Benjamin Franklin famously said, “In this world, nothing can be said to be certain, except death and taxes.” No one enjoys paying taxes, but our communities benefit from parks, better roads, schools, libraries, etc. However, with death, it’s our survivors who benefit from our estate plan. The conversation about what to do with our assets when we pass can be a difficult one, but it is as important to your family as taxes are to your community. We can decide who will receive our investment accounts through beneficiary designations or our personal property through a will. But in the age of technology with smartphones, social media, blogs, and the all-encompassing “cloud,” what do we do with our digital assets?
In order to answer that question, we need to first have an understanding of digital assets. This includes photos, videos, audio files, emails, and even IDs and passwords to social media sites just to name a few. According to a Kiplinger article by Taylor Schulte, CFP®, a recent study by McAfee claims the average American has over $55,000 in digital assets. This is not to say your family members would be able to sell your digital assets to the highest bidder, just think of this as the sentimental value of all your online stuff.
Let’s talk about social media for a second. Facebook is by far the largest social media outlet with approximately 2.5 billion users. What happens if you pass away but no one else knows your password? Facebook recommends assigning a “legacy contact” to your profile. They will make Facebook aware of your passing, allowing your account to become memorialized. This permits friends and family to continue to share a quick story or memory on your timeline, as well as view old posts and photos you shared while living. You’re also able to memorialize your Instagram account, however, with LinkedIn and Twitter, your only option is to have a family member report your death and deactivate your account.
Now that we know what to do with our social media accounts, how do we protect our other digital assets?
1. Use a password keeper
If you’re like me, you have about 30 different passwords between personal and work accounts, all of which require some variation of length, capital letter, number, or special character. Unless you use the same password for every account (which is not recommended), it’s impossible to keep them separate. I use a free version of the app “Keeper” to store my passwords. This way you only have one password to remember, and it works with fingerprint and facial recognition if your phone has those capabilities. It’s also wise to give the password for this app to the executor of your estate so all your other passwords can be accessed upon your passing.
2. Use an account aggregator to keep track of your accounts
At Bridgeworth, we use a software called “WealthVision.” It’s a way for you to link all of your accounts (bank, credit card, investment, mortgage, etc.) into one website. You’re able to monitor your transactions to see if anyone has made any unauthorized purchases. Another aspect and my favorite component of WealthVision is the Vault. You’re able to store legal documents, taxes, family photos, and any other digital information you want to keep organized and secure. You can read more about WealthVision and the vault by clicking HERE.
3. Backup all your documents with an external hard drive
My wife and I love to travel so naturally, it involves a ton of photos. Our standard practice would be to upload them onto her laptop to clear out space on the memory card for the next day. You can probably see where this is headed, but about a year or so ago the laptop crashed. Fortunately, we were able to recover all the documents off the hard drive. But the stress associated with the possibility of losing all those pictures from our wedding, vacations, birthdays, and holidays was way more than it should have been. Needless to say, we purchased an external hard drive and backup all our documents on a monthly basis.
4. Have a meeting with an estate planning attorney
While most of the online accounts we use are dictated by the Terms of Service or Privacy Policy we never read, estate planning attorneys will be able to help guide you on how best to structure your legal documents to incorporate your digital assets based on the state in which you live. They can also help you draft a letter of instruction detailing your desires for who is to receive certain assets at your passing.
I recommend clients have their estate plan reviewed every three to five years. As technology continues to make our lives more efficient, it can also make legal matters more complicated. Digital assets are becoming more and more prevalent, causing laws to continually adjust. Although we can’t avoid death or taxes, we can avoid leaving a mess for our loved ones by being intentional about an estate plan that captures not only our physical assets but also our digital assets. They’ll thank you when you’re gone.
This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to the accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
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