Next Steps: A Practical Guide to Planning for the Best Half of Your Life
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One aspect of your estate plan that you may not yet have taken into consideration is your digital legacy. Arranging what happens to your digital assets and information when you pass away has become an increasingly essential component of financial literacy — and comprehensive estate planning.
According to Pew Research, the number of adults in the United States who say they use the internet has grown from 52 percent in 2000 to 93 percent in 2021, with 85 percent using the internet daily. Many people rely on digital technology to socialize, work, pay bills, and manage their affairs.
When planning their legacies, individuals often first address their tangible assets – homes, cars, money, and personal items, like jewelry collections or photo albums. Yet it is also crucial to consider digital assets and information – which can have significant financial and sentimental value – when planning for the future.
By accounting for digital assets in your estate plan, you can protect your family, pass along things of monetary or sentimental value, make things easier for your loved ones, and preserve your legacy.
For example, suppose you pass away or suffer an accident or illness that renders you incapacitated. In that case, your loved ones might need to access your passwords to continue paying bills and handling things you can no longer do. In addition to a making a loved one your agent under a power of attorney, you need to provide clear instructions for how to access your electronic information.
Or, you might have valuable digital assets that you wish to transfer to your loved ones, just as you intend to pass on physical property. With an electronic legacy plan, you can ensure your family gets the important things you have on a computer, flash drive, or in the cloud.
Your digital assets consist of anything stored electronically that provides or has value, such as online accounts or e-files, that you own or control. This may include:
The first step in making a plan for your digital assets is to organize them. With organization, you can make it easier for your loved ones to handle your digital items if you need their help or you pass away.
To put your electronic possessions and information in order, start by inventorying what you have. There might be things you have forgotten about, such as unused subscriptions or old accounts, as well as electronic items that you value, like digital photos.
A password manager can help you compile and preserve your login information. These services store usernames, passwords, security question answers, Personal Identification Numbers (PINs), and other details you need to access online accounts.
When you use a password manager and choose strong passwords, rather than using the same password for multiple accounts, you can safeguard your digital estate from any bad actors. Examples of password managers include:
In your will, you can designate a loved one to handle and distribute your digital assets upon your death. Creating separate written instructions for your online executor can help you explain your wishes privately, as wills are public documents.
With written instructions, you could:
When you lay out what you would like to happen to your digital assets, you can determine whether you would like your loved ones to delete them, setting up a digital “death.” Or you can tell them to preserve the e-asset and transfer it to a beneficiary.
Your written instructions can also state your wishes for your social media and certain other online accounts.
By adjusting your social media account settings, you can set up legacy contacts to manage your accounts upon your death. For example, Facebook permits legacy contacts to manage memorialized accounts. Once Facebook preserves your account, no one can log in and post as you, but your loved ones can see your Facebook memories.
Google allows users to select a trusted individual to receive their data or erase their accounts after a period of inactivity.
While making final arrangements for your digital property and accounts might seem daunting, including your digital assets in your estate plan can benefit you and your loved ones in the following ways;
Although digital estate planning is a relatively novel concept, it makes sense to prepare your electronic legacy, given how prevalent technology has become. Making a digital estate plan is a crucial financial skill today. Consult with an estate planning attorney to learn more about making an electronic legacy plan.