Bottom Line: Don’t overlook your digital assets in your estate plan.
Your world of online activities doesn’t cease to exist after you die. And yet the question of who will be able to access and control that world, which can range from financial accounts and social-networking sites to photo, music and movie collections, can be complicated and costly if you don’t take the right steps now.
Sure, you might already have an estate plan—but most estate plans don’t take digital assets into account. If you don’t give this some thought, you could create hassles for the executor of your estate or, worse, your heirs might lose out on some of your assets entirely and have no control over your accounts. Even if there are no monetary assets in a digital account, you may want someone to close the account or preserve it in a certain way—for instance, by adding a message that you have passed away.
The laws on controlling digital accounts after someone dies have been quietly changing in important ways. Here’s what you need to know…
Unlike most physical assets, digital assets might be easily overlooked by heirs and estate executors. A smart first step is to create a list of your digital accounts and give an updated copy of this list to the executor of your estate and a trusted relative or two. Don’t forget to update the list regularly.
Of course, this list should include any bank, investment and life insurance accounts that do not mail you printed statements. It also should include PayPal and cryptocurrency accounts…websites and domain names you own…accounts where you store digital photos, videos, e-books, music and movies…subscription accounts, such as video-streaming accounts, for which you have prepaid…frequent-flier and other loyalty accounts that you access online…and your social-media and e-mail accounts. Also list any bills you regularly receive and pay online. (These bills are not assets but including them here could make life easier for your executor as he/she tries to get a handle on your finances.)
Warning: Although it’s OK to include login names and passwords on this list for accounts of relatively limited financial value, such as your social-media accounts, do not include passwords for potentially high-value accounts, such as online bank accounts. There is too great a risk that someone could find this printed list and steal from the accounts. Instead, list these accounts without passwords to ensure that they are not forgotten. Your executor will be able to work with the account providers to gain access.
Until recently, your digital assets were largely at the mercy of “terms of service” policies at various companies after you died. If a website’s terms of service said that accounts are deleted when account holders die, that’s what happened…if they required executors to jump through numerous legal hoops to gain access to your digital assets, that’s what executors had to do.
But most account holders now can exert much more control. The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) encourages standardization among state laws on certain topics to reduce confusion across jurisdictions. Versions of RUFADAA have been adopted by most states, and the law applies to your digital assets if you live in a RUFADAA state even when a digital-service provider is located in another state. State exceptions: As of the end of 2018, states that had not yet adopted this law or a similar version include Kentucky, Massachusetts, New Hampshire and Pennsylvania.
If you live in a state that has adopted RUFADAA, here’s how to take control of what will happen to your digital assets after you’re gone…
1. Look for a web page on each digital-service provider’s website that lets you dictate how your account will be handled after your death. This page might be tucked away in the website’s account settings or account security menu. Under RUFADAA, the choices you make on this page may take priority over all other instructions, including the company’s terms of service and your will. Exception: If the page does not allow you to make changes whenever you wish, your choices do not take precedence over other instructions.
You might have already made these choices when you set up the account. If your service providers have such a page, it is worth reviewing your decisions and making changes if necessary. Examples: Facebook’s “Legacy Contact,” located in Facebook’s security settings, lets you name someone to oversee your account after you die. Google’s “Inactive Account Manager,” which is located in the account settings, lets you decide who should gain access to your Google accounts and what information he/she will be able to access.
2. Add a line or two to your will explaining what you want done with your digital assets. Where there is no online page for choosing—or where the account holder has not made such choices—RUFADAA says that the fate of digital assets is determined by written instructions provided by the deceased. These written instructions might ask that certain accounts be closed…or identify people you want to have access to your digital accounts. Example: “The executor of my will has the power to access and manage my digital assets and accounts.”
This written statement is best included in a will or potentially in another estate-planning document, such as a trust. Add this when you have your will written or updated…or you could instead write these instructions as a stand-alone document. This is slightly less desirable than including them in a will because a stand-alone document is more likely to be lost or overlooked…and because laws dictating what’s required to make it enforceable vary from state to state. Typically, the statement must be signed and dated in the presence of a witness who also must sign and date the document.
3. Review your digital-service providers’ terms of service if you live in a state that has not yet adopted RUFADAA. If you find these terms of service unacceptable, consider switching to a different service provider. These terms of service also would apply to you if you have not expressed your wishes through an online page, as described above, or written statement, regardless of where you live. Example: Apple iCloud terms of service state that all content in your iCloud account will be deleted when you die.
Certain digital assets are “nontransferable”—the provider has the right to, and chooses to, not give its customers the right to pass the assets to their heirs. This might apply to…
Frequent-flier program miles and rewards points balances. Some programs allow points or miles to be transferred to heirs after death, but others do not. Read the “terms and conditions” section on their websites. Example: Delta SkyMiles cannot be transferred to heirs after death.
A way to avoid this is to give your heirs the user names and passwords they would need to access nontransferable digital accounts and assets without anyone informing the company that you have died.
Warning: If you do opt to leave login names and passwords for accounts such as these to your heirs, do not do so by including them in your will. Your will becomes part of the public record when it is filed for probate, which means anyone could read your passwords.
Digital books, music and movies. When you buy these, from a legal standpoint you often are purchasing only a license to access this digital content, not the content itself—and this license cannot be transferred. In that case, the license might expire when you do. That’s not always clear to buyers. Examples: Amazon Kindle e-books and Apple iTunes digital content are licensed, not sold, and when you die, any right of access to these materials is canceled. You cannot pass rights to heirs under the terms of a service agreement. Some content providers allow customers to share content with other people in their household—but if the account holder dies, the household’s rights to the content likely will as well.
As above, one option is to get your heirs the account names and passwords that they will need to access these accounts without alerting the service provider of the death.
