There are many considerations when helping a client set up a will or estate plan, from assigning an executor or power of attorney, to choosing beneficiaries, to setting up a trust and more.
Every good estate plan includes taking an inventory of valuable assets that will need to be managed or dispersed upon someone’s death, including:
- Real estate
- Investment accounts, cash, stocks and bonds
- A business or intellectual property
- Personal property such as jewelry, vehicles, artwork and furniture
- And more
Often, miscellaneous items or heirlooms that may not hold great monetary value but have significant meaning to individual family members are included as well.
Not that long ago, such a list was considered to be a relatively thorough snapshot of a person’s assets that warranted inclusion in a will or estate plan. With the emergence of technology and numerous online platforms, however, digital assets can easily be overlooked or dismissed. Yet, including them as part of an estate plan is vitally important.
Examples of Digital Assets
Regardless of age, approximately 95% of the U.S. population conducts activities online.1 Those activities leave a trail of data and often involve multiple accounts on various platforms, some of which may include:
- Email or other electronic communications
- Social media sites, blogs or website domains
- Rewards programs for credit cards, hotels, travel, etc.
- Online shopping sites
- Financial accounts, including Paypal, online banking and cryptocurrencies
- Cloud-based file storage of photos, videos, music, etc.
- Business data, including CRMs, trade secrets, confidential information, etc.
It’s estimated that the average internet user typically has 23 online accounts that require a password.2 However, many people don’t create a list of those digital assets for other trusted individuals to manage in the event of death or becoming incapacitated.
The Challenges of Digital Assets
It’s one thing for beneficiaries to not have access to a deceased loved one’s unfinished manuscript, family photos or videos, or to have the ability to manage a social media profile, as those digital assets may hold more sentimental value than monetary value. Consider, however, that a client has opted to go paperless and manage the majority of their financial transactions online.
A heir may not even be aware of various financial accounts held by their loved one or, if they are, may not know where to find the account information. It may be stored on a locked computer, smartphone or lost in an email account that is password protected. During a time when someone is grieving the loss of a loved one, the added burden of retrieving their personal information and dealing with multiple online vendors can create further strain and heartache.
As an example, immediate family members can make a formal request to Google in the event a deceased person didn’t leave clear instructions regarding their online accounts, which can include email, personal documents, spreadsheets containing financial information, photo storage and more. Google can help close the accounts or provide some content upon careful review of the request. However, the company cannot provide passwords or other login details for full access.3 Other online providers may hold similar policies for keeping user information secure.
Advice for Clients With Digital Property
When providing guidance to your clients, address the importance of including digital assets in their estate plans. Doing so can help minimize administrative costs and ensure that all digital property is accounted for and accessible in the event of their death. Clients should consider the following.
Create a List of Digital Assets
Include all online accounts, including social media, email, PayPal, online shopping sites, financial institutions, insurance policies and others along with usernames and passwords. Clients should let their power of attorney or a trusted individual know how to access this list when they need to. It’s imperative, however, to discuss cybersecurity with your clients; they should follow best practices to protect passwords and store such a list in a secure location to prevent the information from getting into the wrong hands.
In the same way that someone may keep copies of important financial information, birth certificates or other documentation in a safe deposit box, clients can also use a virtual safe deposit box for any electronic information. Various online services are available for backing up electronic data in the cloud in the event a computer crashes. Likewise, any digital assets stored exclusively on the cloud should also be regularly backed up onto a computer or hard drive to make access easier.
Estate planning documents should include wording that authorizes someone to be the executor of the deceased person’s digital estate. Such a legal document prepared by an estate planning lawyer may allow a designated person to access, cancel, deactivate or delete various digital accounts.4 Clients should still review each platform’s individual terms of service. As previously mentioned, if an executor doesn’t have a list of usernames and passwords, the process for retrieving information can be arduous and access may be limited.
Sometimes it’s good to be reminded that the internet is still a relatively new frontier for many people, especially older generations, and the world of online assets is still evolving. It’s best to work with clients to help eliminate ambiguity and difficulties for their loved ones when they’re gone by documenting their wishes and putting a digital asset plan in place.
Younger generations are often associated with being active on social media and various online platforms, but many Millennials are also eager to receive sound investment advice and guidance on how to manage their finances. Access our report, 3 Myths About Millennials And The Truth Behind Them, to help you connect with this generation and grow your business.
Written by: Marshall Heitzman, CFP®, ChFC, FLMI, CPCU, BFA™
Marshall is CUNA Mutual Group's Advanced Planning Expert and has more than 25 years experience in the insurance and financial services industry. He consults Financial Advisors on advanced retirement planning concepts for retirement and wealth management clients.
1The Next Web, Digital trends 2019: Every single stat you need to know about the internet, January 30, 2019
2McAfee, The Past, Present, and Future of Password Security, May 02, 2018
3Google, Submit a request regarding a deceased user's account, No date cited
4AARP, Prepare a Digital Estate Plan for Future Caregivers, June 11, 2019