October is Cyber-Security Awareness Month! Week 5
Your Estate Plan and your Digital Assets
by Terri McDermott
Many of us have elected to receive to receive electronic statements, set up auto payments or online bill payment. What happens with these accounts when you die or become incapacitated? Without physical evidence of your bills or statements for your accounts, how will your executor, trustee or family members be able to manage your bills or finances when the time comes? How will they know about bills due or money owed if they are unable to access your email or online accounts?
Facebook, LinkedIn, Twitter and Instagram and other social media sites are increasingly used by all of us. These providers have our online profiles with personal information, pictures and contacts. How are these accounts or digital assets handled upon your death or incapacity?
Cryptocurrency ownership adds another layer of complication and is not addressed in this article.
Your estate plan should be designed to make the administration process as easy as possible for your loved ones. This includes making it convenient to manage your assets upon your incapacity or death and avoiding the need to sort through your paperwork to collect assets and pay your bills. Without specific provisions in your estate plan and careful planning, access to this critical information can become difficult for your family or loved ones.
Why not keep a list account credentials, “just in case”? Even if your fiduciary or designated person(s) has the information to access to the accounts doesn’t necessarily mean that they have the legal authority to do so, especially when a website’s Terms of Service do not permit a transfer of ownership. In fact, heirs could potentially be found guilty of “hacking” by trying to access a loved one’s online accounts after he/she is gone.
Federal law regulating access to digital property does not yet exist. To address the situation, the Uniform Law Commission created the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) in 2015, which received widespread support and in just a few years has been adopted by more than 40 states.
RUFADAA provides instructions for how a person’s digital assets are to be treated should a designated representative seek access. This may include not only executors after death, but trustees, court-appointed guardians, and attorneys-in-fact. The starting point is that online service providers can create an “online tool” that functions as a form of “digital power of attorney” to specify who has control and access for that specific site. RUFADAA helps to provide a clear legal framework for digital asset rights to be specified in traditional legal documents (e.g., Wills and powers of attorney). It clarifies that it’s only in the absence of an online tool, or any legal documents, that finally the service provider’s own Terms of Service will control.
In today’s digital world, most of our financial transactions and communications occur online. Digital photographs, websites and Internet profiles are now the norm for many of us. You can do almost anything online, and many people choose to do so. These accounts have limited access with protected passwords, which can create problems when the account holder dies because no one has access to their passwords. Planning now can save a lot of heartache later.
If you live in a state that is not covered by any protective laws, those accounts or assets are governed by the terms of the service agreement when the account was opened. Under these agreements, family members would need confidential identification information and passwords. Consider the following steps:
1. Inventory Your Accounts
Document an inventory of the accounts including login IDs and passwords. That information should be maintained in a secure location.
2. Create an Online Vault
This would be a place to keep passwords, identification or logins and other sensitive information. Available options include Keeper, Last Pass, and others. Your representative should have access to the vault password.
3. Establish a Detailed Digital Asset Plan
This plan would have a clear, specific statement of intent about who would gain access to what information. This statement of intent should address all accounts, past, present and future.
4. Carefully Select Your Trustee, Executor or Representative
When making your decision, consider the private and confidential information that will be accessible. Oftentimes, the information embedded in the digital assets is highly personal and confidential.
The popularity of digital assets is a part of our lives and they probably won’t go away. For your family, heirs, and designated representatives, please take the proper estate planning precautions.