Is Your Estate Plan Out Of Date? Probably (And Facebook Is Likely To Blame)

Is Your Estate Plan Out Of Date? Probably (And Facebook Is Likely To Blame)

Is Your Estate Plan Out Of Date? Probably (And Facebook Is Likely To Blame)

Click here to view original web page at Is Your Estate Plan Out Of Date? Probably (And Facebook Is Likely To Blame)

We live in a digital world where traditional assets like photo albums, businesses, marketing materials and financial assets are moving online. Just look around – the most valuable companies in the world are technology companies that do most of their business online.

information concept, hands from monitors. pile of coins and hand with credit card . 3d illustration

Even money has been digitized through cryptocurrency developments. This digitalization of the world is challenging traditional estate planning techniques, and laws and best practices often lag behind technological advances.

Digital assets create a few unique challenges traditional physical assets do not have.

  1. digital assets can be difficult to find online as there is an endless amount of information available.
  2. accessing the assets can be challenging because most assets stored online are protected by a username and password.
  3. ownership rights of online assets are less clearly defined than traditional assets.

So perhaps the first questions to ask is this: What are digital assets and are they important?

Digital assets are not the physical devices we use to access and store information like computers and iPhones. They are the valuable information stored on those digital devices. Your e-mail account, website, software program, cryptocurrency, credit card reward points, blog posts, Facebook and online photos are all examples of digital assets. For my ten step planning checklist for digital assets click here.

Digital assets are important for three main reasons.

  1. There is real monetary value in digital assets. A study by McAfee showed that the average person worldwide had over $35,000 of digital assets and Americans had value of over $55,000 back in 2013.
  2. Many digital assets present sentimental or lifestyle benefits. Emails between family members or online photos might not have substantial financial value but do have a lot of sentimental value to heirs who would want access to the assets.
  3. Digital assets left alone after death also represent a huge risk due to post-mortem online theft or abuse. Over 70 percent of online users are concerned about identity theft or fraud when online.

I know of one family in which the husband unexpectedly died. He handled all of the couple’s finances, emails, online accounts, bill pays and even accounts with online retailers.

Once he passed away, his wife didn’t know where to go online, how to access their emails or pay bills, or how to close down any of the sites that contained contact information, bank accounts, credit cards and other personal information. In the end, services were disrupted, and bills were overdue because the couple had gone paperless and notices were only going to the email of the deceased husband.

Later on, someone hacked one of the websites and stole the couple’s information. The surviving spouse never knew until multiple new credit cards were set up in her deceased spouse’s name and bills started coming in months later.

This is a real story, and it is not an isolated incident – it’s happening to thousands of people each year because of a lack of awareness about the importance of digital asset planning and digital asset management.

So if someone says they have an estate plan in place to cover all their assets, you can rest easy knowing their digital assets are covered, right? Unfortunately, traditional estate planning techniques are inadequate to cover digital estate plans today.

First, you need to specifically track where your digital assets are online and keep track of login information. It is not as easy as just sorting through a person’s attic, drawers, garage, basement and safety deposit box to find their online accounts. One step is purely tracking and managing existing assets.

Next, you need to understand ownership rights of the digital assets. For instance, most of the ownership rights in digital assets are set when the individual agrees to the Terms of Service Agreement (TOSA) with the online service provider – you know, the agreement you scroll all the way to the bottom of and hit “I Agree” without reading anything. Unfortunately, no one reads these documents.

What does a TOSA say? Mostly, these agreements state that your online accounts cannot be transferred to anyone else upon your death, leaving these assets in a state of eternal limbo, and instead creating a non-transferable lifetime lease in the online account and service.

Another challenge for digital asset planning is that traditional wills struggle to keep track of digital assets. Because passwords change regularly and new accounts are constantly set up, in addition to the will becoming public through probate, the will is not a good place to list assets, passwords and locations of important documents and other items.

Instead, you will have to be much broader in your approach inside the will. However, there are federal laws under the Computer Fraud and Abuse Act and the Electronic Privacy Act that can make sharing passwords, if against the TOSA, a federal violation. So just keeping track of your accounts and passwords without checking and seeing if you have the legal authority to share them, could also be problematic.

Furthermore, laws in this area have just started to develop. Almost every state has now passed a version of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which provides some guidance in planning for digital assets in the event of incapacity or death.

