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Estate Planning Tips for the Digital Era

| July 17, 2017

As there really is not a market-moving theme to discuss this week (and we don't want to fill your inboxes with useless junk), we want to instead take this week to look at an important financial planning topic. After all, we do consider our work to be "planning-centric."  

The following is adapted from materials provided by Fidelity, and it focuses on an emerging area of concern in estate planning. As owning digital property becomes the norm, estate plans should consider employing new strategies. If you have recently updated your documents, you may very well be covered. However, if you are like most, your estate docs may need a refresher, and we encourage you to discuss this topic with your attorney during your next consultation.

Simply put, if an estate plan doesn’t account for digital assets properly, your heirs may not be able to access them. Family photos and videos could be lost forever, social media accounts could stay up long after a client has passed, and heirs may not receive all the money that they are entitled to receive.

It has become the norm to store financial records in smartphones, computers, or in the cloud, and to conduct financial transactions electronically. Most people also own a trove of digital assets, which can include anything from domain names to electronically stored photos and videos to email and social media accounts.

From a legal point of view, digital property is like other kinds of property because it can be passed on to designated parties through estate plans. Yet the laws regarding digital property are still evolving, as are the practices of companies like Facebook and Google.

For these and other reasons, gaining access to digital assets, and to digitally encoded financial information, can present challenges for anyone other than the original owner. Fidelity identified four main obstacles faced by family members of someone who has recently died when trying to access the decedent’s digital assets and vital personal information:

  1. Passwords
  2. Data encryption
  3. Criminal laws
  4. Data privacy laws

For a complete description of each of these four items, please download the PDF version of this bulletin using the link below.

You can avoid these obstacles relatively easily by addressing digital property and information in your estate plans. “By planning ahead, you can arrange for full access to your digital property, keep administration costs down, and ensure that no valuable or significant digital property is overlooked,” says James Lamm, a nationally known expert and author of the Digital Passing blog. He recommends taking the following four steps:

  1. Make a list
  2. Understand the terms & conditions
  3. Back up data stored in the cloud
  4. Provide consent in legal documents

For a complete description of each of these four items, please download the PDF version of this bulletin using the link below.

Note that while you may be able to grant access via your Will, it still serves you and your heirs well to prepare ahead of time by sharing the appropriate amount of information and having the sometimes-difficult conversations around estate planning.

Since digital assets are still a relatively new phenomenon, the laws that deal with them are changing rapidly. You should consult with an attorney about the steps you can take now, and check in regularly to update your estate plan to accommodate any changes in the law or in your digital property.