These days, it’s likely that most of your important financial information is stored digitally through a combination of online accounts, saved documents on your personal computer, and your smartphone. Chances are you keep a lot of other important information stored digitally too. If you’re a small business owner with registered domain names, a thriving e-commerce website or a money-making blog, you should recognize these as important digital assets as well. Have you thought about what will happen to these financial and sentimental digital accounts when you die?
Going Without a Plan is a Bad Idea
Think of your survivors; computers and phones left behind can become electronic lock boxes. If your survivors don’t have access to your email accounts, they may not even know that some financial accounts exist if you’ve signed up for paperless statements or manage certain portfolios only through mobile apps. Online billing due dates may come and go, risking account closure or insurance forfeiture. The increase of privacy and security settings online can add an additional layer of complication when it comes time to bypass 2-factor authentication or unlocking phones and computers that use biological factors like Face ID or Touch ID.
In the real world, wills and estate plans set out instructions to family and business colleagues in the event of death. But those post-mortem road maps are painfully scarce in the digital world.
Identify Your Digital Assets
Start with a list of what you use (and where to find it): mobile wallet apps (e.g. Venmo), bookkeeping software, online financial accounts, and personal accounts including email addresses and social networking pages, and any other important account information that would be crucial to have access to. For all of these accounts, you want to keep a running list of the website address (or where to find it), username, password and any other information needed to log in, including which accounts use 2-factor authentication and how to bypass it.
Digital Assets you likely have include:
- Mobile wallet apps like Venmo, Zelle, PayPal, etc.
- Bookkeeping software
- Online financial accounts and mobile apps
- Email accounts
- Social network accounts
- Subscription services or accounts with recurring payments (i.e. Netflix, Hulu, etc.)
Digital Assets you might have, especially if you are a Small Business Owner
- Website, URL/ domain, and web hosting accounts
- Financial information specific to your business, including employee benefits, retirement plans, etc.
- Business specific social media accounts
- Advertising and marketing (social media ads, Google Ads, etc.)
If you haven’t saved a copy of your physical document assets on your computers, it could be a good time to get it done at the same time. Having a digital backup of your physical documents adds an extra layer of safety and protection.
Select Your Digital Agent
Next, identify the right person to access and review your important online information. This may be your existing agent under power of attorney, your estate executor, or your trustee.
This person should also be the one to sit down with you in this process and help you review the information you’ve compiled. If you’d rather choose a digital agent first, and then sit down together to identify and organize your digital assets, that process can work well too!
Keep in mind that you can have different digital agents for each category of your digital assets. For example, you may have one agent who will have instructions and access to your emails, while another has instructions and access to your social media accounts. Determine how many, or how few, digital agents you feel comfortable selecting based on who you think will be able to fulfill your wishes the best.
It’s becoming more common for large tech companies to allow you to set up access to your accounts after your death. For instance, Facebook and Apple both have features called “legacy contacts” that gives permissions to these identified contacts to have access to your information after death and Google has a system called the Inactive Account Manager that helps to send pre-curated messages to specific contacts after your account in inactive for a certain amount of time.
Keeping Your Digital Assets Organized
Using tools like a password manager can be a helpful “assistant” when compiling your important account information for anything you must log into online. Many password managers will allow you to assign additional users to your accounts to allow designated people to have access to the information and keep it organized in one secure location.
For your other important digital assets, there are companies who specialize in securing, protecting, and organizing all your digital assets, including documents that reveal the location of your trusts and wills, or even something like a special family recipe. While people may be hesitant to trust storing these documents online, these companies provide high-level security and have plenty of privacy options that are often enough to reassure most people’s concerns.
If you feel you must write down the information physically, or at least the information to access your password manager, keep it in a safe place like a sealed envelope or in a safe deposit box. It’s true that security experts warn against writing down such information, but if it’s a necessity, it’s better that your survivors can access this information if you are incapacitated or deceased, than have it be lost.
Prepare Your Instructions
A brief set of instructions will be very helpful for your survivors. That has always been the case, but the tools and instructions themselves are quite different today than they were even ten years ago. You may want to ask your digital agent to notify certain members of your online community about your death, such as people that you communicate with regularly via email or social networks. Be clear about whether online accounts with photo scrapbooks and other treasured virtual objects should be closed or preserved to pass on to family members and friends. In the past few years, a deluge of digital afterlife services have started to provide many of these notifications.
Once it’s set up be sure you’re continually updating the contents of your digital vault as passwords change, or as you open/ close accounts. You and your digital agent can use these opportunities to help feel comfortable accessing your vault and review your instructions so that they are prepared when the time comes.
You may want to introduce your digital agent to your financial planner; just as you would your Power of Attorney and Executor. Your financial planner may help coordinate their efforts; it can be a valuable resource to have someone with experience in complex situations.
The types of information your survivors will need has not changed, but locating and accessing that information is totally different today, which is why preparing your digital assets plan now is a smart move.
For More Information:
The Importance of Having an Estate Plan (Lakeside Chat 12-1-21)
The Digital Beyond List of Online Services
Basics of Trust and Estate Planning (Lakeside Chat 7-9-20)
Heidi Clute, CFP® is co-owner of Clute Wealth Management in South Burlington, VT and Plattsburgh, NY, an independent firm that provides strategic financial and investment planning for individuals and small businesses in the Champlain Valley region of New York and Vermont. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
Securities offered through LPL Financial. Member FINRA/SIPC.