Can you imagine a world without the internet and smartphones?
I know it's a shocking thought and recent studies have shown that you would not be alone in feeling that way.
According to the Pew Research Center in Washington, DC, "about a quarter of U.S. adults say they are ‘almost constantly’ online."
The study went further to show that approximately 77% of Americans go online daily.
I imagine these statistics do not come as a surprise to anyone.
As the internet has become more of a basic utility in our lives, our personal and financial information is stored online more than ever.
We pay bills online, store photos of our families, and store contact and financial records digitally.
The internet has made our lives so much easier and everything available with the push of a button.
It also presents real challenges for those people who need to access these digital assets after we are gone.
Digital assets are your personal e-mail accounts, online bank and brokerage accounts, frequent flier accounts, Facebook accounts and other social media websites.
You might not think of these assets as having much value, but the value is in the critical information that they store or the sentimental value of your photo albums that you no longer keep in physical form.
When it comes to planning for your estate, you should treat these digital assets in the same way you would treat your other valuable assets.
With your digital assets, you really need make special arrangements in advance, so that the executor of your will can gain access to this information.
As a practicing financial advisor, I have never heard of an estate planning attorney recommending that a client take the necessary steps to provide access to Facebook accounts or other online accounts.
Anyone who has tried to contact Google or Yahoo to gain access to their own locked down e-mail account will agree, it must be next to impossible to gain access to someone else’s e-mail account, without the critical information necessary to retrieve usernames and passwords.
You should also provide the passwords of your computer and back-up hard drives to your executor, if you are storing your documents in this manner.
Obviously if your executor can not access the computer, it's going to be difficult for them to access your important documents, without the help of a computer specialist.
If you are storing your documents on some sort of remote location, i.e. cloud storage, then again you are going to want to plan for your executor to have access to these online storage accounts.
Clearly, you need to have a plan in place to make this information available for your executor or family members.
Here is the rub.
Even if you give your usernames and passwords to your executor or a family member, he or she may still run up against service-agreement limitations that deny him or her the ability to access, manage, distribute, copy, delete, or even close accounts.
Further, "unauthorized use" laws can lead to legal issues for your representatives if they are deemed to have exceeded permissible access levels. Fortunately, lawmakers have become more aware of the issues we all face.
A new statute, the RUFADAA, addresses whether and how a family member, executor, attorney-in-fact, or trustee can access digital assets. Most states have already introduced or adopted RUFADAA. Hopefully, the rest will follow.
RUFADAA is different from state laws governing estate administration, powers of attorney, and trusts. It does not presume that family members and fiduciaries can access digital assets because of their relationship with the account owner. Instead, the statute requires express authorization before anyone—family member or fiduciary—may access the content of a digital asset.
So, what can you do now to start organizing your digital assets?
- Decide how you want your digital assets handled after your passing. For example, Facebook allows an executor or immediate family member to close the account and "memorialize" it. Consider creating accessible instructions for your personal representative on your social media accounts. You may assign different roles to different people. You may decide, for example, to appoint one person as your executor and another to have access to certain social media accounts.
- Consider investing in a password manager such as LastPass or Sticky Password. These sites maintain a record of your online accounts and passwords in a digital vault. These accounts can be set up in advance to provide access to a representative at a specific event, such as your death or incapacity.
- Create a list of your digital assets. Be sure to store this list somewhere your personal representative can access it. You should not store the list in an email account as some e-mail providers, like Yahoo!, will close an account that has been inactive for several months and delete the e-mail history. Even if your personal representative promptly contacts the e-mail provider, he or she may still run into issues by not being able to copy important e-mails before the account is shut down.
- Don't assume your digital estate has no value. Some Credit cards with cash-back feature stores are generally redeemable after your death, but only if they are claimed. Internet domain names have value and can sometimes be sold, and blogs are a form of intellectual property.
Concerned about the legal limits on your executor or beneficiaries?
- Talk to your estate attorney about adding language to your last will and testament that grants your executor the authority to access your non-financial digital assets and accounts.
- Ask your estate attorney about inserting provisions in your power-of-attorney documents that will grant your POA agent authority to act on your behalf with your digital accounts and assets.
- If you have assets in a trust, consider amending the trust agreement with language that will allow the trustee access to digital assets and accounts.
- Review the policies of your online service providers surrounding the death or disability of account owners. Each provider has its own access-authorization tools, and the terms vary, so be sure you understand who can and can't access information.
Lastly, be mindful if you include provisions covering digital assets in your estate planning documents and complete a provider's access-authorization tool.
The instructions in your estate planning documents need to match the information you have provided to the online account provider's access-authorization portal.
If the instructions do not match, the provider likely will follow the instructions you directly to them and not accept your estate planning documents.
