PINs can be recorded and updated where necessary, and online guidance can be provided after someone’s death. Such sites are not without their own inherent dangers, however. Even discounting the dangers posed by hackers, there is no guarantee that information stored online account will be up to date, particularly if an individual has suffered a period of mental decline before their death.

It is important to remember that even if passwords to online accounts are available, the accounts of a deceased person should never be managed online. Anyone attempting to make transactions using the account of a person who has died would fall foul of the Computer Misuse Act 1990. The asset holders would need to be notified of the death and their usual procedures should be followed to close or transfer assets.

Although there is no simple or one-size-fits-all solution to the question of how to identify online assets and data, this is something which anyone using online facilities needs to consider when making a Will.

Guide to Life: How to handle online accounts during estate planning

Guide to Life: How to handle online accounts during estate planning

Eleanore

Death seemed easier before the Internet.

In those days, loved ones could handle any unfinished business by following a paper trail.

Bank statements and unpaid bills would leave a breadcrumb path of sorts — easy to negotiate.

Now that Americans have built their lives online, however, the trail is less clear-cut — and less easily contained.

Which explains why legal experts encourage individuals to consider the digital estate when drafting a will or considering the possibility of incapacitation.

“I think the landscape in this regard is changing quickly,” said Robert Dunn, a lawyer specializing in estates and trusts at the firm Bailey Cavalieri in Columbus.

“And individuals, when they’re planning, need to recognize this and plan accordingly, … giving thought as to how they want these assets disposed of or handled after their death.”

A digital estate, according to the Ohio State Bar Association, encompasses everything from social-media accounts — such as Facebook, Tumblr and Twitter — to online banking and even an Xbox 360 gaming account.

During estate planning, though, clients don’t typically raise the issue of online accounts, said Samir Dahman, founder of a Columbus law firm bearing his name.

When he mentions a digital estate to clients, they’re often caught off-guard, he said.

“They’re usually thinking about who will take care of their children and how they’ll be provided for,” he said.

But unprotected online activity could carry serious risks: Unpaid electronic bills might lead to financial harm, valuable possessions such as unpublished manuscripts or photographs might be lost, and identities can be stolen. A person might also have private or embarrassing secrets or accounts that he or she wouldn’t want others to access.

To protect digital activity, lawyers say, people should make a list of all online accounts — including passwords — and provide clear instructions to a friend or relative about how each should be handled in the event of the person’s death or incapacitation.

The authority to access those accounts should be officially granted — say, through a will or durable power of attorney.

The master list of accounts should be kept in a location that is secure but easy for the designated overseer to access.

Some experts suggest keeping the list in a safe-deposit box, in a personal safe with a combination lock at home, in a file cabinet with a key or even with a lawyer. The list might be on a flash drive or even on paper.

“Low-tech is good tech when it comes to planning for the unexpected,” said Sean O’Malley, communication manager for the Office of Information Technology at Ohio University in Athens.

For a master list kept digitally on a phone or computer, lawyers advise using a software program such as Dashlane or 1Password, which protects the information with encryption.

Your designee would need to know the password to that application to access account information.

The person you choose as an executor to handle digital, health-care and financial affairs should be someone you trust completely, Dunn said.

“Each circumstance is different as to who is appropriate to serve that role,” he said.

Some people choose two individuals — one for the computer side of things, the other for the physical.

The person left to oversee your affairs might still run into challenges, cautioned Mark Watson, head of an Ohio State Bar Association committee on digital assets.

Although some states have addressed the question of who can access digital accounts, Ohio has not; and no federal law outlines the rights of heirs regarding online accounts, Watson said.

Someone who has a password to an account, he said, could run afoul of Ohio’s computer-hacking statute, even if appointed as a trustee or an executor. The third-party provider could deny access because the laws aren’t clear, Watson said.

“User agreements don’t provide for it. Someone can face criminal prosecution, and (that) could result in jail time. Having access doesn’t mean it’s perfectly legal.”

User agreements for an individual site trump any others, he said.

“Everything goes back to the user agreement,” he said. “Even if you are truly trying to help someone, it doesn’t mean the law doesn’t prohibit it.”

Social-media accounts

Social-networking sites such as Facebook, Twitter and Google+ have gradually introduced guidelines for families who want to gain access to a loved one’s account in the event of a death or an incapacitation.

As an example, Facebook on its website outlines various options for loved ones who obtain the necessary documentation, including proof of death. They can:

  • Turn an account into a memorial. In such cases, the word Remembering appears atop the deceased’s Facebook page, and others can post memories and share photos on the deceased’s timeline.
  • Delete the account. This option leads to the loss of all information posted by the deceased person. To delete an account, a loved one must provide the deceased person’s name, his or her relationship to the deceased and a link to the deceased person’s timeline.
  • Turn off an account. For situations that might prove temporary, Facebook can deactivate an account rather than delete it permanently.

For Facebook users who plan ahead, the company allows them to name a “legacy contact” in their profile settings — which allows that contact to write a final message on the deceased’s behalf, provide information about a memorial service, update the deceased’s profile picture and cover photo, and respond to friend requests.

The legacy contact can’t access the deceased’s account, read messages, remove any friends or delete information on the timeline.

