We’re living in a digital world. Nowadays, those important papers that you used to stash in a file cabinet or a safe deposit box often are created and stored electronically. That can remove some of the clutter of having lots of paper around, and it also may be good for the environment. Plus, it gives you easier access to information you need. But advanced technology also may result in problems you may not have considered.
Your heirs could face particularly thorny issues. What will happen to all of your electronic documents and files when you die? Who will have access to them? How will family members be able to find your user names and passwords? What about your photos and music? Will your social media accounts live on forever or will someone take them down? What about bills and insurance premiums you’ve been paying online? How about information that you want to remain confidential? Those and many other similar questions need to be addressed.
There also could be problems in other situations. Suppose you’re severely incapacitated and your oldest child starts to handle your financial affairs online. As far as the financial institutions are concerned, you’re still the person logging onto the account and making the transactions. Is it legal for your child to step in if a financial institution doesn’t have a durable power of attorney on file? Are there any other restrictions?
State laws are continuing to evolve in this area, so there are no definitive answers, and you could be subject to rules that you agreed to when you signed up for various internet accounts—even if you paid scant attention to the fine print.
Nevertheless, it makes sense to do what you can to safeguard your digital assets while you’re in good health. Putting aside the legal technicalities for the moment, here are five steps that could provide some measure of protection:
1. Make a list of passwords and accounts. The first thing to do is to make sure your loved ones have access to your user names and passwords, or that they know where to find that information if it’s needed. And try to remember to update your list when you are prompted to change a password for security purposes. It won’t do much good to give someone a list of expired passwords.
2. Use a password manager. Along the same lines, it can be difficult managing all of your electronic accounts, even under the best circumstances. A simple solution is to use an online password manager service. Once you enroll with the service, a single password grants access to all of your accounts.
3. Provide authority under your will and durable power of attorney. Don’t forget to coordinate the management of your digital assets with your overall estate plan. This may require some additions or modifications to your existing will and durable power of attorney. If you don’t have a power of attorney in place, now is a good time to create this document. It enables a designated party to act on your behalf in a multitude of situations.
4. Review vendor contracts. Check the terms of agreements you’ve signed with social media sites and other online entities. In some cases, matters will be taken out of your own hands. If you’re not satisfied with the terms, you might opt to close the account or shift to a different provider. At the very least, develop a good understanding about how things will work in the event of your incapacitation or death.
5. Consider storage with an online company. Undoubtedly, your electronic files contain sensitive information you need to protect, such as your Social Security number and account numbers for securities and IRAs. If that information falls into the wrong hands, it could lead to a financial and logistical nightmare. That could be avoided if you use an online storage company to secure your data.
Technology can simplify our lives, but it also may result in unexpected complications. That’s why it’s important to do whatever is necessary to give family members the access they will need to handle your financial matters.