Estate Planning for Digital Assets
As more and more of our personal and professional lives move from paper to the realm of the internet and other electronic formats, the issue of estate planning for digital assets has become very important. While having access to social media accounts such as Facebook and Twitter are important for sentimental reasons, access to financial accounts is critical for a person trying to care for an ailing family member or settle the estate of that family member after they die.
The New York Times has reported that 45 percent of high-net-worth people questioned in a poll had not organized passwords and account information in a place where their families could find them. http://www.nytimes.com/2013/05/25/your-money/forgotten-in-estate-planning-online-passwords.html. The result is more time, money, and anguish spent by family members trying to settle a person’s estate after they die. In some cases, the family of a deceased person may not even know that accounts exist.
While the scenario described above can be inconvenient, not having access to online financial accounts can be a matter of life and death in a situation where an ailing family member is being cared for. On top of having a durable power of attorney, it is critical that a caregiver be able to access online accounts to be able to pay for catastrophic illness or end of life care. If access to the digital accounts has not been planned for in advance, it may be too late once a person becomes ill or is in an accident.
There are several ways to address the management of online accounts in the estate planning context. First, the account information can be left with the attorney that has drafted other estate planning documents such as a last will and testament or powers of attorney. Care must be taken to update the document any time a password is changed or an account moved. Next, there are online services that allow people to create a “virtual safe deposit box” where they can document all accounts and passwords in one central location.
So next time you update your estate plan, be sure to consider how your digital assets will be accessed, maintained, and distributed once you become incapacitated or die. Contact an attorney at the McCleskey law firm for more information on estate planning for digital assets.