The Impact of the Digital Age on Estate Planning
Taking inventory of the assets after the death of a loved one used to involve walking around the house of the departed. If the Personal Representative was not aware of all the decedent’s assets and bills, he or she could simply watch the mail for account statements that would inevitably show up.
The digital age has changed this process. Statements of accounts are often sent via e-mail or are available online. Individuals have social media accounts and store family photos and videos electronically. They may have domain names, blogs, PayPal, airline frequent flyer accounts or cash back credit cards, that have monetary value.
The need to plan for digital assets becomes obvious. The family cannot deal with assets it does not know about or cannot access because it lack passwords. If an account with significant value cannot be accessed, it may be lost to the heirs or at the very least, distribution delayed. Bill payments will not automatically stop because someone dies. These payments need to be stopped. And family treasures such as photos may be lost forever if no one can access them.
There are important steps that can be taken:
Update your estate planning documents. Wills, revocable trusts, and powers of attorney should contain a “Digital Asset Clause” which grants your Personal Representative, Trustee, and Agent broad access and control over all your digital accounts, social media, and the like. In addition, specific bequests should be made for frequent flyer miles programs or other loyalty programs; sometimes there is a very large accumulation that can be lost to beneficiaries.
Inform your trusted representatives where you have online accounts and provide a means of accessing passwords. Consider making a digital inventory and store it with a service such as LastPass, or in a safe deposit box. Make sure your representative has access to the inventory and remember to keep the list updated. There is always some risk in creating a list so consider its security carefully.
Backup your family photos and place them on a CD drive, or some other media that will allow them to be saved if your computer cannot be accessed or the photos inside them are forgotten.
Take steps to protect privacy. A revocable trust usually does not become a public record whereas a will does. If certain accounts are referenced, such as airline frequent flyer accounts, a revocable trust might be preferable. Minimize the number of accounts; consolidation leaves fewer accounts to deal with.
Planning for the disposition of your house or car is an obvious task when preparing an estate plan. Planning to allow access to digital assets should also be an important part of this process.