Articles

Virtual Estate Planning in the Digital Age by Barry M. Brant


Posted on June 20, 2014 by Barry Brant

It is difficult enough for most individuals to remember all of the usernames and passwords they establish for email, social media, and online shopping, banking and investing. Imagine what happens to those digital assets and online identities when an individual dies or becomes incapacitated. How will family members access those accounts or terminate recurring charges for services? Where and how would they find the usernames and passwords required to continue paying the individual’s bills or finding their personal and important documents or photos stored in the cloud?

Despite all of the conveniences of technology, challenges arise when family members and executors attempt to gain access to these digital assets to carry out the provisions established in a decedent’s estate plan. Not only may family members be unaware of the existence of some accounts and their related usernames, passwords and security questions, but they also may find that the online accounts have a legal right to deny access to family members. To prevent these challenges and grant loved ones easy access to online accounts and treasured assets stored in the cloud, individuals should address their digital assets in their estate plans.

Digital Asset Management and Planning

With increased reliance on the web, cloud computing and personal devices, the ability to take stock of the entirety of one’s online presence may seem overwhelming. However, setting aside the time now to prepare a list of all of one’s digital assets will save his or her heirs significant time and stress down the road.

• Take Inventory of Digital Assets. Create two lists of all online accounts, one for business assets and one for personal assets. For each list, include usernames, passwords, PINS and answers to security questions for the following accounts:

o Email

o Financial banking, credit cards, brokerage, insurance and PayPal accounts

o Utilities, such as Internet service provider and electricity

o Tax filing sites, such as e-file and EFTPS accounts

o Social media accounts, including Facebook, Twitter, LinkedIn

o Shopping sites, such as Amazon and eBay

o Travel accounts used for hotel bookings and managing airline mileage

o Entertainment sites such as iTunes, Hulu and Netflix

o Sites for storing and sharing photos, videos and important documents

• Store Digital Assets Safely. Security experts recommend that individuals never save their login information on paper, where anyone could gain easy access. Nor should individuals include login information in their wills, which could become public record upon their passing. Instead, such lists can and should be stored in safety deposit boxes or with any of the many password-manager apps and services available online. In either case, individuals should ensure that they share the location and accessibility of this information with their personal representatives and/or estate planning counselors.

• Document and Authorize Access to Digital Assets. Individuals should update their wills, power of attorney appointments and estate plans with specific language that authorizes personal representatives to access their digital assets. They may also want to provide directions on how they want their personal representatives to manage or delete online accounts. Many online accounts require a death certificate and copy of the account holder’s photo identification in addition to a copy of the will and letters of administration in order to access, delete or deactivate an account.

• Update, Update, Update. Digital assets and login information should be kept current as new online accounts are opened, passwords are changed and apps are added to personal devices.

Estate plans must keep up with changing times and new technologies. Providing family members and/or personal representatives with a list of all of one’s digital assets and means of access to those online accounts ensures the preservation of one’s wishes and smooth settlement of his or her assets, including the virtual ones.

About the Author: Barry M. Brant, CPA is director of Berkowitz Pollack Brant’s Tax, Consulting and International Services practices. For more information, call (305) 379-7000 or email info@bpbcpa.com.