If you are reading this, it is because you have Internet access. With Internet access comes a host of services, including online banking, online businesses, and online access to pension savings and other investments. All of these services require you to create a user name and a password. Many have challenge questions as well. What is your plan for these digital assets if you should become incapacitated or die?
With the exception of Oklahoma, state laws that control the disposition of your estate have not been enacted to keep up with this massive societal change in the way we transact our financial lives. For instance, if a family member has given you a power of attorney over their financial affairs, a bank will work with you with respect to their non-virtual accounts. But if that family member schedules payments and transactions through their online account, the power of attorney may be ineffective to gain access to that online account. You must have at least the password.
But you or your family members may not want to give out passwords to online banking or investment accounts. The possibilities for fraud or mismanagement are large. In addition, many people do not want to reveal the full extent of their financial lives. Access to passwords provide that full view.
On the other hand, there are good reasons to give access to passwords to these trusted sites. Mental incapacity due to illness can rob the individual of the ability to manage their online financial life. At the same time, mental incapacity prevents a person from legally drafting a Will or trust. Thus, estate planning for our digital assets becomes a priority for anyone with anyone who manages their financial life online.
Even if you have a Will, you probably did not make provisions in this document for your digital life. In any case, a Will is not the proper place to list your passwords. If you include your passwords as part of your Will, a probated Will is a public document, exposing your digital assets to prying eyes. These user names, passwords, challenge questions, and other online account identifiers are best protected in a digital assets trust. Trusts, in contrast to Wills, are private documents and a safe way of communicating your online passwords to your trusted family members and advisers.
So who is a candidate for digital asset estate planning? If you can answer “yes” to any of the following questions, then you need an estate plan for your digital assets.
— Do you do online banking?
— Do you regularly schedule payments through your online banking accounts?
— Do you use an online password to access your retirement accounts?
— Do you use an online password to reach your investment accounts?
— Do you have an online business?
— Do you sell items on eBay or other online auction sites?
— Do you have a PayPal account?
— Do you have a business website?
— Do you have a blog or other social media site associated with your business?
In the next part of this series, we will look at why a digital asset trust may be a good solution for your estate planning needs.
If you would like to discuss your own personal situation with me, or how a digital assets estate plan can be tailored to your needs, you can get a free 30-minute consultation simply by filling out this contact form. I will get back to you promptly.
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