Digital Lives Have Grown Exponentially
People are living more of their lives on computers and the internet. In 2011 it was reported in the news media that every 60 seconds: (1) over 168,000,000 emails were sent, (2) over 695,000 Facebook status updates were posted, and (3) 6,600 photos were added to Flickr. That year Kindle e-books outsold all books combined. The number one seller of all music is now iTunes. Banks and financial institutions urge us to go paperless with our accounts. This year the U.S. Treasury began making all Social Security payments in electronic form.
Our digital lives encompass much: email, social and business networking, blogging, books, music, photos and videos, business, legal and personal documents, address files, video games, “cloud” file storage, bank and investment accounts, tax files, medical records, sales and bill-pay accounts, shopping, bookkeeping, newspaper and magazine subscriptions, credit card accounts, and voicemail.
Death or Disability Can Hide a Digital World
It always has been difficult and time-consuming for an executor or trustee to gather all information about a decedent’s assets and liabilities. Typically, these successors must search through files at home and work, collect mail and bills to identify assets and outstanding liabilities, examine bank and investment statements, review life insurance policies, and find copies of tax returns. However, digital assets and on-line accounts are often hidden from the view of everyone but the user. No one else may have any idea of what exists or where to find it. If a decedent took no steps to identify and give successors access to his or her digital world, this makes a successor’s job infinitely more difficult, if not impossible.
With no access, successors may not be able to pay on-line bills, complete pending on-line securities transactions, close on-line accounts, maintain registered domain names, or identify and communicate with friends and family. Digital photos, blogs and the like may never be found and may be lost forever. If your successors never gain entry to computers and other devices, your digital life could die with you. At a minimum, delay, frustration and added expense (including the cost of a computer forensic expert) will result.
When we open an on-line account, we are presented with a “Terms of Service” agreement, which we may just click and accept without reading. Unfortunately, these agreements typically are designed to protect the privacy of the original user, and can block access by successors in the event of death or disability. Some provide for closing accounts following periods of inactivity, or for permanently deleting email and other accounts upon death. Others may prohibit passing accounts to anyone else. There is a bias in favor of protecting the privacy of the deceased account user, which conflicts with the need of successors to obtain information.
We understand that some successors have had to obtain court orders compelling companies to provide information held in digital accounts. Even where successors spend the time and money to obtain a court order, reports are that access might still be withheld.
Planning Steps To Consider
- Inventory On-Line Accounts and Passwords
A key problem is hidden passwords. Reports have it that the average person now has 25 passwords, and many people may have over 100. Many might be “strong” passwords, used to make unauthorized access nearly impossible.
Inventorying all digital assets and accounts, with their passwords, is critical. These inventories need regular updating as passwords and accounts change and seem to multiply over time. Be sure to inventory accounts, user ids, PINs, passwords, and security questions for each of your devices. These include computers, tablets, smart phones, external hard drives, flash drives, DVDs and CDs. It helps to describe where on each device digital assets are stored and how digital files are organized. It might also help to note the software used to manage digital assets, such as Excel, Word, Quicken, and Turbo Tax.
One might use a simple written inventory, or even an old-fashioned address book. A variation could be to use a CD or flash drive. Sample inventory forms can be found on-line. Such inventories need to be kept in a safe deposit box or other secure location, and successors need to know how to gain access in the event of death or disability.
It now is possible to store all passwords (and copies of important documents like passports, birth and marriage certificates) using commercially available software that promises secure, encrypted cloud storage. Access usually is given to you and your successors with a single “master” password. The master password must be kept secure and successors must know how to access it. It could be kept in a sealed envelope in a safe deposit box, and successors would be told how to find the key to the box. Of course, using on-line storage requires confidence that it is secure and will be around for the long-term.
- Decide What Should Happen with Each Account
Ideally, one would determine in advance the ultimate fate of one’s digital life. Some data and accounts might be marked for destruction, and some for preservation, like photos. One can explore the policies of some social networking sites that provide for either closing an account at death, or “memorializing” it to keep a page open for friends and family to post memories. Sites exist that even allow one to create a personal message for posting in the event of death.
Decisions may depend upon whether there is economic value (blogs with ad revenue, Pay Pal accounts, or professional work like a photographer’s photos stored on-line), or only sentimental value (personal email, photos, and videos). Decisions should factor in how each account would be handled under the provider’s Terms of Service agreement.
- Choose the Right Person To Handle the Accounts
While you may have made the right choice for your executor or trustee by naming a seasoned adult, this might not be wise for computers and on-line material if your choice is not tech savvy. Perhaps an adult child who never knew a world without computers might handle the digital part of an estate.
- Update Estate Planning Documents
Wills, revocable trusts, and durable powers of attorney can be revised to include language specifically giving your fiduciaries access to and the power to handle digital accounts and assets. Since these documents may become public or be provided to heirs following death, passwords should never be listed in them.
Laws Have Yet to Catch Up to Today’s Digital World
To date, only five states have enacted laws on accessing and transferring digital assets following death. California is not one of them.
Federal law penalizes and seeks to restrict unauthorized access to computers and data. The National Conference of Commissioners on Uniform State Laws is working on a draft model law that would balance a fiduciary’s need to gain access to digital information with the privacy policies under Terms of Service agreements and current law. However, at this time it is unknown when and if improvements will be made to Terms of Service agreements and the law.
We are far from perfecting how successors can best handle someone’s digital world, particularly since the law has yet to develop. However, taking steps like those described above is better than doing nothing.
