Does Your Estate Plan Include Digital Property?

Many clients own digital property, but need estate plans utilizing new laws to control and protect their digital legacies.

One of the challenges facing estate plans today is a new class of assets, known as digital property or digital assets. When a person dies, what happens to their digital lives? According to the article “Digital assets important part of modern estate planning” from the Cleveland Jewish News, digital assets need to be included in an estate plan, just like any other property.

What is a digital asset? There are many, but the basics include things like social media—Facebook, Instagram, SnapChat—as well as financial accounts, bank and investment accounts, blogs, photo sharing accounts, cloud storage, text messages, emails and more. If it has a username and a password and you access it on a digital device, consider it a digital asset.  I wrote recently on this topic in response to Pennsylvania’s passage of a law addressing digital property, so see there for more details on what these assets are  https://www.galliganmanning.com/new-digital-asset-law-passes-in-pennsylvania/

Business and household files stored on a local computer or in the cloud should also be considered as digital assets. The same goes for any cryptocurrency; Bitcoin is the most well-known type, and there are many others.

The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) has been adopted by almost all states to provide legal guidance on rights to access digital property for four (4) different types of fiduciaries: executors, trustees, agents under a financial power of attorney and guardians. The law allows people the right to grant not only their digital assets, but the contents of their communications. It establishes a three-tier system for the user, the most important part being if the person expresses permission in an online platform for a specific asset, directly with the custodian of a digital platform, that is the controlling law. If they have not done so, they can provide for permission to be granted in their estate planning documents. They can also allow or forbid people to gain access to their digital assets.  Texas has such a law, and we prepare our estate planning documents to address such property.

If a person does not take either of these steps, the terms of service they agreed to with the platform custodian governs the rights to access or deny access to their digital assets.

It’s important to discuss this new asset class with your estate planning attorney to ensure that your estate plan addresses your digital assets. Having a list of digital assets is a first step, but it’s just the start. Leaving the family to plead with a tech giant to gain access to digital accounts is a stressful legacy to leave behind.

Reference: Cleveland Jewish News (Sep. 24, 2020) “Digital assets important part of modern estate planning”

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New Digital Asset Law Passes in Pennsylvania

The new PA digital asset law highlights the need to plan for your loved ones to have access to your digital assets after you pass.

More and more of our lives are lived online. We bank online, use email for everything, have Facebook, Twitter, Instagram accounts, keep photos on the cloud and have usernames and passwords for virtually every part of our online presence.  All of these things could be considered digital asset examples. However, what happens when we become disabled or die and our executor or a fiduciary needs to access these digital assets? Pennsylvania recently joined many states that have passed a law intended to make accessing these accounts easier, reports the Pittsburgh Post-Gazette in the article “New Pa. law recognizes digital assets in estates.”

The official name of the law is the Revised Uniform Fiduciary Access to Digital Assets Act, or RUFADAA. Pennsylvania is one of the last states in the nation—48th—to adopt this type of legislation, with the passage of Act 72 of 2020 (FYI Texas readers, the Texas legislature passed the Texas Revised Uniform Fiduciary Access to Digital Assets Act (TRUFADAA) in 2017). Until now, Pennsylvania didn’t allow concrete authority to access digital information to fiduciaries. The problem: the ability to access the information is still subject to the agreement that the user has with the online provider. That’s the “yes” we give automatically when presented with a software terms of service agreement.

Online service providers give deference to “legacy” contacts that a user can name if authority to a third party to access their accounts is given. However, most people don’t name a successor to have access or the successor is unaware of it, and most apps don’t have a way to do this.  I just this week received my first prompt from Facebook to name a legacy successor contact, and if Facebook is just starting that process, you can assume most other apps are far behind.

These laws are necessary because administering an estate with digital assets presents unique challenges.  With digital assets, first you have to locate the person’s digital assets (and chances are good you’ll miss a few). There’s no shoebox of old receipts, or letters and bills coming in the mail to identify digital property. The custodians of the online information (Facebook, Instagram, TikTok, Google, etc.) still rely on those contracts between the user and the digital platform.

