Digital Info Just as Important as Traditional Estate Planning Documents
Having your proverbial “digital estate” in order is just as important in today’s society as having a well-drafted Durable Power of Attorney, Advanced Medical Directive, etc. If you pass away without a document providing your username and password to your online accounts, your loved ones may be prohibited from accessing those accounts, resulting in unnecessary delay and frustration in getting your assets distributed and online accounts closed.
Only seven states have laws addressing online estate planning (including Virginia). However, that means 43 states have no laws or regulations regarding digital estate planning and allow the service contract between the deceased and the online company dictate who can access the decedent’s account.
For example, let’s say you have an online checking or savings account. If you live in a state lacking any type of regulation for online estate planning, your loved one may be prevented from accessing the funds in that online account. The simplest way to prevent this from happening is simply creating a spreadsheet with your usernames and passwords. Obviously, you’ll want to protect this document by keeping it stored in a protected online folder, or using a professional service that allows you to name a digital executor. For example, DocuBank, the service we provide our clients, allows them to store their digital information in an online safe and name a digital executor to have access to that safe in the event of a disability or death. It is critical to let your loved ones how to access this information, so they can if a situation arises.
Another step is to list your beneficiaries on your online account. Financial institutions like to see the beneficiary information attached to your online account before giving your beneficiaries access to your account. This practice should be implemented on all of your life insurance policies, annuities and retirement accounts such as IRAs, Roth IRAs, 401(k) plans and similar plans, according to mainstreet.com.
Having your digital estate organized will save your loved ones a tremendous amount of time and frustration in dealing with a multitude of web sites and online financial institutions. Digital estate planning is here, it’s essential, and should be addressed when you meet with your estate planning attorney.