By Sam Coveney, Intern, Shepherd Financial Partners
Traditionally, estate planning has focused on preparing an individual’s physical assets in the event of incapacitation or death. In this new world filled with computers, smartphones, tablets, social media sites and online shopping marketplaces (just to name a few), it is remarkable that many people forget about all of the sensitive information they keep online when estate planning. What would happen to that Paypal account or the credit cards entered online that could be lost in the event of incapacitation or death? That Amazon account that you use? The thousands of songs you bought and downloaded on iTunes?
Amidst the positives of this digital revolution that we are experiencing, hackers are now more prominent than ever and can take advantage of online assets after a person’s death. In addition, online companies usually do not provide access to the deceased’s accounts, unless explicitly requested by a fiduciary prior to incapacitation or death. Password-protected accounts that contain information such as pictures, posts, documents and money, for example, can be lost upon death unless a solid plan is made. Listed below are some of the best tips for protecting and preserving digital assets and ensuring that your online presence outlives you only in the presence of your family members and trusted individuals.
Keep a List of Passwords, Online Accounts and Digital Property.
Preparing a current, complete list of digital property, filled with passwords and usernames is essential in estate and succession planning. Upon death or incapacitation, this list will provide family members and fiduciaries with an easy transition into taking the appropriate steps to manage and shut down existing accounts. But what should this list include? Start by downloading a “Digital Audit” which can be found by clicking here. The general rule of thumb when estate planning for digital assets is to document anything that requires a username and password. This includes usernames and passwords for personal computers, tablets, phones, email addresses, social media accounts and cloud storage devices, just to name a few. A good place to start is by separating your hardware devices from your software programs, and recording the relevant information. It is important to be meticulous and to record every account at your disposal. Also, make sure that your most important files are easily accessible, yet safe, so that family members can easily access these documents.
Make sure that the list is protected.
Since this comprehensive list will have a great amount of sensitive information, it is best to keep the list in a secure location, such as a safe deposit box or a personal safe. Never keep this list on your person, or in a non-protected spreadsheet on the hard drive of your personal computer. The chances of misplacing or theft increase if you take this list with you. If you prefer to keep an electronic copy instead of a hardcopy, consider using a password encrypted master list on your computer, and leaving clear instructions on how to access this master list. There are many great web services available for this application, such as DeathSwitch, AfterSteps and BestBequest.
Put Thought Into Who You Want Handling Your Digital Accounts
It sounds trivial, but naming a successor, family member, or fiduciary that is computer and tech-savvy is an important step in estate planning for financial assets. You may leave an extensive list, with clear instructions on what accounts to shut down, which ones are assets and which ones are liabilities. But if the successor can’t navigate this space easily, you may want to consider appointing someone who is more able.
In addition to preserving usernames and passwords, a comprehensive estate plan includes instructions for what is to be done with sites that don’t necessarily need to be “shut down” like an EBay account. For example, a person may choose to preserve a website that they hold or keep old eBooks for their successors because it may provide some financial value down the road. An estate plan for financial assets doesn’t always mean completely shutting down your online presence. Keep detailed instructions on what things should be deleted, and what things should be preserved.
Give Legal, Appropriate Authority
This step usually involves an attorney, but assigning appropriate legal counsel or trusted advisors to look after your “financial estate” and ensuring a smooth transition to the next generation may be beneficial.
Kennedy, Dennis. "Estate Planning for Your Digital Assets." Law Practice Today RSS. American Bar Association, n.d. Web. 23 June 2015. <http://apps.americanbar.org/lpm/lpt/articles/ftr03103.shtml>.
Lamm, Jim. "My Digital Audit." Digital Passing. N.p., n.d. Web. 23 June 2015. <http://www.digitalpassing.com/digital-audit/>.
Kilham, Austin. "Estate Planning for Digital Assets." The Wall Street Journal. WSJ, n.d. Web. <http%3A%2F%2Fwww.wsj.com%2Farticles%2Festate-planning-for-digital-assets-1431357357>.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.