Under the digital asset law, if the user does not make use of the online tool to name a successor, or if one is not offered, then the user can dictate the terms of access or non-access to the online accounts through estate planning documents, including a will, trust or power of attorney.  Most quality estate planning attorneys have included access to such assets in the documents they prepare, and we certainly do.

Here are some tips to help administer your digital assets:

Make a list of all your online accounts, their URL address, usernames and passwords. Share the list only with someone you trust. You will be surprised at just how many you have.  I did this a few years ago and was surprised to find it covered four pages.  You should also consider recording login information to your devices where you might store information.  Often people don’t keep paper records, so you can look for information on laptops, phones and similar devices.  Our estate planning binders actually provide a section to do exactly this.

Review the terms of service for each account to see if you have the ability to provide a name for a person who is authorized to access the account on your behalf, such as the Facebook example I provided.

Make sure your estate planning documents are aligned with your service contract preferences. Does your Power of Attorney mention access to your digital accounts? Depending on the potential value, sentimental and otherwise, of your digital assets, you may need to revise your estate plan.  This is especially true as our lives are likely to become even more digital in the future.

If you are interested in learning more on this topic, especially the practical components, Mary Galligan did an excellent article on this topic you can find here.  https://www.galliganmanning.com/does-your-estate-planning-include-your-online-account-passwords/

Remember to never put specific private information in your estate plan such as account numbers, URLs, usernames or passwords, since your will becomes a public document once it is probated and your other documents may be shared as well. Your estate planning attorney will know how to best accomplish documenting your digital assets, while enabling access to them for your fiduciaries.

Reference: Pittsburgh Post-Gazette (Aug. 24, 2020) “New Pa. law recognizes digital assets in estates.”

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Does Your Estate Planning Include Your Online Account Passwords?

Your estate plan should include a way to access your passwords
Your estate plan should include a way to access your passwords.

With most bank customers receiving financial statements electronically instead of on paper, there are some actions you need to take to be sure your online accounts are incorporated into your estate planning.

Kiplinger’s recent story, Your Estate Plan Isn’t Complete Without Fixing the Password Problem,” says that having online access to investments is a great convenience for us. We can monitor bank balances, conduct stock trades, transfer funds and many other services that not long ago required the help of another person.

The bad thing about these advancements, is that they can make for a very difficult situation for a surviving spouse, the executor of your estate, or the successor trustee of your living trust,  attempting to determine where the assets of a deceased person are held.

This was in the news recently, when the founder and CEO of a cryptocurrency exchange died unexpectedly. Gerry Cotten didn’t share the password to the exchange’s cold storage locker—leaving $190 million in cryptocurrency belonging to his clients totally inaccessible. Investors may never see their funds again.

You can see how important it is that your estate plan provides a way for someone to access your online data, if you become incapacitated or die. This is also true for your other digital assets such as email and social media accounts. It can be a heart breaking situation for a family who wants to access photos and other online memories left behind by a deceased loved one if they are unable to do so because they don’t know the passwords.

The easiest, but least secure, answer is to just give your passwords to a trusted family member or the person you have appointed as executor of your estate or successor trustee of your living trust. Remember, they’ll need the passwords to access your online accounts. They’ll also need a password to access your email, where electronic financial statements are sent.

Another option is to write down and place all passwords in a safe deposit box. But you’ll need to let your agent under a power of attorney, the executor of your estate, or the successor trustee of your living trust, know that the passwords are in your safety deposit box so that they may take steps to access them in the event you are deceased or incapacitated.

But the problem with storing your passwords in a safety deposit box is that it requires diligence to keep the password list updated.

Another option to consider is a password manager, which is an app that keeps track of all your passwords across all your devices. With a password manager, you, or anyone who needs to have access to your passwords, will only need to know one password that, when used, will give access to all your other passwords. That one password may be kept in a safety deposit box, a safe at your home, a locked file drawer, or any other secure location. You should share the password, or the location of the password, with the trusted people who will handle your affairs if you should become incapacitated and after you die.

Finally, your estate planning documents should include provisions that authorize your agent under a power of attorney, the executor of your estate, or the successor trustee of your living trust, to access and manage your social media and online accounts.

Reference: Kiplinger (April 19, 2019) “Your Estate Plan Isn’t Complete Without Fixing the Password Problem”

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