With few exceptions, most of us are living digital lives. That includes basics like sharing family news on social media and storing photos in the cloud, as well as financial information. Your digital life needs to be part of your estate plan, now more than ever before.
Your executor and your heirs are likely to run into trouble if you don’t have a digital estate plan, advises a recent Morningstar article, “Do You Have a Plan for Your Digital 'Estate'?”
The article reminds us that not every aspect of an estate will be addressed quickly, even six months later. This includes questions about how to handle the files on the decedent’s computer or the stuff on his smartphone. His social media accounts may also still be up and running.
Many people who think they've X’ed all of the right boxes on their estate-planning to-do lists, may have overlooked the proper management and orderly transfer of their digital assets after they die or become disabled. Digital estate planning includes all of your digital possessions, such as computers and smartphones, stored data (on your devices or in the cloud) and online accounts like Facebook and LinkedIn. You should include your digital assets in your estate plan. You should state who should get the data and if there are things you don't want others to have. Here are some first steps:
First, conduct a digital fire drill. This will jog your memory about which digital assets you deem important. Consider the following questions:
- What valuable items would you lose, if your PC or other device was lost or stolen?
- If you’re in an accident, would your family be able to access your significant digital information?
- If you died today, to what digital property would you like your loved ones to have access?
Next, make an inventory of the digital assets you named during the fire drill and include user names and passwords. Your digital inventory may include digital devices, data-storage devices or media, electronically stored data, social media accounts, domain names and intellectual property in electronic format. Keep this document safe.
You may want to keep an electronic list of digital property and passwords, protected with strong encryption and a strong password and backed up in the cloud (not on your computer and smartphone). Create a master password for the electronic list, store the password in a safe deposit box or home safe and give your fiduciary instructions on accessing it.
Remember to back up all your data.
You’ll also want to formally designate a digital executor so that someone will make sure that your digital assets are managed according to your wishes. You may need to provide this person with a special power or authorization to deal with certain digital assets, like cryptocurrency. Be sure that your will includes a list of specific digital assets and what you want them to do on your behalf.
Reference: Morningstar (December 15, 2017) “Do You Have a Plan for Your Digital 'Estate'?”