It’s easy to imagine someone reading the title of this article and thinking, “I wouldn’t touch cryptocurrency with a 10-foot pole; I certainly don’t have a digital estate!” Not to burst your bubble, but there is about a 99.999% chance that your impression is incorrect.
For example: Do you use email? “Sure, doesn’t everyone?” you reply. Well, then you and everyone you just mentioned have a digital estate. Do you use a smartphone app to access banking information or investment accounts? You guessed it: that’s also part of your digital estate. If you have frequent flyer miles, credit card reward points, social media profiles, voice memos saved on a hard drive or a “cloud” account, music files (whether streamed or stored on a digital device), internet domain names, digital photos, health records accessible online, or a loyalty account at your local pharmacy, you have a digital estate. In fact, anything you use to log in to any database or application—a desktop or laptop computer, smartphone, tablet, or wearable device—is also part of your digital estate, along with all the accounts, profiles, passwords, web browser bookmarks, and saved files they contain. Oh, and yes, if you own cryptocurrency like Bitcoin or Ethereum, that counts, too.
If you’ve read this far, you have probably conceded that you actually do have a digital estate. But you may be thinking, “So what? Most of that stuff has no real value by itself. Why should I worry about it?”
Well, for starters, think about what would happen if you had a fatal accident. Would your spouse or other family member be able to access your online accounts? Remember, virtually all of these are password-protected, and many are likely also subject to two-factor authentication (requiring an additional method of verification for access, like a numerical code sent via email or text message). Unless you have designated a digital executor and provided them with all the necessary information, your loved ones could find it very difficult to transact necessary business involving your final affairs.
Also, simply providing someone with a list of usernames and passwords may not be sufficient. That’s because these accounts may be protected by laws governing their lawful access. Many of the terms and conditions for opening these accounts (those screens full of small print that most of us scroll past to reach the “I accept” check-box) contain stipulations concerning who may and may not access your digital assets and the purposes for which they may be used. Having in place a digital estate plan can ensure that the people for whom you want to provide access have the necessary legal rights.
Your Digital Estate Plan
So, what exactly is a digital estate plan and what does it look like?
In 2015, the Uniform Law Commission—a nonprofit national agency that works to develop uniformity among state legal codes—put forth the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) as a model for states to use when creating legislation around the handling of digital assets after the death of the owner. Since that time, every state has adopted RUFADAA, with the exception of California, Louisiana, Massachusetts, Oklahoma, and the District of Columbia.
According to RUFADAA, there are three tiers of consideration that determine what happens to your digital assets upon your passing.
- Tier One: If a digital service provides a tool to designate what happens to assets after you die, this designation guides what happens to the account. For example, if you used Google’s inactive account manager to designate a family member, this designation would guide what happens to your Google assets.
- Tier Two: If there isn’t any tool, then the owner’s directions in a will or legal document determine the handling of the account or asset.
- Tier Three: If neither of the first two scenarios are present, the terms-of-service agreement dictates how those accounts can be accessed; those agreements often restrict access to the original owner.
In the event that the terms of service do not cover the issue, RUFADAA’s default rules stipulate multiple types of digital assets. For assets like cryptocurrency, RUFADAA gives fiduciaries (executors, for example) unrestricted access. For electronic communications, however, the statute does not provide the same access; instead, it allows fiduciaries to access a “catalog” of communications consisting of metadata such as the addresses of the sender and recipient, as well as the date and the time the message was received.
As with a conventional estate plan, the best way to ensure that your wishes are carried out with respect to your digital assets is to name a digital executor. This empowers the named individual to act on your behalf to access and dispose of the assets in the way that you stipulate.
Here are some steps you should follow when preparing your digital estate plan.
- Stipulate access to your email accounts. Email accounts are often used as part of the credential to access other online accounts. Also, because many bills, invoices, and other important notifications are transmitted via email, it is helpful to stipulate that your digital executor be given access to the accounts and the contents of the messages. RUFADAA requires you to specify that the executor has this level of access, however. Otherwise, the account terms and conditions may limit access to the original (deceased) owner.
- List all logins and passwords. Be sure to include all online accounts that are password-protected and notify your executor of the location of the list. Note that it is inadvisable to include this list in your will, since that becomes a public record during the probate process.
- Document your intentions. Outline your wishes for your digital assets and accounts. For example, should your Facebook account be deleted immediately upon your passing, or should the contents first be archived? If you have an online business, what should be done with the website, domain name, and other associated assets?
- Name a digital executor. This may be the same person named as executor in your will, if you believe they would be comfortable handling the disposition of your digital assets. On the other hand, if you have privacy concerns around your digital assets, you may wish to have a separate executor.
- Store securely. Keep in mind that physical media such as CDs, thumb drives, and hard drives may not be the best choice; as technology continues to evolve, access to those types of media may become more difficult (for example, when was the last time you listened to an 8-track tape or watched a movie on VHS?). However you store your records, make sure to inform your digital executor as to the location and method for access.
At Mathis Wealth Management, we understand that your wellbeing involves so much more than the balances in your accounts. Our fiduciary obligation to our clients requires us to consider all the aspects of your life and to help you take them into consideration in your planning. To learn more, visit our website to read our recent article, “Is Your Advisor a Fiduciary? Should You Care?”
