The digital age is transforming how we think about estate planning and administration. Gone are the days when it was relatively easy to inventory a person’s assets after death. Tangible property and real assets could be identified by watching the mail for paper statements.
Today, however, an executor may have no idea of the scope of a decedent’s online presence. Without forethought and guidance, he or she may never know of the “digital assets” someone leaves behind. And even if survivors areaware of specific accounts, without a password, they’ll most likely be unable to access them.
So, what are digital assets, exactly? They are financial accounts that are accessed only online; bills that are paid automatically online; social media accounts like Facebook and Twitter; and loyalty programs, memberships and accounts in the cloud, where images and data are stored, and information is password protected.
Safeguarding digital assets is often overlooked in the broader estate-planning process.
Without proper care, not only will these assets be lost, but a person’s identity could be vulnerable to theft as well. Safeguarding digital assets is often overlooked in the broader estate-planning process, but it is very important. Identity theft is a very real threat, and we often stress the importance of protecting passwords to block thieves from accessing information or assets online.
Yet these efforts to secure data during someone’s life are the same efforts that challenge an executor and heirs in gathering information about an estate. If an account cannot be accessed, it may be lost or at least delayed in its distribution. And such risks are pervasive: Bank, brokerage and credit card statements are now commonly delivered online, while paper statements are suppressed. Bills that are on “autopay” simply don’t stop being paid when someone dies. People prepay subscriptions for years that could be reimbursed upon death.
What’s more, many of us have extensive photo collections depicting special moments that will be lost forever if we do not plan to give someone the ability to access them. And that’s not all: Examples abound of an executor’s ignorance of digital assets or instances where a lack of access has resulted in financial loss.
A “digital asset clause,” which essentially grants a trusted family member or executor broad access and control of the deceased’s digital accounts when he or she passes away or becomes incapacitated, should therefore be added to estate-planning documents. While these clauses are somewhat untested and may run into obstacles with the licensing agreements of online providers, they may encourage a court or provider to grant access to accounts to designated parties upon a death or incapacitation.
Consider making a digital inventory of accounts and passwords, then; but be extremely careful, as such an inventory creates a major risk if it falls into the wrong hands.
This inventory should be securely stored with other important documents and kept safe. The reason is that the digital age is now well entrenched, and its role in our everyday lives is growing. It is clearly time that all of us make the effort to plan for our digital assets no differently than we plan for the traditional ones.
Stuart C. McLeod and Camille Valentine are Financial Advisors with UBS Financial Services Inc., a subsidiary of UBS AG. Member, FINRA/SIPC, at One Post Office Square, Boston, Mass. UBS Financial Services Inc. Financial Advisor(s) engaged Worth to feature this article. As a firm providing wealth management services to clients, we offer both investment advisory and brokerage services. These services are separate and distinct, differ in material ways and are governed by different laws and separate contracts. For more information on the distinctions between our brokerage and investment advisory services, please speak with your Financial Advisor or visit our website, at ubs.com/workingwithus. The strategies and/or investments referenced may not be suitable for all investors. UBS Financial Services Inc., its affiliates and its employees are not in the business of providing tax or legal advice. Clients should seek advice based on their particular circumstances from an independent tax advisor. The views expressed herein are those of the authors and may not necessarily reflect the views of UBS Financial Services Inc. Member, FINRA/SIPC.
This article was originally published in the June/July 2016 issue of Worth.