Essentially, RUFADAA provides a clearer framework for how access to digital assets will be handled. First, if the service provider allows for a beneficiary-like transfer system, that will take priority. Next, traditional legal documents would have authority, but only if they are correctly drawn up. Next, if neither of the other two are in place, you would look to the TOSA. In the event that no direction is given by anyone, it is likely you would then revert to traditional state common law and estate practices.

However, it is also important to remember that RUFADAA cannot change ownership of assets as set by the TOSAs. If you agree this is a non-transferable lifetime lease when you set up the online account, it remains a non-transferable lifetime lease. This can lead to improper ownership of assets in many cases and create serious challenges for small businesses.

Instead, RUFADAA aims at allowing access to digital assets to certain fiduciaries laid forth in legal documents or through another process. This allows fiduciaries to have access to the online accounts to manage them or close them in the event of death, disability or incompetency, but only if the owner affirmatively gave the fiduciary this management control in the applicable trust agreement, will or power of attorney document.

Essentially, fiduciary access to digital assets will be treated as a “hot power,” meaning that you must specifically grant the fiduciary access to “digital assets.” Just saying your fiduciary has access to all your assets won’t work! This also means most existing wills, trusts, and powers of attorney are out of date and you should update them immediately to include current digital asset language.

While almost every existing estate planning document needs to be updated, just updating documents is not enough either. Digital asset planning also requires planning as to which accounts you want memorialized, continued, or deleted and what information you want preserved or removed. In some cases, new accounts will need to be set up or assets moved from one spouse to another or from an individual to a company. True digital asset planning will be part risk management and part ownership review.

Attorneys also need to discuss digital asset management and planning with clients. With small businesses, even a brief delay in access to their online accounts could be devastating. You also want to ensure that the client has a process for tracking their online accounts, keeping usernames and passwords safe, and, if desired, provide insight into how they want their accounts managed in the event of incapacity or death. The client might want some accounts destroyed or deleted and other accounts passed on to someone else.

Digital assets are growing in value and need to be part of your practice. Find out how your state is handling these assets, update your documents and discuss these digital assets with clients, especially those clients with small businesses.

The Big Hole in Estate Plans: Digital Assets

The Big Hole in Estate Plans: Digital Assets

Most clients and advisors are acutely aware of the value of a thoughtfully designed estate plan that provides for the eventual disposition of a client’s tangible and financial assets. Despite this, even the most carefully constructed estate plan often overlooks a client’s digital assets.

In today’s society, almost all clients are active online, and may have substantial digital assets with both sentimental and monetary value even if they do not realize that this is the case. Without a clear plan that specifies the client’s wishes, however, both state and federal laws can create roadblocks to accessing digital assets—making it critical that the client include digital assets in any comprehensive estate plan in order to ensure an orderly post-mortem disposition that carries out the client’s wishes.

Uniform Laws Governing Digital Assets

The concept of estate planning for digital assets actually covers an extremely broad range of online assets, ranging from email accounts and social media to PayPal, domain names, intellectual property stored on a computer and virtual currency. While some of these accounts are likely to have only sentimental value, domain names, blogs with advertising and business contact lists contained in email accounts can have monetary value, as well.

Without a clear estate plan contained in legal documents, data privacy laws can prevent the online service provider from allowing the client’s executor or family members to access his or her online accounts. The Uniform Fiduciary Access to Digital Assets Act, which has been passed in most states, provides that an owner of digital assets can specify who will be able to access and dispose of any digital assets after death.

Absent proper planning, the online provider’s terms of service agreement (TOSA) will often control what happens to the account after death. In some cases, this TOSA can even override the client’s specifications that are contained in a will or other document, especially in cases where the service provider provides specifications as to how the account owner can make his or her post-mortem wishes known.

For example, Google provides an “inactive account manager” function that allows the account owner to specify what should happen to the account after it has remained inactive for a period of time. The account owner can list beneficiaries who will be notified that the account will be closed before it is deleted, giving beneficiaries time to download any content contained in the account.

It is important to remember that the instructions the client leaves in his or her online service provider’s tools will trump instructions left in the will, so it is important to include this document among those that should be regularly considered and updated.

An Action Plan for Digital Estate Planning

After a client determines who should be allowed access to his or her digital assets after death, it is important to takes steps to ensure that the heir is able to access the relevant data. Importantly, the client’s will, trust documents and other legal documents should specify a digital fiduciary or executor who will be able to access any given digital asset after death, and should also provide that individual with the ability to reset or recover the client’s passwords.

