The essence of estate planning is endeavoring to set your affairs in order to ease the transfer of assets to your loved ones. However, most planning tends to focus on tangible assets – personal possessions, financial investments and insurance policies. Yet, with our increasingly digital lifestyle, designating the fate of physical assets after death isn’t enough. For example, the average household in the US has six or more Internet connected devices, and 61% of Americans do their banking online, often by cellphone. What happens to digital data, and access to accounts and important information, when someone dies? What are the ramifications for family business owners where confidential information may be across multiple accounts or platforms? For families and their advisors, the ability to manage a post-mortem digital presence over both personal and business assets is becoming a significant concern as we move more of our lives into the Ethernet.
In the US, the law has struggled to keep pace with the evolution of our digital lives. Currently, only a handful of states have laws regarding digital assets, and the legislation is wildly inconsistent in terms of who has a right to access what. Add the state law complexity to the myriad Terms of Service offered by online companies and websites, which further limit access to data, and you easily end up in a tangled mess. While it may be “your” data, chances are your ability to transfer the data, or even provide access to another user, is significantly limited in your lifetime and more so after death.
Outside the US, there is also an increasing focus on digital asset management in a fiduciary or estate context. Globally, most digital asset laws relate to preserving confidentiality or protecting intellectual property rights of a provider (e.g., Facebook, Instagram, Gmail, etc.) and take significant steps to limit access to information, while this access is exactly what the fiduciary or personal representative needs! At the same time, information is now stored globally and those same ubiquitous “terms of service” contracts that pop up when you access an application often set jurisdiction for disputes in foreign jurisdictions.
Many companies are taking digital access after death issues into their own hands. Just this month, Facebook announced that it will allow users to select an executor, or Legacy Contact, to manage their Facebook page after death. Yahoo! has implemented Yahoo! Ending (but only in Japan) and Google allows users to designate a trusted contact to access their account data after three months of inactivity.
While the corporate response to the issue of access to digital assets is clearly a needed step in the right direction, the fractured approach creates a confusing system where each digital account is managed differently. Without uniform laws in place, it can be nearly impossible for estate practitioners to keep track applicable terms of service for various platforms as well as constantly changing laws and practices globally.
The US Uniform Fiduciary Access to Digital Assets Act (UFADAA) is model legislation that would ensure a consistent approach across state jurisdictions, allowing for the access to digital assets by the fiduciary or personal representatives, but limiting their rights to those of the decedent. Some version of digital rights legislation is pending in upwards of 30 states, although timing of enactment will vary by state legislature as will the scope of the legislation. Currently some of the existing laws provide only for access to email accounts of a minor, while Delaware’s law goes the farthest, presuming authorization of fiduciary access unless otherwise stated in the estate documentation. As such, it’s important for advisors to know the laws of the applicable jurisdiction and encourage the families to take pre-emptive action by adding authorization (or de-authorizing access) in their estate documents.
So what can You do Now to Ensure Your Digital Assets are Protected?
Step 1 – Get Educated
Stay abreast of developments, find a comprehensive (yet easy) way to manage or track your digital information, and discuss different approaches with your estate and financial advisors.
Step 2 – Add Authorization Added to All Relevant Documents
Add specific language permitting access to your digital assets to all of your estate documents, including wills, revocable trusts, powers of attorney, and even health care proxies.
Step 3 – Get Organized
Face it; we are all digital “hoarders,” with multiple passwords, lots of outdated information and often-important data squirreled away where it may not be easily located. At the same time, we are increasingly aware of the cyber security risk and often reluctant to put too much reliance on password keepers or online systems that may not hold up. Good due diligence on your cyber profile, coupled with a thorough inventory of every digital account (get help here!) you have, along with the necessary information needed to access them. Invest the time to maintain your passwords in a secure fashion and do not forget to list out the following for each account: What are the passwords reset requirements? Which email account will a reset password be sent to? Who should access the data? What should they do with it (delete, archive, share?)?
The more information you can provide to their families, the better chance that they’ll be able to access the digital information they need, even in a legal environment that hasn’t quite caught up with our digital lives. What better way to show your love?