Financial, medical accounts

With financial and medical accounts, an online guardian needs to be granted official access, Dahman said. Gaining access on behalf of someone who has died or become incapacitated, he said, generally requires you to:

Prove the relationship between you and the user.

This can be done with a signed declaration stating that you are immediate family or a copy of the durable-power-of-attorney document.

Provide proof of the account user’s death via an obituary or a death certificate.

Ensure that you are authorized to access the account.

Generally speaking, access to either or both such accounts, Dunn said, comes down to a person’s wishes.

“In both situations, it is important to be specific as to the access a person wishes to allow.”

A digital checklist

Experts recommend creating a master list of digital accounts and passwords, and placing it in a secure location for loved ones. The Ohio State Bar Association suggests including:

  • Email and cross-platform login information
  • Websites, hosting services and URLs
  • Social-media accounts such as Facebook, Google+, LinkedIn, MySpace and Twitter
  • Video-game and virtual-world accounts such as Xbox 360
  • Audio and visual content such as YouTube, GarageBand, Google Docs and Scribd
  • Financial-service accounts such as banking, credit cards, auto debiting and shopping accounts
  • Medical records
  • Photo-sharing sites such as Flickr and Picasa
  • Companies whose bills you pay directly online
  • Cloud computing devices and remote storage
Planning your digital afterlife

Digital Estate Planning: Profiteering or Legitimate Concern?

Eleanore

What, fundamentally, is the difference between the decedent in the 1990’s who shredded all of his bank statements and personal letters prior to death, and the decedent today who fails to disclose his online banking and e-mail passwords?  This is an answer for a later article, but for the time being we will delve into the emerging world of “digital estate planning.”

If you haven’t figured out by now, one of my biggest issues with estate planning is the incessant fear-mongering used to scare people into getting their estate planning done.  As I have previously mentioned, fear is not a motivator for a large number of potential clients who lack an estate plan.  Some people will not acknowledge the possibility of premature death, or the risk associated with a lack of planning, so there will never be a sense of urgency outside of experiencing a close loss.  There are, however, some potential clients who are overly sensitive to fear and emotion, and either fail to act or over-react based on this fear.  This sub-group of potential clients is most at risk for being ripped off.

There is no shortage of oversold estate planning strategies.  One strategy I noted before is the over-emphasis of probate avoidance.  Another popular estate planning buzz phrase deals with guardianship planning for parents of minor children.  The benefit of these estate planning strategies is that they are at least pitched by attorneys, who have some level of training and knowledge in the estate planning sphere.

However, a spam e-mail I recently received from one of the CRM companies I mentioned in a previous blog post reminded me of the newest kid in town in the parlance of estate planning: DIGITAL ASSETS.  I will not directly quote the e-mail so as to not identify the company in question, but its basic premise is that you are screwed if you fail to plan for digital assets.  This upset me, as it is unnecessary fear-mongering.

As I started to dig, I noticed a disturbing trend.  NON-ATTORNEYS HAVE NOT BEEN ABLE TO SIGNIFICANTLY PROFIT FROM DOCUMENT PREPARATION SERVICES.  SO, NON-ATTORNEYS ARE BEGINNING TO USE DIGITAL ESTATE PLANNING AS A PROFIT-MAKING ALTERNATIVE TO DOCUMENT PREPARATION.

Now, don’t get me wrong.  Digital estate planning is important.  However, as noted in the CRM article, a common theme to digital estate planning services are that “all attorneys are bad, because in a few isolated cases clients have had extra difficulty by ignoring digital estate planning.  Don’t trust your attorney.”  By painting at the extremes, there is a concerted attempt to divert legal business to non-attorneys.

Now, some would say that this diversion of business can be a good thing.  However, the customer who falls prey to this type of scheme is the customer driven by cost-savings and emotion, who is not well-trained in making educated decisions.

In a future article, I will examine digital assets in light of the pre-digital world.  In other words, how were things handled prior to the digital age?  As you will see, there is not much difference from today’s world.  Things have just shifted from paper to an online record.

The Care and Preservation of Your Digital Assets (Part 1)

The Care and Preservation of Your Digital Assets (Part 1)

Eleanore

How many of you get “paper” bank statements?  How many you write “paper” checks to pay your monthly bills?  How many of you pay your bills through automatically scheduled payments?  How many of you store and save your personal information on your computers and on third party sites? And what happens to this information if you are no longer around?  Can your family get access to it?

According to a 2011 Census more than three-quarters of all Americans owned a computer.  That number increased to nearly 90% of all Americans who had a bachelor’s degree or higher.  Today, the vast majority of the population owns a computer and with it, what are now referred to as “digital assets”.

A digital asset has been defined as “information created, generated, sent, communicated, received or stored by electronic means on a digital device or system that delivers digital information.”  In common parlance, digital assets include personal information contained in:

  • Online accounts with financial institutions (e.g. banks or credit card companies)
  • Social media accounts such as Facebook, LinkedIn, YouTube, Twitter, where a third party allows the account holder to store personal information
  • Online accounts with forums such as Amazon, eBay or Craigslist, that not only allow users to buy and sell but facilitate such transactions with on-line currency accounts such as Paypal.
  • Reward programs, such as frequent flyer miles or reward points.
Is Your Digital Life Ready for Your Death?

Don’t take PINs and passwords to your grave

Eleanore
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.

More from Money on planning for the end

“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.