Who gets your digital fortune when you die? «
Do you have a vast iTunes library? Maybe some e-books stashed on a Kindle or Nook? Do you sell items on eBay or use PayPal? Bitcoins? Got an online-only bank account? Email and Facebook?
Americans value their digital assets at more than $54,000 on average, according to a 2011 survey conducted for McAfee, a security technology company — but few people take the time create an estate plan for their digital assets.
Without a plan in place, you risk burying your family in red tape as they try to get access to and deal with your online accounts that may have sentimental, practical or monetary value.
If you have, say, a Yahoo email account, your emails might be deleted before your family has a chance to review them. In other cases, maybe your family gains access to emails that you’d rather they didn’t see.
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Or, maybe you’ve been blogging for years, and your family wants to maintain your online writing as a sort of memorial. Without access to the accounts through which you manage that blog, it might be deleted before your family can act, or spammers might take over the comments section.
These are the sorts of problems that a digital estate plan — one that details your online assets — can help prevent. Keep in mind that, given the legal complexities, a digital estate plan won’t guarantee your wishes are met. But it will help your executor as he or she attempts to manage and distribute your assets.
And it’s not only an issue of family photos and other sentimental assets. If you have an online-only bank account or a PayPal account, your executor may never know about that account if not for your digital estate plan. And what if you have a fortune in Bitcoins on your computer?
But divvying up your online assets is complicated: These accounts often are governed by the terms-of-service agreement to which you agreed upon opening the account. Often, service providers have created those agreements to comply with federal laws that limit access to account information to authorized users.
Plus, most state laws don’t offer specific support to executors in taking control of digital assets. Even where such laws exist, they are often well behind the reality of today’s technology. (The Uniform Law Commission, a nonprofit that drafts model legislation for states to adopt, is in the process of drafting a proposed law on digital assets — a Uniform Fiduciary Access to Digital Assets Act — but there is no guarantee states will adopt the legislation.)
Given the legal realities, creating a digital estate plan won’t fully guarantee your wishes are met after you die.
“It makes for a pretty convoluted state of affairs. I don’t know that there is a perfect comprehensive solution,” said Sharon Klein, managing director of family office services and wealth strategies at Wilmington Trust, in New York.
There are services such as Family Archival Solutions, PasswordBox (which includes Legacy Locker) and SecureSafe, among others, that aim to offer easy online solutions to the digital-asset conundrum — from full-service estate plans for your online accounts to simple password-management solutions.
But such services come with their own set of challenges. Will the company still be around when you die? Will its encryption methods fall prey to scammers? In the end, you’ll have to decide whether an online solution, an encrypted file on your home computer or simple pen-and-paper work best for you.
1. Make an inventory
First, make a list of your online accounts so your executor knows about your online assets.
Just as you would with your physical assets, “make an inventory of the accounts you have,” said Alexandra Gerson, a lawyer with Helsell Fetterman in Seattle. Read more about estate planning: It’s not about the money.
Keep in mind that allowing just anyone to log into your account could be a violation of the terms of service. But an executor acting in the best interests of the estate and as per the terms of your will is unlikely to run into problems.
(Read more below on designating a “digital executor.”)
The estate’s executor or representative “has a duty to inventory your estate, locate and ascertain creditors and ultimately pay creditors and distribute assets to your beneficiaries,” Gerson said. “Your digital accounts are part of your estate.”
Your inventory should include login IDs and passwords. “It’s no good just knowing about the accounts if you can’t get access,” Klein said. “Be vigilant about keeping that updated and storing it in a safe, private, secure location.”