Yes, You Need Digital Estate Planning. Here’s Why.
You’ve done your due diligence when it comes to shoring up your affairs: bequeathed home or property made plans for where your money should go, or even made plans for the end of life care and health directives. You have responsibly planned for what lies ahead and now you’re all set, right?
Well, not so fast. Unless you’ve also addressed your online assets, you’re not as prepared as you may think. Consider these scenarios after your passing:
- Who will be able to access your email accounts?
- Will anyone be able to manage or post final messages on your social media accounts?
- Will your digital photos, music, or other “in the cloud” items be accessible to friends or loved ones?
- Who’s going to manage your online business or blog, if you have one, or your seller account on sites like Etsy or eBay?
- How is a digital currency, like credit card rewards or Bitcoin, to be handled?
- Can anyone access your online financial accounts?
With just these few examples, you can see how much of our business and our lives are conducted online and, thus, just how important it is to include digital assets in your estate planning.
Let’s take a look at what you need to know to get your online affairs in order.
Legal Issues Arise With Digital Assets
First, it’s important to understand how digital estate planning provides legal protection for friends or loved ones that you may enlist to manage your digital assets.
You may think that sharing a list of usernames and passwords is all you need to grant others access to online accounts. However, unless the recipient has a legal directive to access those accounts, he or she may not be recognized as an authorized user.
That can lead to accusations of identity theft or hacking.
To address this issue and provide legal protection to well-meaning third parties, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADDA) of 2015 has now been enacted in almost every state. This gives fiduciaries the right to manage digital assets as they would tangible assets.
Again, however, it’s not enough to just ask someone to fill this fiduciary role. In order to protect them as an authorized user, this fiduciary must be assigned through a will, trust, or power of attorney.
Following legal procedures provides protection and peace of mind for both you and the person you choose to serve as your online manager.
How Do I Get Started?
Ready to plan for those digital assets? Here’s a basic list and some helpful resources to get started.
1) Start a List
Think about all your online accounts and/or assets and list them. Include everything, such as:
- Online financial accounts, including banks, utilities, mortgages, and investment accounts
- Email and social media accounts
- Passwords for accessing devices
- Online storage accounts like iCloud or Google Drive, including storage accounts for photos, videos or music
- Payment sites like PayPal or Venmo
- Online business or blog information, including domain names
Don’t forget to also include information on any hardware you may use, such as computers, laptops, tablets, flash drives, smartphones, and watches, etc. View this article for a more comprehensive list of what you may want to include in your digital inventory.
TIP: You may find it helpful to keep this information in an online account management program, such as LastPass or Keeper.
2) Detail Your Wishes
Now that you have all your assets accounted for, you need to decide what happens to them. Take extra time and care to make these decisions, and be as detailed as possible. For example, there may be emails, photos or posts that you would not want certain individuals (or anyone!) to see. Specify those wishes down to the letter.
Also, don’t leave any decisions, no matter how small, up for interpretation. Do you want your knit sock store on Etsy to shut down immediately, or after all the socks are sold? Should your sister have access to all your photos or just the ones from your shared family vacations? Do you want your family fighting over your credit card rewards?
The devil is truly in the details when it comes to digital assets.
3) Make it Legal
The next step is choosing who is going to serve as your digital manager a.k.a. digital executor. Naming an individual for this role clearly defines who can and cannot have access to your online assets. This person can also work with your overall executor to make decisions regarding digital assets.
This person can be a friend, family member, attorney, business manager or any other trusted individual. Most importantly, whomever you choose should be willing to manage your assets according to your wishes, and not abuse that trust.
Finally, work with your estate planning attorney and financial advisor to put this all into writing. This will include updating wills or a codicil to a will, powers of attorney, and living trusts. If you live in a RUFADDA state, you may need to complete additional electronic forms specifically naming your online fiduciary.
TIP: Do not include your actual online asset inventory or any usernames or passwords in your will. Your will becomes a public document upon death, allowing anyone to access this information. Instead, store this sensitive information with your attorney, in a safe, or an online storage service. Just make sure to share the location with a few trusted folks.
Once you’ve got your digital estate plan in place, don’t forget to update it regularly to account for any changes in new laws or your own digital activity.