With all of the various accounts, passwords and files that make up our digital identity today, it is easy to see why organization of this information is essential. While this is a subject that many do not like to discuss, it brings up the interesting concept of digital legacy and how important it is to maintain and preserve your digital identity in the event of incapacity or death.
It is becoming a more and more common practice for financial advisors, including DWM, as well as estate planning attorneys, to advise their clients on a plan to preserve their digital legacy. According to a survey conducted by NAPFA, two-thirds of NAPFA members said that they do in fact advise their clients on digital legacy.
As part of our DWM “Total Wealth Management” process, we provide our clients with an “Estate Flow.” This has three parts. First, a concise and easy to read recap of all of their estate documents to make it easier to review so that they can assess whether their documents outline their current wishes or if changes need to be made. Second, a review of titling and beneficiary designations, to make sure the disposition of the estate is as desired and its administration is as hassle-free as possible. And, third, our recommendations. We have recently added a review of our clients’ digital legacy as part of this process.
It is vital that all information is stored in one designated place to ensure that your entire estate is transitioned smoothly and easily. There are many applications and services that can help you store passwords to preserve digital legacy. Having a password manager for your passwords so that someone can log in to your accounts in the event of your incapacity or passing and take care of your digital assets is essential. Many cloud-based digital services will actually wipe your data after an account is closed, so it is imperative that your loved ones have a way to access this information before that occurs. Some of the more useful password tools that enable the user to assign heirs include PasswordBox and Zoho Vault.
Aside from password protection, there are other steps individuals can take to ensure their digital legacy is properly handled, such as the introduction of “digital heirs.” As digital legacies begin to become a common hindrance in postmortem estate processes, more companies, such as Google’s Gmail, are instituting ways to improve the flow of digital legacies. Through Gmail’s Inactive Account Manager, found in your account settings page, you can now specify what you would like to have done upon account inactivity. After three, six, nine, or twelve weeks, the user can choose to have his or her data automatically deleted or have a notification email sent to trusted contacts. By enabling a contact email to be sent, the user is allowing this contact to access his or her account, which may contain sensitive information, so it is important to choose this contact selectively.
The bottom line is this: It is necessary to develop and implement a plan to preserve your digital legacy and ease the transition for your loved ones, making it as simple as possible for them to take care of your digital assets, including financial accounts. Specifically, at DWM, we would recommend three key components:
- Take and record an inventory of all of your digital assets including your user names and passwords and store that information in a secure place.
- Work with your estate planning attorney to make sure that digital asset provisions are included in your estate documents. These provisions should allow your successor Trustees or executor/executrix the power to access, view, modify and make use of any electronic accounts including online financial accounts.
- Consider providing your successor trustee or executor/executrix now with information about your digital assets.
At DWM we believe your digital assets are a very important part of your legacy. Getting things in order now can significantly help your loved ones in the future.