This New Year, Don't Forget Your Digital Estate

This New Year, Don’t Forget Your Digital Estate

Think about what would happen if you were to die unexpectedly or become disabled. If your spouse or other loved one doesn’t have your user names and passwords for your financial accounts, he or she may find it awkward at best and impossible at worst to manage your affairs.

As 2015 begins, do a New Year’s check of your estate-planning documents, making sure your spouse or some other trusted person has your login information. And make sure you have the correct beneficiaries.

As part of your estate planning documents, you should include a list of all online accounts and passwords for your executor. Your will can stipulate what should be done with email and other online accounts at your death.

The list doesn’t need to be formal. It can just be a folder with a printed list of logins and passwords. Passwords change, so updating your list is a good part of an annual process.

If you have password-management software, which is free or inexpensive, you can just give your spouse or executor the master password, which unlocks all others.
Bank and brokerage accounts contain financial assets, but your digital estate often has little or no monetary value but great sentimental value. Items in a digital estate can include a Dropbox account with thousands of photos, email accounts, and social media accounts like Facebook and LinkedIn. All this could be lost without current logins and passwords.

Absent a will, it may be very difficult for an executor to deal with digital vendors. As of this writing, only 7 states have laws addressing online estate planning, so in most cases the service contract between the deceased and the online vendor will dictate what powers an executor may have over an online account.

It’s a little bit of the Wild West. Putting your instructions in your will or an addendum to it may not be foolproof, and some vendors may not accept it, but it’s at least a good start.

There’s another area where people need to do an annual checkup. People often forget to update their beneficiaries.

Make sure that you have the correct beneficiaries on all life insurance policies, annuities, and retirement accounts such as IRAs, Roth IRAs, 401(k) plans, and similar plans.

These assets go to the beneficiary or beneficiaries listed on the account regardless of what your will says. So, it’s crucial that they’re correct and up to date.

Learn How to Preserve Your Data with Take Control of Your Digital Legacy

Do you have a “Digital Estate Plan?”

My bank, USAA Savings Bank, has a section of its web site devoted to educating its customers. One of the recommendations is to have a “Digital Estate Plan.” What they suggest is a written document that explains how to access your various online assets in the event that you are not available.

It reminded me of a real life experience. One of my friends went into the hospital for knee replacement surgery. It is usually a routine surgery, so he didn’t make any special arrangements. Things didn’t go as planned and he died without having an opportunity to inform his wife of any of his passwords. I got the job of helping his widow gain access to the financial accounts. In addition to the grief she felt upon his death, she was angry at him for placing the financial assets outside of her reach. I share the story to hopefully help some others avoid that kind of grief.

The approach that I have taken is fairly simple. I record all of my passwords in LastPass. I have written my username and LastPass password in a document that is available to Linda and to our daughter.

Funerals and Instagram: A look at the funeral hashtags

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?”

Is AI The Key To Eternal Life?

Important tips regarding digital estate planning

It can be hard to stay on top of all of the changing media, electronic devices and social media websites. The majority of Americans have at least one kind of digital account like e-mail, Facebook or Twitter. But, what happens to these accounts when you die? It is important for people to know how to incorporate social media into an estate plan as part of their estate administration.

Digital media is here to stay. With almost everyone having at least an email account it can be important to consider what happens to these accounts when people die. If an account is left open it can be vulnerable to hackers, as in the case of Joan Rivers. Weeks after she died her Facebook had a posting endorsing a new IPhone. There are some steps for a person to consider when coming up with a digital estate plan.

First, people should make an inventory of all digital media accounts they have. These include all email addresses, Twitter, Facebook, blogs, online backup programs, photo sites, financial accounts, ITunes, Amazon, home utilities managed online and other electronic sites. After coming up with this list, keep it in a secure location. Something like a password management program can keep all this information in one place. After having the information secured, designate a family member or trusted friend as the digital estate executor. This person will be in charge of all of the digital account information and will have your instructions of what to do with it should you die. Finally, decide what you want to do with your digital information when you die. This should be included in a digital estate plan for your executor to carry out.

Everyone should have an estate plan to make sure their wishes are carried out after death. A digital estate plan is another thing to consider, along with the more traditional wills and trusts.

[…]