Digital Inheritance Laws And Cybersecurity For Estate Planning

Summary

Digital inheritance laws are complex and vary by jurisdiction, so a comprehensive estate plan should include provisions for digital assets. Key steps include inventorying digital assets, designating a digital executor, securely storing access information, formalizing instructions in legal documents, and communicating with heirs about digital inheritance plans and cybersecurity measures.

Digital Inheritance Laws & Cybersecurity: A Comprehensive Guide for Estate Planning

In today's digital age, our lives are increasingly intertwined with technology, from online banking and investment accounts to vast collections of digital photos, videos, and sentimental keepsakes. However, while most people take great care in estate planning for their physical assets, digital assets are often overlooked. Digital inheritance laws are still evolving and can vary significantly between jurisdictions, creating a complex landscape to navigate. Cybersecurity concerns add another layer of complexity when passing on digital assets to heirs. Let's take an in-depth look at what you need to know about digital inheritance laws and cybersecurity to comprehensively plan your estate in the modern era.

1. Take Inventory of Your Digital Assets

The first critical step in digital estate planning is thoroughly inventorying all your digital assets. This includes any accounts, files, or data stored electronically, such as:

• Email accounts
• Social media profiles
• Online banking and investment accounts
• Cryptocurrency wallets
• Photo and video sharing sites
• Websites, blogs, and domain names you own
• Digitized documents (tax records, medical records, etc.)
• Digital intellectual property (copyrights, trademarks, patents)

Be comprehensive in accounting for all your digital assets. Some items like email accounts or social media may seem inconsequential, but they can hold sentimental value for your heirs and need to be included. For financial accounts, document the institution name, website, account numbers, approximate value, and any other relevant details. The more thorough your inventory, the easier it will be for your executor to carry out your digital estate plan.

2. Review Service Provider Policies on Death or Incapacitation

One complicating factor with digital inheritance is that each service provider has its own policies about what happens to your accounts after you die or become incapacitated. Some, like Facebook, allow you to designate a "legacy contact" who can memorialize or delete your account. Others, like Yahoo, are much more restrictive and will not provide account access to anyone, even with a death certificate.

Here are a few examples of digital inheritance policies from major service providers:

• Google allows you to set up an Inactive Account Manager, where you can designate trusted contacts to receive your data or have your account deleted if it's been inactive for a set period of time.
• Apple will delete your Apple ID and iCloud content upon presentation of a death certificate, but will not provide access to any content. Some content like movies or music may not be transferable due to licensing agreements.
• PayPal will close the account of a deceased person upon providing a death certificate, will, and other documents. Any funds in the account will be issued to the estate.
• Coinbase, the largest cryptocurrency exchange in the US, will transfer crypto assets from a deceased person's account to designated beneficiaries. This requires providing numerous legal documents and a dedicated Coinbase estate team reviews each case.

Make sure you carefully review the policies of each service provider for your key digital accounts. Understand what your options are and make sure they align with your digital estate planning goals. If a provider's death policy is too restrictive for your needs, you may need to make alternate plans for that account.

3. Decide What Should Happen to Your Accounts

With your digital inventory and understanding of provider policies in hand, you can now decide what you want to happen with each asset. Generally, you have three options for each account:

1. Transfer to an heir/beneficiary
2. Archive data, then close account
3. Delete account entirely

For any accounts you want to transfer, you'll need to specify the beneficiary and make sure that aligns with the provider's policies. If you want certain data saved for your heirs but the account closed, document exactly what data needs to be preserved and in what format. For accounts that should be deleted entirely with no preserved content, make that clear designation as part of your plan.

This is also a good opportunity to decide if you want any of your digital assets to remain "live" after you're gone. For example, you may want a memorial page on social media, or to keep your blog or website operational. Determine what assets should persist and document the necessary instructions to maintain them.

4. Determine Appropriate Access & Cybersecurity Measures

For any digital asset you want to pass on to your heirs, you'll need to arrange for them to have appropriate access, while maintaining robust cybersecurity. Generally, this means you'll need to securely store and transfer the login credentials they'll need, like usernames and passwords.

A few options for securely storing and transferring access to digital accounts include:

• Using a password manager with "emergency access" features, like LastPass, which allows designated emergency contacts to request access to your accounts.
• Storing login credentials in an encrypted digital vault like SecretVault, which requires two-factor authentication and allows you to set a "dead man's switch" to automatically transfer account access.
• Keeping a physical printout of account details in a secure location like a safe deposit box or estate attorney's office, to be delivered to your executor upon your death.

Whichever method you choose, it's crucial that your digital inheritance instructions do not compromise the security of your accounts. Passwords should never be included directly in your will, which becomes a public document. Two-factor authentication, encryption, and secure delivery methods are a must.

