Often a key challenge faced by people responsible for carrying out an individual’s estate plan is 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 such as digitally stored photos or music, social media accounts, emails, financial and medical records, etc.
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.
Access to digital assets is a key factor in Estate Planning in Colorado
Another issue particularly relevant to handling digital assets in an estate is how to access such assets. 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. (Colorado passed its own law in 2016. It’s an intricate piece of legislation. See https://leg.colorado.gov/bills/sb16-088).
“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.”
It’s obvious that this area of estate planning can be tricky. As the estate planning firm of Chayet & Danzo, LLC, writes at ColoradoElderLaw.com, “This topic is complicated and constantly evolving,” so “it’s important to make questions about estate planning for digitally held assets part of your consultations with your estate planning lawyer.”
Steps you can take to secure and manage your digital assets in Colorado
So what is the best way to arrange ahead of time for your digital life to be known to your heirs and/or executor when you die and to ensure they have needed access to properly manage your digital assets? Three key steps to take are to 1) adequately inventory and document your assets, 2) clearly explain your wishes about their disposition, and 3) arrange for your estate handler(s) to be able to access and handle those assets according to your wishes. If you don’t have your digital matters sorted—or even just spelled out in a memo—your loved ones may have to spend their grieving hours on customer-support calls, trying (often fruitlessly) to gain access to your accounts and files.
Carlson points out that 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.
He 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 also 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 automated 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.
Spell out how your digital assets can be accessed
While your formal legal documents may clarify who can access your digital life, those designated persons 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. See a little more on such platforms below.
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
Julie Jargon writes in her “Family & Tech” column in the Wall Street Journal of a woman, Nancy, who lost her partner of 18 years, Burton, when both had been avid photographers. Burton had thousands of nature and family photos in his iCloud account. Jargon recounts that after his death, his account began receiving emails saying that payments for iCloud storage were past due and warning that his account would be closed. His credit cards had been locked posthumously. When Nancy tried to log in from her computer with a saved password, it didn’t work. “The thought of losing all those photos made me sick,” Nancy was quoted as saying. With some technical assistance, she was eventually able to access the photos and save them.
Partly based on such anecdotes, Jargon offers the following additional advice to ensure your heirs don’t lose access to your digital assets:
Colorado residents safely store passwords and designate a contact for access
Consider using a formal “password manager” to store passwords and name a contact or contacts who can be granted access should you die or become incapacitated. Examples of such password managers include Bitwarden, 1Password (which allows you to create a family account [up to five family members] and share login credentials), LastPass, and Dashlane.
Colorado residents name a legacy contact for cloud-based accounts
To avoid locking out your loved ones upon your death, be sure to designate legacy contacts for your cloud-based accounts, and notify those people. That way, your heirs can more easily retrieve photos and other important documents you might have stored. For example, Apple lets you designate a legacy contact or contacts from the settings on your iPhone, iPad or Mac under “Password & Security.” With your death certificate in hand and a complex alphanumeric access key, these legacy contacts can access your digital files without having to know your Apple ID password. With Google, you can decide ahead of time what to do with your Google account and data when the former becomes inactive after a chosen period. Through optional settings in “MyAccount,” you can name legacy contacts and choose which data—emails, photos, documents, etc.—you want to share with them.
Make plans for your social media accounts while you are living in Colorado
For many people, social media is a varied catch-all of photos, diary-like entries, personal and professional contacts, and more which might be important to your heirs. There can be a question of whether to just shut down the account or “memorialize” it for posterity and for continuing to accept observations by others. But heirs may not know how to do either one. Log into your account on platforms such as Facebook, Instagram, LinkedIn, Twitter, and others to see how account closing or memorialization is done (where this is available) and let your heirs know the procedures and what your preferences are. If a given platform doesn’t allow for naming legacy contacts or memorialization, see what survivors can do to remove your account and give your heirs that information. (Note: Because processes and practices on social media platforms occasionally change, it’s advisable to periodically double-check what you have set up to be sure it’s still valid and effective for your goals.)
Last but not least, make your wishes known while living in Colorado
Whatever you choose to set up for the handling of your digital assets, Carlson says be very clear in your estate planning documents who should have access to and have managing authority over each digital asset or account. He says some people “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.
Jargon says to also have a conversation with family about your digital assets and what you want done with them. It’s not enough to simply pass along login credentials to survivors. Your heirs need to know what you want them to do with the access you give them.
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. 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—including expressing your wishes about your digital assets—the less stress, confusion, time and expenses your loved ones will “inherit.”