The Security Case for Digital Estate Planning

Although a lot has been written on the importance of digital estate planning (including the comprehensive article, “Estate Planning for Digital Assets,” by I. Richard Ploss in the April 2018 Journal of Financial Planning), stories continue to hit the news about the family who can’t access their deceased loved one’s pictures on their cell phone, or access their email or social media accounts.

Digital assets include any digital property or online information your clients have. Failing to plan for digital assets isn’t just about missed opportunities to look at pictures and reminisce; it’s a question of security. If there is no access to the deceased’s digital assets, the family cannot properly protect those assets and personal information could be ripe for the stealing.

Taylor Schulte, CFP®, founder and CEO of Define Financial, wrote in the April 2019 Kiplinger article, “How to Protect Your Digital Assets,” about the risks of letting digital assets linger once you’re gone. These risks include people hacking into an email address of the deceased, then parlaying that into hacking into bank and credit card accounts, allowing them to potentially rack up charges, leaving the surviving spouse or other family members unaware.

So how can clients keep their information safe, even after they’re gone? Here are some tips:

Inventory all digital assets.

Write down all accounts—complete with web addresses, usernames and passwords— and store them someplace safe. If your clients are averse to password managers, have them purchase an external hard drive and keep it with their estate planning documents.

Include written consent for fiduciaries to access accounts.

The laws concerning digital assets are ever-changing, however current federal laws could make criminals out of people for innocently signing on to a deceased’s online accounts, if the proper precautions are not taken.

“Even if a fiduciary is able to access the account (i.e., has the username and password on file), he or she may not have the legal authority to do so and does not want to run afoul on these criminal statutes,” wrote Cynthia M. Pedersen, J.D., LL.M, in the August 2019 article “Estate Planning for Digital Assets,” in AICPA’s The Tax Adviser. 

Written consent, stating specifically how your client want fiduciaries and loved ones to be able to access his or her digital accounts, grants the permission to do so.

Consult an estate planning attorney.

An estate planning attorney familiar with digital asset planning can help your clients get all this done and offer them peace of mind.