Planning for Digital Assets

In a recent WSJ Wealth Advisor article, New York advisor Holly Isdale discusses the planning she does with clients to prepare to deal with digital assets.  With so much of our lives now online, it’s critical to have access to a loved one’s digital information and assets after their death or incapacitation. But securing that access can be a real challenge, which is why advisers should help clients proactively form a strategy to organize their digital lives.  Our technology has outpaced our legal system. The rules governing access to information are drawn from the outdated Electronic Communications Privacy Act, a set of laws enacted in 1986. Those laws were intended to protect the privacy of users by restricting access to information.  Under that act, a provider of electricity or phone services, for example, cannot disclose whether or not your family member is a customer of theirs, let alone grant you access to their online account. Without prior authorization from that family member, settling those accounts after their death can be a challenge.  Under the Uniform Fiduciary Access to Digital Assets Act, which has been introduced to be adopted in a number of states, fiduciaries could have automatic authorization to access digital assets.
While the law is a positive development, advisers still need to be aware of the current laws in their state and help clients identify and explicitly authorize access to their information and assets so that they can be maintained in accordance with their wishes.

A good way to introduce this issue to clients is to inform them that the laws around privacy are changing. Then, ask them about the assets they have digitally or online and how they organize them. Together you can prepare a comprehensive inventory of their most important assets and record instructions on how they can be accessed and how the client wants them handled in their absence.
What most clients tend to overlook is the fact that their digital assets include more than financial accounts. Ask them to consider what they want done with their intellectual property—their photos, videos, writing—which can often be housed across various hard drives, email accounts, and websites.  Next, add documents like wills and trusts that authorize access to your information and accounts for executors, trustees, and fiduciaries. I encourage clients to include such authorization in their health-care proxy as well as to designate who has access to their medical records. I like to remind clients that their medical history is part of their legacy and that their heirs should have that information.
At DRC, we pioneered use of digital vaults and continue to lead in offering our clients counseling and services designed for digital assets. Having organized digital assets that are easily accessible when a loved one dies is a tremendous help for a grieving family. Not only does being organized provide relief for the family, it also gives clients comfort in knowing that the effects that outlive them will be taken care of responsibly.