Estate Planning for Your Digital Assets
Presented by Timothy Weller
Most people live through their computers, smartphones, and tablets. E-mail, online financial statements, and cloud storage are replacing written correspondence, paper bank and credit card statements, and photo albums as components of daily living. Although a virtual lifestyle is common, planning for the administration of digital assets, including social media accounts like Facebook and LinkedIn, is relatively new to estate administration.
How does the digitalization of information affect estate planning?
State probate laws, which govern estate administration, allow executors to step into the shoes of the deceased owner and administer tangible assets. Digital assets are different. The privacy policies of custodians like Facebook, LinkedIn, and Google do not grant executors automatic access to digital assets, and many executors, in fact, have been denied access to such material. The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) has given states the opportunity to establish a solution for the administration of digital assets.
Under RUFADAA, the original user of a digital asset must expressly grant access to the content of that asset. This consent can be given either through the custodian’s access-authorization tool or in a planning document, such as a last will and testament or general durable power of attorney. Without this express consent allowing access to content, the custodian’s terms-of-service agreement will determine whether the executor gets access.
Many, though not all, states have adopted the act; visit www.uniformlaws.org and type “RUFADAA” into the search box to determine whether the act is legal in your state.
What can you do to help your executor or family avoid complexities?
Now that RUFADAA is most likely part of your state’s laws, you need to understand how you should plan for access to and administration of your digital assets. First, consider whether you want to give your executor access to your digital assets. Second, if you want your executor to have access, you must expressly consent through either the custodian’s access-authorization tool or through your last will and testament. You may also grant an attorney-in-fact access to your digital assets through a power of attorney.
Access-authorization tools vary among custodians, and you should recognize that authorization given to one custodian will not apply to another. If you choose to use authorization tools, create a list of account IP addresses on an encrypted thumb drive and store this in a bank safe deposit box or a fireproof safe in your home. Be sure to update this information diligently.
Alternatively, if you decide to grant access through your last will and testament or a power of attorney, be sure to discuss these provisions specifically with your attorney. Some standard powers of attorney do not cover digital assets.
What are some additional steps you can take to organize your information?
- Consider investing in a password manager. This type of service stores passwords in a digital safe and will transfer the passwords to your representative at a specific event, such as your death or incapacity.
- Create a comprehensive inventory of your digital assets. Be sure to store this inventory somewhere other than an e-mail account. Some e-mail providers close an account if it has not been accessed for several months. Even if an executor promptly contacts the e-mail provider, he or she may not be able to copy important e-mails or contact lists before the account is deactivated. Back up important information elsewhere and update it regularly.
- Don’t assume your digital estate has no value. Some frequent flyer points are transferable after your death. Credit cards with cash-back feature stores are generally redeemable after your death. Internet domain names are potentially sellable, and blogs are a form of intellectual property.
- Decide how you want your online life handled after your death. Facebook, for example, allows a personal administrator or immediate family member to close the account or “memorialize” it. This may help ease your loved ones’ pain during a time of grief. Consider creating instructions for a family member to do this, or something similar, on your social media accounts.
By understanding how to grant access through a provider’s authorization tool and planning for your digital assets with your attorney, you can help ensure that your executor and your family are able to carry out your wishes as quickly and efficiently as possible.
This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.
Tim Weller is a financial professional with Weller Group LLC at 6206 Slocum Road, Ontario, NY 14519. He offers securities as a Registered Representative of Commonwealth Financial Network®, Member FINRA/SIPC. He can be reached at 315-524-8000 or at email@example.com.
© 2018 Commonwealth Financial Network®