Paul O. Dillon, Attorney at Law

Estate Planning for Digital Assets

Whether you know it or not, you have a “digital footprint,” defined as the trail of data you create when using the internet, including photos, opinions, videos and financial and tax records. Just as we need an estate plan for traditional assets, a recent article from Think Advisor, “4 Ways to Help Clients With Digital Assets,” urges us to have a plan for digital assets. This makes life far easier for loved ones after we pass, protects the estate and limits identity theft.

The first step is to take inventory of your digital assets. This includes everything from assets owned by your business to your personal life. Online content, graphics, audio and videos are just the start. These four categories may be helpful:

Personal assets: Photos, videos, emails, contact lists, medical records, blogs, e-books, e-gaming assets, information on frequent flier miles, loyalty programs, etc.

Social assets: Facebook, Linked In, Instagram, Pinterest, X (Twitter), What’s App, Telegram and any platform where you communicate and post with others.

Financial assets: Investment and retirement accounts, banks, credit cards, tax documents, Pay Pal, Apple Pay and cryptocurrency.

Business assets: Websites, domain names, customer information, vendor information, intellectual property.

A digital inventory should not be part of your will, as the will becomes a public document once it is filed with the court. However, it should be treated the same as wills, trusts and transfer-on-death documents: kept in a secure location.

Next, name a Digital Executor. This is not yet legally binding in all states. However, you’ll want to name a tech-savvy person who can manage digital assets. This needs to be someone comfortable with the digital world and who understands what you want to happen to your digital assets.

For the most part, email accounts with companies like Yahoo and Google are actually owned by the companies and only licensed to users. Whether you remember or not, when you created the account, you opted into a “Terms of Service Agreement” or TOSA and agreed to use the platform. However, you didn’t purchase the email account itself.

Some platforms allow you to name a legacy contact to take control of your digital accounts. However, you’ll have to name someone, and they’ll need to reach out to the company and provide documentation as requested.

This may sound like a lot of work. However, not addressing digital assets means your digital and traditional assets may be vulnerable to cybercrime, including identity theft, hacking and fraud. Unlike traditional assets with a hard-copy paper trail, your digital executor will not be able to locate and manage digital assets without this information.

Talk with your estate planning attorney about how digital assets are handled in your state and for their recommendations on preparing this part of your estate.

Reference: Think Advisor (Aug. 4, 2024) “4 Ways to Help Clients With Digital Assets”

How to Create a Digital Estate Plan

Digital estate planning has become just as important as traditional estate planning, since so much of our lives now are online. A recent article, “Digital Estate Planning Guide: Get Your Digital Assets in Order,” from Kiplinger, explains the steps needed to protect digital assets and let loved ones know your wishes.

Unlike boxes of photos left in attics, digital photos, social media accounts and cryptocurrency can’t be easily accessed and don’t physically disintegrate. With no plan in place, your estate is vulnerable to identity theft and lost assets, not to mention disputes between family members over digital assets.

Digital assets include email accounts, social media profiles, photographs and recordings, online banking and investment accounts, intellectual property, cryptocurrency, subscriptions, frequent flier miles and documents stored online.

The first step is the most tedious one. However, it is necessary. You’ll need to list all assets, their URL (address), login credentials and account numbers. If the account has two-factor protection, for example, when you must put in a code received on another device, include this information. If this sounds like too much work, consider your executor trying to locate every asset. It will take much more time, and some assets may be lost forever.

Speaking of your executor, you’ll need to identify a trusted person who is both reliable and tech-savvy to serve as your digital asset estate executor. It doesn’t have to be the same person you name as your executor. Speak with your estate planning attorney about how to name both individuals in your will.

Here are some issues to consider when creating a digital estate plan:

• What do you want to happen to each of your accounts—do you want them deleted, or do you want your executor to download and store the information on a local hard drive or other hardware?
• How do you want your assets to be used? If cryptocurrency, do you want them to transfer the assets, or do you want to convert them to traditional money and then distribute them to heirs?
• If you have sensitive information and wish to keep the asset private, can your digital executor do that, or do you need to delete or transfer the information long before you die?

Let loved ones know of the existence of your digital estate plan and who your digital executor is. Review the digital estate plan often, since digital assets change much faster than traditional assets. Every jurisdiction has its own laws regarding digital assets, so speak with an experienced estate planning attorney, since your digital estate plan needs to comply with state laws and regulations.

