By Rob DeHollander, managing principal, DeHollander & Janse Financial Group
“Being famous on Instagram is basically the same thing as being rich in Monopoly.”
I’m not sure who is credited with this, but it is clever. We live in an ever-expanding, dynamic digital world. According to the Pew Research Center, 87 percent of Americans use the internet. This statistic makes you wonder about the other 13 percent. Regardless, most of us maintain at least some personal and financial information online. We pay bills online, keep contact records digitally, and rarely print a photo — because it’s in our online photo album. Although this digitizing of information makes it easier to store and recall, it also presents some concerns when it comes to accounting for all of these “assets” in your estate.
What are digital assets?
Digital assets include your online financial accounts, your personal email accounts, and your Facebook, Twitter, and LinkedIn accounts. The assets may or may not have a value. For example, you might own a domain name for your small business, which would have value, but the photos you uploaded to Shutterfly have sentimental value only.
The problem with digital assets in estate planning
With traditional estate planning, you take steps to ensure that your executor or personal representative can access the information needed to gather and safeguard your assets, contact creditors, and, if necessary, oversee your business after your passing. This can be especially challenging with digital assets, however, if you do not arrange the proper authorization ahead of time. The key consideration is privacy. Imagine if someone were able to impersonate the account holder, share private communications, or access valuable digital assets of the estate. Hence, legislation has been created to address some of the concerns.
New legal statute may ease access concerns
The new statute is called the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). I know what you’re thinking — lousy acronym. I agree. Basically, RUFADAA addresses whether and how a family member, executor, attorney-in-fact, or trustee can access digital assets.
RUFADAA is different from state laws governing estate administration, powers of attorney, and trusts. It doesn’t presume that family members and fiduciaries can access digital assets because of their relationship with the account owner. Instead, the statute requires express authorization before anyone — family member or fiduciary — may access the content of a digital asset.
So what can you do now to start organizing your digital assets?
- 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. You may also assign different roles to different people.
- Create a comprehensive inventory of your digital assets. Be sure to store this inventory somewhere other than an email account.Some email providers, like Yahoo!, will close an account that has been inactive for several months and delete the email history. Even if an executor promptly contacts the email provider, he may not be able to copy important emails 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 offering cash back generally allow redemption after your death, but only if it is claimed. Internet domain names are potentially sellable, and blogs are a form of intellectual property.
- Consider investing in a password manager.Sites such as LastPass and Dashlane maintain a record of your online accounts and passwords in a digital safe. You can set them up to transfer the passwords to your representative at a specific event, such as your death or incapacity.
How can you ensure that fiduciaries and family members have access to your assets?
- Ask your attorney about inserting provisions into your will that grant your executor the authority to access your nonfinancial digital assets and accounts.
- Talk to your attorney about adding language to grant your power-of-attorney agent authority to act on your behalf with your digital accounts and assets.
- If you have assets in a trust, ask your attorney about the possibility of amending the trust agreement with language that will allow the trustee access to digital assets and accounts.
- Check online service providers’ policies on death or disability.Each provider has its own access-authorization tools, and the terms vary, so be sure you understand who can and can’t access information. If the provider allows access to your executor, trustee, or power-of-attorney agent, inform these individuals where important information is stored.
Digital assets need to become a part of the conversation with regard to estate planning. While recent legislation helps provide some guidance when it comes to access to these assets, it is still a good idea to create an inventory and list of usernames and passwords in a safe place where your fiduciary has access upon your death or incapacity.
Robert DeHollander is a managing partner and co-founder of the DeHollander & Janse Financial Group located at 3515 Pelham Road, Suite 100, Greenville. Contact him at 864-770-0220. Securities and advisory services offered through Commonwealth Financial Network®, member FINRA/SIPC, a Registered Investment Adviser.