Digital Estate Planning: How to Organize and Protect Your Digital Assets and Transactions

Your estate plan is incomplete if it doesn’t have arrangements for your digital life, including accounts, files, trans-actions and more.

Technology is taking a greater role in our lives, even for those who consider themselves Luddites. It took a while, but estate law finally is just about caught up to technology, and it’s essential to incorporate digital assets into estate plans. To avoid tremendous hassles and perhaps a lot of expense for your estate and heirs, be sure the digital aspects of your estate plan are complete and up to date.

Otherwise, it will be difficult at best for people to access and manage accounts and stop automatic payments.

On the other hand, there might be digital assets to which you want access limited, or you might even want the assets deleted. That should be in your plan, too. Digital assets include any online account or service that is protected by log-in security, such as identification and passwords.

Obvious digital assets are email, social media, message board accounts and subscriptions. Your computer, computer files, files you store on “cloud accounts” and any web domains you own are digital assets.

Online financial accounts, of course, must be included in the list. A smart phone and all the apps and other items on it are digital assets. Medical records are being digitized and accessible online, making them part of your digital estate. The first step in developing an estate for digital assets is to create an inventory.

Your heirs need a complete compilation of all your digital assets and accounts. This includes all the items listed above and any others you can think of. Be sure the inventory includes information about any automatic payments, whether they are automatically made from your accounts or charged to credit or debit cards.

There also are a number of hybrid assets. For example, many people have a standard account or IRA at a broker but set it to have online access. All or most of the account management is done online. Such assets should be included in your inventory. A good inventory lists the name and web address of each account or asset and any account number. Include the full name that’s on the account, whether it is your name, your spouse’s name, both names or a business name.

The inventory also includes all the online access information. Typical information includes a username or personal ID and a password. An additional layer of security, such as a fixed passcode or one that is sent to a cell phone or email address, is becoming more common and should be included when one is used. Many digital accounts also have you answer security questions. Include these in the inventory. Add any other helpful information or comments to the inventory.

If you need help organizing and compiling the inventory, consider using my work book, To My Heirs: A Book of Final Wishes and Instructions. It is available for $24.99 by calling 800-552-1152 or going to the Bob’s Library page on the website under the “About bob Carlson” tab.

The next step is to determine who should have access to these items and what should be done with them.

The executor should have access to the financial accounts and a number of the other items. The executor will manage them and eventually transfer them to new owners under your will or trust. The executor also will ensure bills are paid while the estate is being processed and eventually turn off automatic payments and cancel subscriptions.

The disposition of other digital assets might be less obvious. Consider who you want to be able to see and manage your email, social media accounts and any other personal digital assets.

Many of these assets aren’t needed by the executor to process the estate and are in the nature of personal possessions. Some people want to limit access to their email, computer hard drives and files stored on the cloud to their spouse, their closest child or someone else.

Yet, there might be emails, for example, that are relevant to managing and processing your estate. You could have someone review all your incoming email and forward to the executor any related to financial matters or managing the estate. You might have incomplete creative work on the computer or in cloud storage.

Some people want most items to be deleted or destroyed after they pass while others have someone in mind to handle the items. When you want to limit access to the digital assets to different people, you might want to prepare separate inventories of digital assets and give each person the appropriate inventory with the access information. The executor might need to know something about these items if they are assets included in the estate and bequeathed through your will.

But the executor might not need the access information if you provide it to someone else. After completing the inventory and deciding how you want each item handled, it’s time to state your wishes in your will or trust.

Not long ago, this step wouldn’t have mattered much. There wasn’t any law covering digital assets, and most providers of digital assets and services set their own policies.

Many refused to allow anyone to access the account and wouldn’t give passwords or other access information to executors or family members. They often cited a federal law which states it is a crime for anyone to access an online account that isn’t theirs.

Those difficulties largely have been cleared up by the Uniform Fiduciary Access to Digital Assets Act. The Uniform Law Commission issued the proposed law in 2015. Since then, versions have been adopted in most states.

It hasn’t been enacted, but is being considered, in Massachusetts, Pennsylvania and the District of Columbia. Only California, Kentucky, Louisiana and Oklahoma haven’t enacted and aren’t considering the law, though some of those states have adopted their own laws to cover digital assets.

The law allows estate executors to manage many digital assets without special permission, unless the will states otherwise. The executor is authorized to manage computer files, web domains and virtual currencies. The executor doesn’t have access to email, text messages and social media accounts without express permission in a will, trust, power of attorney or other legal document or order.

Be clear in your will, trust and power of attorney who should have access and management ability over each of the digital assets and accounts. Without that express direction, there could be a lot of difficulty settling your estate, accessing assets, shutting off automatic payments and taking other actions.

Without that direction, assets could be viewed and managed by someone you didn’t want to have that control.

Also, determine if each digital asset provider has its own policies. Google, for example, lets you designate in your account profile who can access your account after you pass. Facebook automatically turns an account into what it calls memorial status after it learns someone passed away.

Memorial status allows people to post remembrances but otherwise no one can sign into the account and change it. Some people authorize one or more people to update, change or delete the account after they pass away before Facebook is notified of the death.

Not long ago, digital assets were an estate planning nightmare. The law was unclear, and many people didn’t plan what would happen to the assets after their demise. Families and estates spent a lot of time and money trying to learn about accounts and obtain access to them. Some resorted to hiring computer experts to try to discover passwords or hack into accounts.

Now, you should treat digital assets and accounts the same as other estate assets. The keys are to leave an inventory of all the digital assets and state clearly your wishes regarding access to and treatment of the assets.