Reference: Kiplinger (March 14, 2024) “Digital Estate Planning Guide: Get Your Digital Assets in Order”

What are Digital Assets in an Estate?

Planning for what would happen to our intangible, digital assets in the event of incapacity or death is now as important as planning for traditional assets, like real property, IRAs, and investment accounts. How to accomplish estate planning for digital assets is explained in the article, aptly named, “Estate planning for your digital assets” from the Baltimore Business Journal.

Digital asset is the term used to describe all electronically stored information and online accounts. Some digital assets have monetary value, like cryptocurrency and accounts with gaming or gambling winnings, and some may be transferrable to heirs. These include bank accounts, domains, event tickets, airline miles, etc.

Ownership issues are part of the confusion about digital assets. Your social media accounts, family photos, emails and even business records, may be on platforms where the content itself is considered to belong to you, but the platform strictly controls access and may not permit anyone but the original owner to gain control.

Until recently, there was little legal guidance in managing a person digital files and accounts in the event of incapacity and death. Accessing accounts, managing contents and understanding the owner, user and licensing agreements have become complex issues.

In 2014, the Uniform Law Commission proposed the Uniform Fiduciary Access to Digital Assets Act (UFADAA) to provide fiduciaries with some clarity and direction. The law, which was revised in 2015 and is now referred to as RUFADAA (Revised UFADAA) was created as a guideline for states and almost every state has adopted these laws, providing estate planning attorneys with the legal guidelines to help create a digital estate plan.

A digital estate plan starts with considering how many digital accounts you actually own—everything from online banking, music files, books, businesses, emails, apps, utility and bill payment programs. What would happen if you were incapacitated? Would a trusted person have the credentials and technical knowledge to access and manage your digital accounts? What would you want them to do with them? In case of your demise, who would you want to have ownership or access to your digital assets?

Once you have created a comprehensive list of all of your assets—digital and otherwise—an estate planning attorney will be able to update your estate planning documents to include your digital assets. You may need only a will, or you may need any of the many planning tools and strategies available, depending upon the type, location and value of your assets.

Not having a digital asset estate plan leaves your estate vulnerable to many problems, including costs. Identity theft against deceased people is rampant, once their death is noted online. The ability to pay bills to keep a household running may take hours of detective work on your surviving spouse’s part. If your executor doesn’t know about accounts with automatic payments, your estate could give up hundreds or thousands in charges without anyone’s knowledge.

There are more complex digital assets, including cryptocurrency and NFTs (Non-Fungible Tokens) with values from a few hundred dollars to millions of dollars. The rules on the valuation, sale and transfers of these assets are as yet largely undefined. There are also many reports of people who lose large sums because of a lack of planning for these assets.

Speak with your estate planning attorney about your state’s laws concerning digital assets and protect them with an estate plan that includes this new asset class.

Reference: Baltimore Business Journal (Sep. 16, 2021) “Estate planning for your digital assets”

It Is Important to have a Digital Estate Plan

Just as you organize your physical possessions and financial accounts, you need to organize and plan for your digital estate. Otherwise, according to the recent article “Why You Need a Digital Estate Plan and How to Make One” from Next Avenue, you will leave a giant mess for your family.

Nearly 50 states have already passed laws that give a person’s family or their executor the right to access and manage some of their digital assets after they die. However, if the digital platform does not allow an executor or anyone to access and manage accounts, the problem will not be easily resolved.

Facebook has created a “Legacy Contact” and Google has an “Inactive Account Manager,” but they only work if you take the time to go through the process in advance. Sharing passwords and instructions or setting up an online password manager may or may not solve the problem for the 200 other accounts. Why?

Increasing security means that many accounts require confirmation codes, typically sent to a mobile phone or email address, before an account may be accessed. If the phone or email is locked, then access will be impossible. Two-factor authentication makes it harder for digital criminals to access your accounts, but it also makes it difficult for heirs and executors. Some people have taken a step into the future to have their accounts opened via facial recognition. How then do you access accounts?

Not all digital accounts and services have the same requirements for access.

Here is a way to think about your digital estate: what is the level of importance for each account? If it were deleted and all contents removed, how would it impact your life? Is it a “single sign on,” where credentials are needed to log into other accounts? Are there payment methods attached to the account, like automatic withdrawals or credit cards?

Many accounts may be dormant, like an old email address you stopped using ten years ago. However, what about the important accounts that are central to the business of your life, like checking and savings accounts, or personal email?

