What happens to your digital assets when you’re no longer around to manage them?
Left without a game plan, a lifetime’s worth of online files and accounts becomes inaccessible, creating incredible stress for already bereaved family and loved ones who are left to settle an estate.
Email accounts, digital purchases, bank and brokerage accounts, social networking profiles and photo sharing are seamlessly integrated into our everyday lives. However, these digital assets, which can hold both sentimental and monetary value, often go unaddressed in estate planning.
Bank, brokerage, PayPal, eBay, bitcoin accounts and the like are all linked to our financial profile. Digital music libraries and photo albums may not translate to a dollar amount, but certainly are valuable, nonetheless.
Consider this: If all your accounts were wiped out, if every aspect of your online presence was deleted, what would that mean to you today? My guess is that it would be crippling at worst, stressful at best.
Though often overlooked, having your digital assets documented and organized is a vital part of estate planning. That’s why it is key to start thinking about and planning the process of organizing digital assets.
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As a financial advisor, I’ve found that there is no one solution for everyone. Creating a plan for digital assets depends on the individual and should take into account both the nature of the assets as well as the person’s sensitivity to privacy. Based on my experience, I would suggest the following framework to get your digital assets prepared:
- Identify and inventory: Make a list of your online accounts, memberships and subscriptions. One of the easiest methods I’ve seen is to create a password-protected Excel spreadsheet using these headings: description, Web address, user identification, password, account number and special notes. Of course, compiling this list creates risk in and of itself, so take security into consideration.
- Appoint a “trustee”: Choosing someone to entrust with this access can be a difficult decision. This person could be a spouse, a family member or a reliable friend. It needs to be someone who would handle the responsibility according to your wishes. For many people, there may not be one individual to share all of this data with. Perhaps splitting the list and relying on two people would work best.
Others may not feel comfortable distributing so much information outright and would rather provide just enough information that their trustees would know where to find the lists in the event it becomes necessary. This is a huge responsibility and not one to be taken lightly.
- Provide access: A password-protected Excel spreadsheet is a good starting point, as long as your trustee has access to the document when it’s needed. The obvious issue with a hard copy is choosing a secure place to store it.
I once had a client who kept his password list in a safety deposit box. That became an issue when it was discovered that the box would remain locked after death until his executor was able to petition the bank for access.
Nowadays, there are countless online services for storing passwords. Be aware that even the most secure systems are vulnerable to hacking. If you’re interested in going this route, investigate a service’s features, ease of use, customer support and, most importantly, its security. Some of the sites my clients have come across are Assetlock, PasswordBox, SecureSafe and Deathswitch.
- Provide instructions: The estate-planning community is beginning to integrate the management of digital assets into their services. It will become commonplace to provide executors of wills with instructions on where to obtain password lists and what should be done with them. Work with your estate-planning attorneys and financial advisors to better understand the laws involving digital assets, because they vary greatly from state to state.
While everyone’s solutions may be different, it is important to start this conversation today and to be proactive. As a financial advisor who is thoughtful about all aspects of financial planning, I urge my clients to start thinking about digital-asset management before they hear how necessary it is.