Studies have shown that one of the key challenges faced by people responsible for carrying out an individual’s estate plan is simply lack of adequate information provided by the person for whom the plan was created in the first place. In modern times, one area where these information gaps frequently arise is the handling of digital assets.
Today an estate plan covers more than the traditional financial and physical properties you leave to others. It’s never been that unusual for certain assets to be overlooked because no one knew about them. This has become all the more common when it comes to digital assets. One reason is that myriad pieces of property or information are not even thought of as digital assets even though they are.
The result is that many people don’t realize just how much of their digital life they are saddling others to deal with and how much this can delay administering an estate while also increasing the cost of doing so.
First comes access
It starts with access. One noted retirement planning author, Robert Carlson, points out that accessing someone’s online accounts used to automatically violate federal privacy law. But now he says most states have enacted a form of the Uniform Fiduciary Access to Digital Assets Act. “Generally the law allows an executor to manage computer files, web domains and virtual currencies unless the will or other document specifically prohibits the access,” Carlson writes. The executor simply has to show proof he or she is so authorized.
However, Carlson goes on to note, “the law doesn’t allow the executor to access email, text messages, social media accounts, and other digital assets without express permission in a will, trust, power of attorney, or other legal document or court order. You probably don’t want your heirs to have to engage in legal battles for the right to access your various electronic assets or hire technology experts to crack them.”
The solution: Be very clear in your estate planning documents who should have access to and managing authority over each digital asset or account. Carlson says some people sort of “customize” access by, for instance, allowing only family members to access personal items like email, social media, or cell phone, while the executor (assuming this is someone else) gets access to financial accounts and other assets needed to do his or her work. Of course, if one so chooses, all these permissions can be formally given to the executor.
Your digital asset inventory
So what comprises your digital assets? It’s more than most people realize.
Virtually any online account or service that requires a secure log-in is a digital asset. This includes obvious things like email, social media, bank and credit union accounts, investment/retirement accounts, owned websites or blog platforms, medical records, and online subscription services (newspapers/magazines, ID protection, audio/video streaming, etc.), online-only U.S. Savings Bonds. Your smartphone and whatever apps on it are digital assets.
Carlson notes that many people are surprised to learn they do not own most of the books, movies, music and more that they “purchased” online and downloaded. “You didn’t really buy the assets,” he writes. “You bought only a license to use them, and this license usually expires with your death. But be sure the executor knows about them so recurring charges can be avoided.”
Think about any and all automatic payments you’ve set up—including charitable donations if you’ve done that. We might call these “digital debits.” Things like mortgage or auto payments, insurance premiums, HOA dues, utilities accounts, wireless fees. You may have also created online accounts for payment of federal and state taxes. Whoever handles your estate will need to know what the status is on all these and when such auto-payments can or should be stopped. Remember these payments may be being charged to a credit card or being deducted from bank accounts. Then there are also auto-deposits, such as from Social Security, bond interest, IRA benefits, annuities, and pensions.
As you can see, the roster of such assets your executor and heirs will need to know about is extensive. The examples offered here are not exhaustive, and these are focused on individual persons. The scope would grow considerably where a business or other non-personal interest is part of an estate.
Here is where another access consideration arises. While your formal legal documents may clarify who can access your digital life, they will also need to know how they can do it. Perhaps the most common method is via user name and password entered on a sign-in screen, possibly requiring two-factor authentication. These days for many people, the cell phone is a key gateway. Does yours use biometric access (fingerprint, facial recognition). If so, is there an alternate secure way to access it? Whoever is handling your estate will need to know. Major entities like Apple, Google and Meta (Facebook) allow designating who can access your accounts after you die.
With regard to this access factor, a good inventory of digital assets (and digital debits) lists the following:
- Name and web address for each item
- Account number, if applicable
- Full name on the account (include spouse or business name, if applicable)
- User name and password for the account or service
- Explanation of two-factor authentication when this is used
- Answers to security questions, if these were created
This article is a broad-brush look at the potential extent of one’s digital asset picture, not a complete presentation of every possible detail. It’s limited in part because people’s digital lives vary considerably. The take-away point is to not overlook what all comprises your digital life. The more thoroughly you cover this in your estate planning, the more stress, confusion, time and expenses you will save for your heirs and executor.