Tech giants like Google, Amazon, Microsoft, and Apple have made their way into many aspects of our lives. If you have a library of ebooks, or an online gaming presence with digital assets, would you wish to maintain those assets? Think about all the autopayment accounts that you have—and how much money your estate would lose if those accounts could not be shut down.

Once you have identified all of your important accounts, examine them one by one to see what if they have a legacy process. Then start thinking about what you would like to happen to the accounts and their contents, in case of your incapacity or death. Having a digital estate plan today is not futuristic at all—it’s how we live, and our estate plans should be updated accordingly.

Your estate planning attorney will know what your state’s laws are for digital assets, just as they do for more traditional assets.

Last word: do not include your usernames or passwords in your will. A will becomes a public document upon probate, and this information must be protected from identity thieves if the accounts are to remain secure.

Reference: Next Avenue (Jan. 1, 2021) “Why You Need a Digital Estate Plan and How to Make One”

Act Quickly to Protect an Estate

For most families, the process of estate administration or the probate of a will starts weeks after the death of a loved one.  However, before that time, there are certain steps that need to be taken immediately after death, according to a recent article “Protecting an estate requires swift action” from The Record-Courier. It is not always easy to keep a clear head and stay on top of these tasks but pushing them aside could lead to serious losses and possible liability.

The first step is to secure the deceased’s home, cars and personal property. The residence needs to be locked to prevent unauthorized access. It may be wise to bring in a locksmith, so that anyone who had been given keys in the past will not be able to go into the house. Cars should be parked inside garages and any personal property needs to be securely stored in the home. Nothing should be moved until the trust administration or probate has been completed. Access to the deceased’s digital assets and devices also need to be secured.

Mail needs to be collected and retrieved to prevent the risk of unauthorized removal of mail and identity theft. If there is no easy access to the mailbox, the post office needs to be notified, so mail can be forwarded to an authorized person’s address.

Estate planning documents need to be located and kept in a safe place. The person who has been named as the executor in the will needs to have those documents. If there are no estate planning documents or if they cannot be located, the family will need to work with an estate planning attorney. The estate may be subjected to a probate proceeding.

One of the responsibilities that most executors don’t know about, is that when a person dies, their will needs to be admitted to the court, regardless whether they had trusts. If the deceased left a will, the executor or the person who has possession of the will must deliver it to the court clerk. Failing to do so could result in large civil liability.

At least five and as many as ten original death certificates should be obtained. The executor will need them when closing accounts. As soon as possible, banks, financial institutions, credit card companies, pension plans, insurance companies and others need to be notified of the person’s passing. The Social Security Administration needs to be notified, so direct deposits are not sent to the person’s bank account. Depending on the timing of the death, these deposits may need to be returned. The same is true if the deceased was a veteran—the Veteran’s Affairs (VA) need to be notified. There may be funeral benefits or survivor benefits available.

It is necessary, even in a time of grief, to protect a loved one’s estate in a timely and thorough manner. Your estate planning attorney will be able to help through this process.

Reference: The Record-Courier (Oct. 17, 2020) “Protecting an estate requires swift action”

Protecting a Digital Legacy

There’s never an easy time to talk about end-of-life planning, and a pandemic that has everyone thinking about death can make it harder, says the article “Wannabe Wired: Preparing your digital legacy,” from The Lawton Constitution. Most of us think about creating a will, making burial plans and ensuring that our loved ones are cared for when we are gone. However, planning for our digital legacy is often neglected.

You don’t have to be Bill Gates or own billions in bitcoins to have a digital legacy. In fact, most people don’t even recognize their digital assets as a new type of property. If you have bank accounts, social media, own any websites or have original music, artwork, or videos online, you have digital assets.

Prior planning can help your loved ones deal with your digital assets, as well as your traditional property.

Different online platforms have different policies about what happens to accounts owned by people who have passed. Sometimes there is an option to delete or deactivate a profile, if the owners have checked the right box. However, that’s not always the case. Many digital giants won’t allow someone who is not the owner, to gain access to their accounts or the data.

Start by making a list of user names and passwords. If you can, go through all of your accounts one by one to see if they allow users to make a plan for what happens if the owner dies. Some, like Facebook, allow the account owner to name a Legacy Contact. That person is permitted to manage tribute posts on your profile, deciding who can and who cannot post on your account and request the removal of your account. Just go to General Account Settings and click on the “Memorialization Setting.” You also have the option to have your account deleted after you die.

