These tips from Merrill can help you ensure your heirs and executor have access to all the information you have stored online — while protecting your privacy.
Practically every aspect of our lives is inextricably tied to our devices and networks, and the digital assets we have accumulated have become just as critical as anything else we possess. We need to account for these assets in our estate plans, taking all eventualities into account.
What are “digital assets”? The term refers to any electronic record to which an individual has a right or interest. These can be financial assets, including bill pay sites or virtual currencies; business assets, which might include a domain name or client data; personal assets like photos; and social assets like Facebook or LinkedIn accounts.
It is more than simply a matter of making sure your account information is safely stored and your passwords are secure. You also need a plan for how and when the people you trust can gain access. As you develop that plan, consider the following five tips.
Create a legal framework
Why not just give your heir, executor or fiduciary the passwords for your laptop, smartphone and other devices? Unfortunately, this strategy can weaken your personal security. “Many people do not fully appreciate that digital assets are different animals from traditional assets such as bank accounts,” says Colin Korzec, head of Trust and Estate Settlement Services at Bank of America Private Bank. “They are often subject to terms of service agreements as well as state and federal laws.” In other words, others will likely need your explicit permission to go into these accounts.
As you consider granting access to others, be aware of potential trade-offs. Your personal email account, for example, might contain a trove of information that could help in settling your estate. Yet you may want to keep some messages private. Balancing those two needs requires a thoughtful approach. You can grant access to some digital accounts while excluding others or choose different people to receive access to different accounts.
Make an inventory of your digital assets
“Creating a road map of the assets you own could be the most important thing you can do,” says Korzec. Documenting everything you do online will help ensure your heirs will not miss anything. Jot down the key accounts and assets you own and use, organized by type, including:
- Financial: Include bank and brokerage accounts, online payment tools, credit cards, digital wallets and NFTs (non-fungible tokens).
- Business: If you own a business, those digital assets might include tax software, proprietary business software, client data, domain names, patents and more.
- Personal: This long list may cover email accounts, texts, contacts, medical records, photos, digital music, loyalty programs, streaming services, online shopping accounts and even gaming avatars.
- Social: Some social media sites have settings that let you designate what happens to them if you die. Nonetheless, be sure to make your wishes known.
Keep passwords separate
While the inventory document gives you a place to note usernames, Korzec cautions against including passwords. “Those passwords may have expired by the time the inventory is accessed,” he says. “Plus, the person with your inventory may not be authorized to access those accounts.”
One way of keeping your digital assets inventory and passwords safe is to save them on separate password-protected documents. Tools such as a password vault can serve as a secured central storage location, not only for passwords but also for key account information and documents your heirs and executors may need. Alternately, you can write down passwords and store them in a locked safe or a safe deposit box or keep them with your attorney.
Whichever way you choose, the executor you name in your will should be granted access to both the inventory and your passwords.
Engage experts when you need to
In some cases, it may be worthwhile to call on a digital expert. That third party, for example, can examine a device for any references to a digital wallet or an NFT. “We had one client who had a relatively valuable painting on consignment that no heirs knew about — until a forensic computing expert found a reference to it stored electronically,” says Korzec. “It turns out it was worth a significant amount.”
Revisit your plan from time to time
Just as you update your estate planning documents every couple of years or if something major changes, like a marriage or the birth of a grandchild, you will want to periodically take another look at your digital asset inventory.
Keeping track of those assets, Korzec says, “will ensure your loved ones and heirs are not spending an already difficult time scrambling for account access — which is probably not the legacy you intended to leave.”
For more information, contact Merrill Lynch Wealth Management Financial Advisor Jeffery D. Price of Price & Associates at [email protected] or (817)-410-4940.
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