The days of pointing to a file cabinet and telling your loved ones “everything is there when the time comes” are fading fast. In today’s world of technology, digital assets are becoming a more important part of a person’s estate. If these assets are not included in an estate plan, grieving survivors can be left without access to loved one’s online accounts.
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Kevin Ruth, Head of Wealth Planning and Personal Trust at Fidelity Investments discussed with Fox Business why we should now include digital assets with our estate planning. Here is what you need to know.
Boomer: What are digital or social media assets?
Ruth: Digital property generally falls into two categories: financial and sentimental. Assets that have financial value include digital currency such as Bitcoin, and domain names. Assets that have sentimental could be photos, videos, personal websites, and social media sites like Facebook or Instagram.
Boomer: What happens to a social media account after death?
Ruth: From a legal point of view, digital property is like other kinds of property because it can be passed on to designated parties through estate plans. Yet the laws regarding digital property are still evolving, as are the practices of companies like Facebook and Google. For these and other reasons, gaining access to digital assets, and to digitally encoded financial information, can present challenges for anyone other than the original owner.
In the case of Facebook for example, you must notify them in advance as to whether you’d like to have your account memorialized or permanently deleted from Facebook. Memorialized accounts are a place for friends and family to share memories after someone dies. Once your account is memorialized, you can name a legacy contact to look after your account. A legacy contact will have the option to do things like write a pinned post for your profile. For example, share a final message on your behalf or provide information about a memorial service.
Your estate plan should specify how, and who, you want to fully manage your social media accounts.
If your estate plan doesn’t account for digital assets properly, your heirs may not have access to them. Family photos and videos could be lost forever, social media accounts could stay up long after you’ve passed, and your heirs may not receive all the money (digital currency, like Bitcoin) that you’d like to see come their way.
Boomer: What should be included in a social media estate planning document?
Ruth: You can help your heirs avoid the legal obstacles that can cause problems after your death by addressing digital property and information in your estate plan.
Make a list. Start by listing your digital property so your loved ones know what you have and where they can find it. Include all your important passwords, online accounts (including email, social media, PayPal, etc.), and digital property (including domain names and virtual currency). Store your list in a secure location and make sure your family members know how to access it.
Understand what you really own. There are instances where you may have thought you purchased a digital asset, but in fact you purchased a nontransferable license to use the asset, like music. There may also be limitations restricting the number of times you can burn the music to a CD.
Back up data stored in the cloud. If you store any digital assets in the cloud, back them up to a local computer or storage device on a regular basis so that family members and fiduciaries can access them with fewer obstacles.
Provide consent in legal documents. Work with an estate planning attorney to update your wills, powers of attorney, and any revocable living trusts. They should include language giving lawful consent for providers to divulge the contents of your electronic communications to the appropriate people. You also might consider exactly which information you want to make available.
Passwords and providing access. We put a lot of effort into protecting our passwords, but upon death, those designated to manage our estate will need to know how to access important information. It’s imperative to securely document passwords and provide detailed instructions. These can be stored in an online safe, such as Fidelity’s FidSafe, which offers a mechanism for storing passwords.
In your estate planning documents, you can specifically allow your fiduciaries to bypass, reset, or recover your passwords. This is particularly helpful since this allows them to lawfully access important financial documents, as well as access manage social media accounts like Facebook.