Creating an estate plan for your digital assets could be as important as making sure that your will is up to date and you’ve named the right beneficiaries for your retirement accounts.
“Awareness is low now. A lot of people who died in the past 10 years weren’t into the digital world,” says Jamie Hopkins, associate director of The American College’s Center for Retirement Income. But in the next 10 years, he thinks that more people will see the need for retirement planning related to potentially valuable belongings stored online, including inherited businesses with online aspects and just plain old access to online bank and investment accounts.
“Typically, people don’t ask their financial planner about this until they have a personal experience — a family member passes away and their Internet provider won’t give the family that person’s email password,” Hopkins says.
He notes that there have been some small companies providing digital estate services for the last decade, but “most that were around five years ago aren’t around now.” But he believes that it won’t be long before well-established companies leap into the business of providing digital estate plans. “Some large financial services companies are looking into it,” he says.
In the meantime, this is mostly a do-it-yourself retirement responsibility. Hopkins recommends that you start with an electronic spreadsheet that you can save on an encrypted flash or other remote drive. Here’s what to think about:
Identify your assets. Everything from wedding pictures to the family history that you wrote could have value to someone. Hopkins points out that you’ll do the family a big favor if you exercise some judgment. Try not to save everything.
List the access information. That includes location, passwords, usernames, login IDs, security question answers and PIN numbers.
Understand transfer rights. Some online companies have rules that can make it difficult for heirs to claim ownership. It pays to read online agreements while you’re still around and able to move anything valuable away from a site that might claim ownership that you don’t want to give.
Make a plan for dispersing the assets. Include this plan in your will or trust. Make sure that your will or trust plan doesn’t contradict your digital plan.
Decide if you want anything destroyed. If you don’t want that lousy novel you wrote or painful correspondence to outlive you, specify in your will or trust items that are to be deleted.
Spread the word. Tell key people — your spouse, your executor, your attorney — where to find your digital estate plan as well as the password. Hopkins thinks that putting it in a file cabinet in your home is secure enough. It is more important for this information to be accessible quickly than to keep it secure in a safe deposit box or your attorney’s office.
Keep it up to date. Some account information and passwords change monthly. Don’t forget to regularly update your plan.
Read about the basics of estate planning.