Most of us dread the chore of creating new online accounts, but we all have dozens. We bank and shop online, pay our mortgages, water, and credit cards online, use Facebook, Instagram, and Twitter. The list goes on and on and it seems like every site has a different username and password so it is nearly impossible to remember them all. If we have trouble with our own accounts, how is anyone else supposed to handle them when we pass away? How would we handle the affairs of a loved one when they pass away if little to no information is left behind?
Regular access to a computer equipped with email, an internet browser, and other technical capabilities has become commonplace in the modern world. While these conveniences simplify how we live life on a daily basis, they come with a plethora of complications. For instance: How do you manage the digital assets of your loved ones when they pass away? What step can people take to make sure they provide access to those handling their estate when they pass?
What Are Digital Assets?
A digital asset is defined as any online file, record, or account that belongs to a person. This includes online presence on websites, social media, or online accounts like a bank, brokerage, shopping website, or anything else that requires a login. It also includes any electronic asset such as cyber-currency or information stored on a hard drive, backup drive, CD, DVD, thumb drive, or in the “cloud”.
Some digital assets may be an accumulation of personal information such as medical records, social media accounts, emails, pictures, website domains, music playlists. While others may hold information regarding an individual’s financial wealth, including their assets and debts.
Access to Digital Assets Act
In 2015 the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) was issued to helped clarify some of the confusion regarding what happens to these assets when someone passes away. This Act explains that an owner of digital assets must specifically consent to disclose some or all of the contents of their digital assets. Fiduciaries do not have default access to all digital assets.
With the adoption of RUFADAA, there are three ways individuals are able to grant rights to the fiduciary to access digital assets, each with greater precedence than the next.
- Online tools: The simplest and most efficient way to grant access is through a service provider’s online tool, if available. By using the settings of your online account you can choose a “trusted contact” who will gain access your account if it remains inactive for a specified period of time.
- A trust agreement, will, or power of attorney: The document must explicitly state that the trustee or executor has the right to access digital property of the deceased.
- Terms and conditions of the online company: If no online tools are available and none of the legal documents specifically allow a trustee or executor to access the assets, then the terms and conditions of the custodian of each digital asset will determine whether or not access can be granted. If possible, this scenario should be avoided as the terms of each online company are subject to change without notice.
Establishing A Plan
Although the rules can be confusing, there are several things to consider that may simplify the settlement of your estate related to your digital assets.
- Create an Inventory. Providing a list of all the different accounts you own is an important step toward simplifying the settlement of your estate. Additionally, your wishes and expectations for each account should be clearly stated for your fiduciary.
- Provide Access. Clearly identifying those who should have access to your accounts and giving them login information will allow trusted representatives to seamlessly manage your finances upon death. You might choose to keep an updated list of account usernames and other login details for your fiduciary. If possible, back up all of your data to tangible media, such as a hard drive or thumb drive.
- Security. It is important to keep this list safe and secure. Though you might choose to write your account details on a piece of paper, there are also online password storage applications for those who prefer the high-tech and more secure solutions. Regardless, it is always recommended to keep passwords and account usernames in separate places in order to preserve their security.
- Valuation. Allow your fiduciary to assess values of your accounts so that they are able to determine the accurate financial representation of your estate. If your estate is required to pay tax, your fiduciary will be able to clearly quantify and plan for amounts owed.
Feel free to contact our team at (858)558-9200 for more help and guidance with planning.