Digital Assets Complicate Estates

When most people think about providing for loved ones after death, an aspect of planning they miss is what happens to digital assets when the owner dies. Digital assets include online accounts, files stored on a computer or in the cloud, photo sharing sites, books and music, and email archives.

You might not consider your bank account to be a digital asset, but if your bank statements and bills are paperless, and you use online bill pay, how would your family be able to identify your accounts, and know what bills need to be paid?

There are federal and state laws that prohibit unauthorized disclosure of protected digital information and providers are not going to break those laws. Without user names, passwords and the answers to security questions, even court appointed estate representatives have been denied access to a decedent’s accounts. That means an internet savvy identity thief who reads the obituaries could hack into a decedent’s accounts, while the people who should have access to the accounts won’t.

The terms and conditions for opening a new account (that most people consent to without reading) often state that the account will be closed at death. However, some service providers have a plan that allows you to give specific disposition instructions. For example, Google has an Inactive Account Manager that allows you to direct what happens to your photos, emails and documents when you stop using your account for a time period that you specify. You can also provide up to 10 contacts to be notified, and direct that your data be shared with them.

For estate planning purposes, you should have a comprehensive list of your digital assets, with user names, passwords, security questions and answers, and you should regularly update it.  Someone you trust needs to know how to access that list, whether it’s in hard copy or digital. There are online services that store documents and keep track of passwords, but most have been established only in the past five years and some have already folded, so research those carefully before signing up.

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