In order for such a plan to be effective, the client should be advised to make a comprehensive list of his or her digital assets during life, which should also include instructions as to how the appointed person can access those assets after death. To facilitate easy access, the client should list usernames, passwords and the security questions associated with the account password. This information should be stored securely, but should not be included in the client’s actual will, which can be accessed by the public after death.

Depending upon the type of digital assets involved, clients may find a virtual asset instruction letter valuable in their digital estate planning. This letter sets forth all relevant information as to digital accounts and assets to allow the digital fiduciary access (or instructions that certain accounts should be deleted).

Clients should also be advised to regularly back up their digital assets on the cloud or another device, both to protect those assets from a device malfunction but also to allow easier post-mortem access to a digital fiduciary.


A client’s digital estate plan will vary in complexity depending upon the type of digital assets involved. Many clients may be unaware that their digital assets hold monetary value, so it is important that the advisor discuss disposition of digital assets with all clients, even those who do not initially foresee the need for digital estate planning.

Digital assets need to be part of estate planning

Digital assets need to be part of estate planning

Digital assets need to be part of estate planning

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digital assets
Phartisan |

By now, most regular readers of this column are aware of the need to make an estate plan to minimize the difficulty of conveying their financial assets and physical property after death. But what about digital assets?

These are the online accounts in your name that may include files such as images, photos, videos and text; email accounts; and social media and networking accounts such as LinkedIn, Facebook and YouTube. What happens to these when you die?

If you don’t plan for the management of your digital assets after death, your family might not be able to access critical information they need from your online accounts. Because of federal privacy laws, most Internet companies won’t be able to ensure that access unless you have taken specific steps beforehand.

Few states have passed laws to solve this problem. In many states, some of your accounts may be deleted upon your death. In others, families must obtain a court order to obtain the rights to view a decedent’s account. The process can take years, during which time the account might be deleted because of inactivity.

Some sites provide solutions. Facebook allows you to name a “legacy contact” — an individual who can post your obituary on your timeline. That individual can respond to new friend requests and update and archive your posts and photos.

Google has an “inactive account manager” feature which allows you to identify “trusted contacts” with whom to share specific data available from your Google and Gmail accounts.

Other sites have similar features, but they all require action on your part to activate them.

In order to avoid potential problems associated with digital assets, it is a good idea to create a digital estate plan. The first critical step is to make an inventory of your digital assets — financial, purchasing and social accounts — and document how to access them after your death.

List all online accounts for brokerage, insurance, banking, credit cards, loans, retirement savings, PayPal, purchasing, email and social media, as well as any blogs and personal websites. Include the usernames and passwords required to access them.

The next step in your digital estate plan should be to develop a safe place to store this information. It can be with your estate attorney, in your safety deposit box or with an organization that provides storage for this information. Your attorney should be able to identify which storage locations are consistent with state laws. There are several organizations that specialize as digital fiduciaries in this field, including EverplansFinal RoadmapSecureSafe and others. Some have annual fees, and some have a one-time fee.

Some states allow you to specify a “digital executor” in your will. If your state does not recognize a digital executor, you should discuss this issue with your estate attorney so that a similar function can be carried out in accordance with state law. The digital executor should be trustworthy and technically competent, and have access to the necessary passwords and to the locations of all important information. He or she should have the responsibility to specify what happens to the nonfinancial digital assets based on your written instructions.

It is up to you to specify in your power of attorney, will and/or trust agreements what happens to your digital assets. Your executor, personal representative and/or trustee will have the responsibility to follow your wishes. If you haven’t discussed digital assets with your attorney, do so.

(Elliot Raphaelson welcomes your questions and comments at

Identity Theft Safeguard

What happens to your online life after you die?

Have you thought about your digital legacy?

Our digital lives seem to know no bounds with every aspect of the way we live today having a virtual dimension should we choose it.

Financial assets are held and accessed online, social media accounts record our personal journeys through life and we relax listening to music downloaded or looking at photographs held digitally.

But after death who would have the complicated job of identifying and sorting out your intangible assets? If you bury your head in virtual sand and ignore the fact you have a digital life, in the real world it could cause chaos when you die. So the key advice is plan ahead ….

Your digital afterlife

Dr Wendy Moncur of the University of Dundee talks about her research carried out in association with the Centre for Death and Society at the University of Bath.

Protecting your legacy

1. Make a will

In a will you can name executors who will be in charge of sorting out your estate when you die – including your digital assets.

Would you send a message after your death?