Why you need a digital estate plan and how to create one

Chances are good you’ve never considered the need for a digital estate plan. But you’ve definitely experienced the aggravation of forgetting a password to a rarely used site, as well as the answer to the security questions, as well as the password to the disused email account connected with the site.

The circular frustration of not being able to get into your own account is one of the hallmarks of the digital age. But we often don’t think about the unpleasant corollary: How will your loved ones access your online accounts and assets if they don’t have your login credentials and you’re not there to answer the security question about the first concert you attended? (It was Milli Vanilli, and you’ll carry that secret to your grave.)

We live online these days, which means an estate plan needs to cover more than just tangible assets. Here’s how you can create a digital estate plan that will ensure your loved ones can access your online assets.

What are your digital assets?

It’s helpful to start with an inventory of any assets, records, or files you own that are stored online, on the cloud, on a mobile device, or on your personal computer. These might include any or all of the following types of assets:

• Email accounts: Make sure you list them all, including the Yahoo email address you only use to sign up for discounts.
• Social media accounts: While you may care more about your LinkedIn account than the Instagram profile you rarely use, it will be helpful for your loved ones to know about all of them.
• Online banking accounts: Would anyone know you have an online-only savings account if your statements are emailed to you?
• Loyalty program benefits: These may include credit card miles and points, and they may or may not be transferable, depending on the loyalty program.
• Cryptocurrency wallet: If your family does not have the key to your crypto wallet, any cryptocurrency or NFTs you own will be lost forever.
• Domain names, blogs, or websites you maintain: Your family may wish to sell these assets.
• Photos, videos, or other data stored on the cloud: Without access to the cloud, your family may lose these important files.

List your digital liabilities too

While your digital assets may be part of what you want to leave to your family, you will also need to account for any digital liabilities you may have. These might include:

• Credit card and payment accounts: This may include access to your Apple Pay or Paypal account.
• Dating or gaming accounts: Though you may not want anyone to know who you connected with or what games you played, your heirs will need to know which accounts you have so they can cancel payments to them.
• Online subscriptions: Canceling your Stitch Fix or Hulu subscription will be much easier if your family knows about the accounts.
• Retail sites: This includes things like Amazon and eBay.
• Online utility accounts: Trying to figure out who provides your internet service, cellphone service, and electricity could be a major headache for your loved ones.

Know the obstacles to access

Having a full inventory of your digital assets and liabilities is an excellent start, but just knowing what you have will not necessarily be enough for your family to access your accounts. There are two main obstacles your heirs will encounter when trying to access your digital accounts:

Password protection

The passwords that keep fraudsters from wreaking havoc on your accounts can also keep your family from accessing your digital life after you die. Password protection can keep your heirs out of everything from your laptop and cellphone to your crypto wallet.

Setting up a password manager can help provide access to your family—in some cases. With a password manager, your heirs will only need a single password to access your accounts, and the manager stays current with your passwords even if you change them.

Just remember that having your login credentials may not be enough for your family to access all of your accounts, since some may require you to use the service’s own tools gain access after your death. You will need to find out the necessary procedure for every account you want to pass on to your heirs.

Criminal and data privacy laws

Unfortunately, not all sites allow heirs to access your account on your behalf just because they have the password. Both criminal laws and data privacy laws can limit access to your digital assets unless you have given express permission for your heirs to gain access to your accounts after your death.

The law is attempting to catch up to the new landscape of digital assets. The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) provides estate executors and fiduciary agents with a way to legally manage accounts even if digital assets are not included in an estate plan. However, this law has not passed in every state.

How to grant posthumous access

To make certain that your heirs have access to your digital life, you will need to specifically grant permission in your will or power of attorney document. However, just giving permission in your general estate plan doesn’t ensure access because they will be relying on RUFADAA. The law will grant your executor only the narrowest level of access—and they will likely need to provide a number of documents to each company to receive that access.

This is why you should write a letter outlining your digital assets that is separate from your will (since anything included in your will becomes a public document).

The letter does not need to be written by an attorney or notarized. It simply needs to provide specific instructions to your executor about which assets you have, how you want them handled, and how to gain access to them. This is where you will list any password information as well as handover processes required by specific service providers.

Put the letter in a secure spot, along with your will and power of attorney, so that it won’t fall into the wrong hands but your executor can easily find it.

Inheritance in the digital age

Estate planning is already a complicated process—and adding digital assets and liabilities just increases the complexity.

To make closing up your digital estate easier on your family, start with an inventory of your online assets and liabilities. That will help you determine what your loved ones will need to get into your accounts, whether it is just login credentials or a specific process required by the online service.

You will also need to grant express permission for your executor to access your accounts in your will and provide them with a letter outlining how to gain access.

Digital estate planning may take time and effort, but providing clear guidance for your online assets is far better than making your loved ones try to remember if your first pet’s name was Mokey, Mokie, or Moky.