When my grandmother passed away, one of the painful but necessary steps in the weeks that followed was sorting through her personal belongings. Our relatively small family identified the valuable items in her home, both monetary and sentimental, and discussed which ones we would take. Our task was simple because, much like others in her generation, everything she owned could be seen and touched.
Today’s generations have much more to consider when leaving their estate to heirs. For example, the often-prized nostalgic family photos may no longer reside in an album or shoe box, but an online storage vault or cloud. In an increasingly high-tech world, your estate plan may need an update to include these digital assets. The good news is that with some simple planning and forethought, you can likely accomplish what you'd like to with your online and digital assets. But you need to make sure your wishes are known and your accounts can be accessed by your executor.
How to Start
Just as I recommend for all my clients, anyone can begin developing a digital estate plan by creating a list of all of their online accounts and a central repository for usernames and passwords. It’s important to pass along accurate information, so check all usernames and passwords as you compile your list. There are numerous free and secure apps that can be used to accomplish this. Once you have compiled this list and aggregated your passwords, consider placing this list (or instructions for accessing a digital record) in a secure location, such as a safe deposit box, so your executor can access this when the time comes.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
As you compile a list of online accounts, here are a few recommendations to consider and document for the various types of accounts.
Social Media
Each social media platform has its own policy and procedure to handle the death of a community member. Some will shut down your profile, while others will turn it into an online memorial. If you have preferences for how your accounts be handled after your passing, you should document that in a letter to your executor.
Online Storage
Online file storage is a very important asset to plan for and document as part of your estate plan. For many families, photos are one of the most cherished ways to capture and pass along memories of loved ones. One in three Americans now use online photo storage services. Without specifically directing your executor to pass these digital photos onto heirs, the companies may simply shut down your accounts and delete potentially years of precious memories captured in your stored photos. Take inventory of all your online storage and make plans for where and to whom those files should go.
Just like online storage, without a written plan these accounts may simply be deleted after your death. If there are certain messages, folders or attachments you would like preserved and/or shared, this should be documented for your executor.
Financial Accounts
Over half of American adults bank primarily online, and many have accounts that are not tied to brick and mortar banks. Make sure to document the location of all your online bank accounts so that these assets do not get excluded from your estate distribution wishes. Again, providing your executor with login information will aid them and potentially increase the speed in which your estate can be settled.
Rewards Points/Miles
One final “asset” to consider in your planning is rewards points and miles issued from credit cards, airlines, hotel chains and other accounts. Each company and program is unique, but many do have beneficiary provisions so those hard-earned rewards can still be redeemed.
A best practice is to include in your estate planning documents who you would like these points to be left to just as you would with any other asset. Most importantly, just like your usernames and passwords, create a list of all your various rewards points so your executor will be able to easily locate them and begin the transfer process upon your passing.
Estate Planning Documents
Each state has different laws regarding digital assets and estate planning. Some states allow you to name a digital executor to specifically handle your online estate settlement. Other states, like Georgia, provide your executor with the right to access and control your online resources. In any case, speak with your estate planning attorney about what steps you need to take in your specific state to make sure that all your assets, including digital, are accessible and clear to your executor.
If you are like many of my clients, you may be surprised to learn that you need to take additional steps to plan for your digital assets. Just like all estate planning, it’s important to document your wishes so that your heirs aren’t left making decisions on your behalf or completely missing assets because they are unknown.
I’m certain that your estate looks nothing like your grandmother’s; make sure your estate plan reflects the reality of our increasingly complex world.
-
Stock Market Today: Dow Slides 697 Points on Super-Hot Jobs DataWhen the December nonfarm payrolls report hit the tape, there was no question which way stocks would go at Friday's opening bell.
-
Essential Tech Tools for Managing Your Home and Finances While TravelingStay secure and stress-free on the go with the best tech tools for managing your home, bills and security from anywhere.
-
The Wrong Money Question to Ask After Trump's ElectionIf you're wondering what moves to make with a new president moving into the White House, you're being dangerously shortsighted. Here's what to do instead.
-
An Investing Plan for This Year: Doing Less Can Lead to MoreAchieve more when investing in 2025 by planning to work smarter, not harder. These three strategies can help put you on the right track and keep you there.
-
All About Six Types of Auto Insurance CoverageDo you know what your auto insurance policy covers? Here's a primer on some coverage categories, along with examples of how each type of coverage works.
-
Social Security and Medicare Funding: Is the Sky Falling?Social Security and Medicare are slowly running out of money, but what does that mean for the retirees counting on them? Actually, it's not all bad news.
-
What We Need to Do to Protect Retirees' Financial SecurityCognitive decline and aging in general put older retirees at risk of losing their financial security when they're the most vulnerable. What can be done?
-
Financial Planning: Sisters Should Be Doin' It for ThemselvesMore and more women are ringin' on their own financial bells (with apologies to Aretha Franklin and Eurythmics) — but that demands a robust financial plan.
-
Is Money Messing Up Your Family's Life?Parents who discuss money and attitudes toward money with their children are more likely to raise financially successful and responsible adults.
-
Do You Know the Power of Whole Life Insurance in Retirement?Worried about legacy planning, market volatility or where to get cash to cover surprise medical or home repair bills? This little-known tool could help.
