Honey, do you know where we stored our Amazon account password?
I am somewhat embarrassed to report that I once developed a personal rapport with a customer service representative because I called so many times to reset our password. Fortunately for me, and for that customer service representative, I have recently cleaned up my records, and have a good plan in place for the storage and record keeping of our digital assets. In this month’s update, I wish to provide you with a summary of how to keep adequate records of your digital assets, and how to properly plan for digital assets in the event of your death or incapacity.
Digital Assets and Accounts, Generally
A “digital asset” or “digital account” is anything of value, or any mode of communication, that can be accessed using a computer, smart phone, or other digital device and that is being stored for your use and benefit by a third-party service provider. Unlike tangible personal property that is immediately accessible to those in possession of it, a digital account or digital asset is maintained on a third-party platform, such that the owner can only access such accounts or assets through third-party service providers. Types of digital assets or accounts include:
- Online bank and financial accounts;
- Online shopping accounts;
- Cloud-stored intellectual property, such as photos and other creative work;
- Paypal, Venmo, and other direct payment accounts;
- Social media, such as Facebook, Instagram, Twitter;
- Digital music and movie inventory (e.g., Apple); or
- Your cryptocurrency assets, if you are savvy enough to hold them.
It has become increasingly important that you have a plan in place to deal with these assets in the event of your incapacity or death.
Your Authority Under Current Law
Under the “Uniform Fiduciary Access to Digital Assets Act,” a uniform set of legislation that has been passed into law in most states (Minnesota enacted its version in 2016), you have the authority to provide your designated fiduciary, under the terms of your estate planning documents, with legal authority to deal with your digital assets in the event of death or incapacity. Your estate planning documents should specifically provide your named fiduciary the authority to access and administer your digital accounts and assets. Since 2016, our firm’s standard procedure is to include explicit authority for fiduciaries to handle digital assets.
As in many legal issues, there are few important nuances to point out about digital assets and accounts.
- “Trusted Contact” Designations Using A Service Provider’s Online Tools
A service provider may, but is not required, to provide a user with the right to designate a successor decision-maker in the event of your death or incapacity. In some cases, the authorized person (often called a “Trusted Contact”) would have access to your accounts during your lifetime. In other cases, the Trusted Contact would be the person contacted by the service provider when it is made aware of your death. If the service provider offers this as an option, you should take steps to name your fiduciary as a Trusted Contact.
- Authority Limited at Death
It is noteworthy that certain service providers (most notably, Apple), take the legal position that you do not possess the rights to transfer the digital asset in question (e.g., your Apple music and move collection) to your designated beneficiaries. In these cases, it is not a matter of whether your fiduciary has access; it is simply that the asset in question cannot legally be transferred to anyone else.
- Rights in the Absence of Planning Provisions
If you had not designated a Trusted Contact in accordance with a service provider’s online tools, and if you have not included provisions in your estate planning documents, the service provider’s terms of service will legally control. Depending upon the service provider, it may be unclear if anyone has any authority over your digital account assets following your death. Obviously, you wish to avoid this scenario.
Based upon these rules, we offer the following general recommendations:
Bank, Retirement Accounts, Credit Card Accounts and Online Shopping Accounts
For online banking, investment, and other financial transaction accounts, create a list of accounts that are current, and perhaps a list of accounts now closed. You save your family and your fiduciaries tremendous time and headache by clearly specifying those accounts that have already been closed or you simply don’t use anymore. For those accounts that are currently in use, you should specify whether you have an authorized user named (e.g., your “Trusted Contact.”)
If a tree falls in the forest, and no one is in the forest to see it or hear it, did it actually fall? I’ve likewise wondered, if you died at the height of the pandemic, would the service provider and your “online friends” ever know? Those who have a significant social media presence should consider what should be stated on their Facebook and Twitter accounts following death. For example, what do you want your successor to say about your death? Should there be an invitation to the memorial? For those who have prepared a Legacy Letter, should the Legacy Letter be shared by social media?
I once dated a girl who, when she broke up with me, told me I belonged in the 1950s. Not surprising then, that my password storage system has been straight out of the 1950s—that is, written in pencil on (yes, you guessed it) yellow legal paper. With some service providers, such as financial institutions, your agents would eventually gain access to your accounts even if they do not have your password. In other cases, such as your Apple ID and password, not having a plan for the transmission of your ID and password may result in the loss of information or files.
For those concerned about assuring their designated agent that they will have a current password, you can enroll in a password storage services (e.g., LastPass or 1Password), which is no doubt an improvement on the 1950’s style of password recordkeeping.