Do you need a ‘Digital Asset Addendum” to your will? See expert tips on your digital legacy
Even older adults spend so much time online now. Most of our accounts and memberships are controlled via a digital account or app. Our photo and video memories, files, and contracts live in the cloud, requiring logins and passwords. Important accounts like banking and email require two-factor authentication. Even many of our devices now require a fingerprint or facial recognition to unlock.
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So what happens to all of that digital material when someone passes away or becomes incapacitated, and their loved ones have no way of accessing it – or even know what exists? Making plans as to who will inherit your digital legacy is becoming just as important as other end-of-life considerations. Learn more about the importance of managing your digital legacy, and how to get started.
What is a digital legacy?
A digital legacy is the online footprint that is left when someone passes away. This could include any of their online accounts (like email, banking or investment accounts, photo archives), their social media profiles (e.g. Facebook, Linkedin), as well as digital content that is on their personal computers, phones, and other devices (photos, videos, etc.).
Because the digital world is so intertwined with our real lives, it’s more common for estate planning experts to recommend having a plan to help loved ones find and access pertinent digital accounts.
Why Digital Legacy Management is Important
Your family getting locked out of your Facebook account or photos on your phone is one thing, but not having a digital legacy plan can be costly as well. “I’ve seen countless families locked out of digital assets worth more than their physical property,” says David P. Fritch, attorney, CPA, and business coach. The most devastating case he recalls involved a tech consultant whose cryptocurrency wallets contained large sums, but his wife couldn’t access them because he kept the private keys on a password-protected device with no recovery instructions.
That’s why, says Fritch, your digital assets need a separate legal framework from traditional estate planning, or what he calls a “Digital Asset Addendum” that you can add to your will. “This will legally authorize your executor to access digital accounts, because standard will language often doesn’t meet tech companies’ terms of service requirements for account access,” he says.
Ideally, your digital executor should be someone who understands technology well, and it doesn’t have to be the same person as your overall executor. “I now include specific language in wills appointing a digital executor with explicit authority over online accounts. It gives families better legal standing when dealing with uncooperative tech companies,” says Paul Deloughery, attorney and author of “Lasting Wealth: A Revolutionary Method for Family Wealth Transfer.”
Common Mistakes that Can Impact Your Digital Legacy
Just as with other types of legacy planning, you need to stay on top of your digital legacy to keep it up to date. Some common mistakes:
- Not keeping your list of digital accounts regularly updated.
- Forgetting to loop in a family member or executor about where you keep your master list of digital accounts.
- Storing sensitive information like passwords in an insecure manner.
Easy Steps to Get Your Digital Legacy in Order
To take better control of your digital life and get it to a point where it’s easily transferable should something happen to you takes just a little bit of effort, but it’s so worth the peace of mind it will bring to your loved ones.
- Take “digital inventory.” That’s what Deloughery calls it. “List every account that has financial value or sentimental importance – streaming services with family photos, cryptocurrency wallets, business social media accounts, even loyalty program points,” he explains. “One of my clients’ families found $12,000 in forgotten PayPal and Venmo accounts only because we’d documented them properly.”
- Let your loved ones know in person and in writing what your plan is. Someone should be aware of how to locate your digital inventory and know what you’d like to happen to those accounts upon your passing.
- Add legacy contacts/instructions to your important profiles. Platforms like Google, Apple, and Facebook have account settings that let you add a legacy contact. This gives permission to someone who can take over the management of your account. You may also choose how and when you wish to memorialize or shut down such accounts.
- Consider setting up a password manager. Rather than keeping a list of dozens of your passwords, with a password manager program, you would just need to have one master password to pass on that can unlock all the others.
- Put your plan in writing. Once you’ve set everything in motion, figure out who your digital executor should be. Update your legal documents to reflect that. And always consult with an attorney for your specific situation.
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