Not every platform makes this process so easy. Some will delete accounts, if there is no activity after a certain number of months or years. If you have a business that relies on a free email service like Yahoo!, this could cause your family to lose access to valuable information.

Once you’ve made a thorough list of all of your online accounts and passwords, talk with a trusted family member about your wishes for your digital accounts. Do not include the document with online accounts and passwords in your will! Remember that your will is likely to be a probated document, meaning that it will be entered into the public record. You don’t want people accessing your online accounts—it’s an invitation to identity theft.

Speak with your estate planning attorney about planning for your digital and traditional legacy. It will spare your loved ones a lot of trouble and provide you with peace of mind.

Reference: The Lawton Constitution (May 12, 2020) “Wannabe Wired: Preparing your digital legacy”

What’s All that Stuff in Your Wallet?

Is your wallet filled with personal and financial information? Did you know that much of that information can be exploited by identity thieves? The bad dudes just need your name and Social Security number to get going.

Kiplinger’s recent article, “The Worst Things to Keep in Your Wallet,” identifies the things you should immediately take out of your wallet. After you’ve done that, photocopy whatever’s still in your wallet. That way, if your wallet is lost or stolen, you can at least quickly and easily file reports.

Your Social Security Card. There’s no faster way to identity theft than losing your Social Security number. Criminals can use your SSN to apply for loans in your name or obtain credit cards. Never carry your Social Security card or even a piece of paper with your Social Security number on it. You should also be certain that there’s nothing else in your wallet has your SSN on it, like other forms of identification.

Your Handy-Dandy Password Cheat Sheet. Admit it, you have one. Maybe it’s taped to your computer or under your keyboard. It’s your password cheat sheet. We Americans use at least seven different passwords to access all of our accounts. It is recommended that you create individual passwords made up of unique combinations of numbers, letters, and symbols that you change regularly. How do you remember them all? For most of us, it’s a cheat sheet. One of the worst places for a password cheat sheet with your financial passwords is your wallet. Instead, you can jot down your passwords and keep them in a locked box in your house. You can also use a digital password manager.

Your Spare Set of Keys. A step beyond the lost wallet, is a lost wallet with your spare house key, along with your ID that shows your home address. It’s an invitation for thieves to break into your home. Instead, keep your spare key with a relative or friend.

Checks (Really?). OK, some people still write checks, and many of us still carry a blank check in our wallets—"just in case"—for emergency purposes. However, blank checks are risky. A criminal can use a blank check to quickly drain money from your bank account. If the stolen check isn't used, it has your bank account and routing numbers on it—a target for electronic withdrawals from your account. Just take the checks with you that you might need immediately and leave the checkbook at home.

Your Passport. A passport, like any government-issued photo ID, can be a gold mine to use against your finances, if a criminal gets his hands on it. If you’re traveling in the U.S., take only your driver's license or other personal ID. Leave your passport book and wallet-size passport card in a safe place at home or in a bank safe-deposit box. If you’re traveling abroad, carry a photocopy of your passport and leave the original in a hotel safe.

Multiple Credit Cards. How many credit cards do your really need? Just think how svelte your bulging wallet could look with fewer credit cards in it. Therefore, if your wallet is lost or stolen, you won't have as many credit cards to cancel.

Your Birth Certificate. Do you really need to carry this around? While if only your birth certificate is stolen, it won't get anyone very far. However, a criminal could use it with other types of fraudulent IDs and do some major damage to your finances.

A Bunch of Receipts. Why do you need all those receipts crammed into your wallet? Businesses are prohibited from printing on paper receipts, more than the last five digits of your credit card. However, skilled thieves could use those last five digits and merchant information on receipts to phish for the remaining numbers on your credit card! Get rid of those receipts and shred them. If you need to keep receipts for possible returns or warranties, ask the merchant to send you a digital receipt instead.

Your Medicare Card. Many retirees may have Medicare cards with their Social Security numbers printed on them. However, new legislation requires the Centers for Medicare and Medicaid Services to remove SSNs from Medicare cards. It’s a gradual change, so until April 2019, you might be stuck with your old card. If you have an old Medicare card with your SSN on it, remove it from your wallet and replace it with a photocopy of the card.  You should black out your Social Security number on the photocopy.

Reference: Kiplinger (August 17, 2018) “The Worst Things to Keep in Your Wallet”