While the Internet has given us the power to connect with others, share information, and create an entire virtual life with just one click, it has also generated unique estate planning implications like we have never seen before. According to Caring.com’s 2021 Wills and Estate Planning Study, only 32.9% of Americans who were surveyed had a will. This means that not only do the majority of Americans not have a plan in place to protect to their physical assets, but they also do not have a way of securing their digital assets.
Digital assets cover everything that you sign up for online: social media profiles, online shopping accounts, digital banking services like Venmo and PayPal, email accounts, etc. Each time you log in, post, or upload, your digital footprint grows whether you realize it or not. Unlike those “traditional” assets that make up one’s estate, such as automobiles, real estate, and life insurance policies, digital assets are less likely to be on our radar when it comes to estate planning. Loved ones are likely unaware of what are sometimes referred to as “hidden assets” – online bank accounts, digital wallets, and accounts with online retailers – because there is often no paper trail to aid in tracking them down. As a result, these accounts can be lost forever without proper planning.
So, how does one properly plan? Follow these 3 steps to protect your digital assets and achieve peace of mind along the way.
#1 Leave a record
Creating a record of all digital financial accounts is not something that should be left until you are ready to write your will. Just as you regularly take inventory of your checking and savings accounts, so too should you keep a record of your online accounts. For example, when’s the last time you checked the balance of your Venmo or PayPal account? How about your e-gift card balance on Amazon or some other online shopping site?
For each account, document the login credentials and security questions and answers, and generate a “statement” – much like one you receive from your bank each month – of the account balance and the credit cards that you have linked to each account. While it may not seem like these accounts are major financial assets, they are still part of your estate and should be treated as such.
#2 Provide consent
Without proper authorization, your loved ones will not be able to access the contents of your online accounts. Some online service providers prohibit access to accounts by anyone other than the account owner, so simply giving your passwords to a trusted individual can inadvertently set them up for serious legal consequences.
Fortunately, you can include language in your estate planning documents that gives online service providers consent to divulge the contents of your accounts. You may also have the ability to authorize an agent to access your digital assets or to place the digital assets in a trust. However, because the laws regarding the protection of digital assets are constantly changing to accommodate new technological advancements, it is necessary to consult with an experienced estate planning attorney to receive professional guidance about your options.
#3 Review and update your plan
Just a few years ago, we had to manually unlock our cell phones; now all it takes is a quick scan of our faces. Technology evolves quickly and constantly, so your digital assets and how you access them are likely to change over time. Therefore, it is a good idea to review and update your plan periodically to ensure that nothing has fallen through the cracks.
Failure to update your record to reflect changes such as a password reset or the opening of a new account with an online retailer can result in those assets being lost forever, taking a piece of your legacy along with them. Use the time you have now to take control of how your digital assets will be handled once you are no longer in front of the computer screen. Your loved ones – and your virtual wallet – will be thankful that you did.