Another cybersecurity factor to consider is whether you'll be transferring devices to heirs, like computers or smartphones. If so, you'll need to include instructions for how to unlock, access, and secure those devices and protect any data they contain.

5. Formalize & Legalize Your Digital Estate Plan

Once you've determined what should happen to each of your digital assets, it's time to formalize your digital estate plan and align it with your overall estate plan and legal documents. This typically means adding provisions to your will, power of attorney, and/or trust documents. The exact legal strategies depend on your specific circumstance and estate planning goals.

At a minimum, you should add language in your will and power of attorney that:

• Acknowledges your digital assets and clearly empowers your executor to manage them
• References an external document (not in the will itself) with account details and access instructions
• Indemnifies your executor for their digital asset management efforts
• Instructs the executor to engage professional assistance if needed to access/manage digital assets

Here is sample language you may add to your will: "My executor shall have the power to access, handle, distribute, and dispose of my digital assets, and may engage experts or other professionals to assist. Any costs or expenses incurred will be paid from my estate. My executor shall be indemnified from any liability related to these efforts done in good faith. A list of digital accounts, with usernames, passwords, and instructions, will be provided to my executor through secure means."

Work closely with your estate attorney to determine the specific provisions and language needed in your legal documents to empower your digital executor. Laws are still catching up with technology, so you want to be as comprehensive as possible.

6. Choose a Digital Executor

Your digital executor is the person you designate to carry out the terms of your digital estate plan. This may be the same person as the executor of your will, or you may want to appoint a separate digital executor.

Carefully consider who you chose to fill this role, as they will have access to most of your digital life. It should be someone you trust implicitly. They also need to be relatively tech-savvy, as they will be navigating a range of online accounts and cybersecurity measures to access your assets. Make sure to discuss the role with them in advance to ensure they are willing and able to take on the responsibility.

If your digital assets are particularly complex, like cryptocurrency holdings or intellectual property, consider appointing a professional. There are now companies that specialize in digital asset estate management. While they charge fees, they have the technical and legal expertise to ensure your digital inheritance is handled properly.

7. Keep Your Plan Up-to-Date

Digital estate plans can become outdated quickly, as you open and close accounts, change passwords, or acquire new assets. Your plan is only useful if it reflects your current digital footprint.

Set yourself a reminder to review and update your digital estate plan at least once per year. Treat it as part of your regular estate planning upkeep. Whenever you open a new digital account, add it to your inventory right away. If you generate new important passwords or authentication details, make sure you update the access instructions for your heirs.

Securely communicate any changes in your digital estate plan to your executor, trustee, and heirs as needed. If you make significant changes, consult your estate attorney to see if any of your legal documents need revising. Staying up-to-date ensures your digital assets will be handled exactly as you wish.

8. Some Digital Assets Can Be Converted to Physical

While some digital assets like cryptocurrency pretty much have to remain digital, others can be converted into physical equivalents for estate planning. This is commonly done with sentimental digital assets like photos, videos, and other digital memorabilia.

Consider making photo books, CDs/DVDs, or USB drives with copies of treasured photos and videos as part of your estate plan. This provides a tangible way for your heirs to inherit these sentimental assets without needing to deal with your online accounts.

For any digital assets you choose to convert, update your estate inventory and provide instructions on what should happen with the physical versions. Will they be stored in your home, a safe deposit box, or with your estate attorney? Clearly document where the physical assets will be located and how your executor and heirs can access them.

9. Check Regulations & Consult Professionals

The legal landscape for digital inheritance is complex and evolving. Few states have robust digital asset laws. Regulations vary based on asset type and provider policies. Cryptocurrency and other digital asset exchanges often have their own rules that can supersede local laws.

Consult with estate attorneys and financial advisors who specialize in digital assets to navigate this complex web. They can advise on the specific steps needed to align your digital estate plan with relevant regulations.

Also pay attention to tax guidance from the IRS on digital assets, especially cryptocurrency, which is treated as property for tax purposes. Make sure you understand the potential tax implications for your heirs and plan accordingly.

10. Communicate with Your Heirs

Don't let your digital estate plan come as a surprise to your heirs. Have open conversations with them about your wishes for your digital assets and their role in carrying out the plan.

Make sure your heirs know you have a digital estate plan and understand the basics of what's included. Share which assets you are passing on to them and any related account details or access instructions. If you've converted any digital assets to physical, let your heirs know how to locate them.

Discuss any cybersecurity precautions or legal requirements they will need to follow. If you've designated any digital assets to remain "live" like memorial pages, outline your heirs' responsibilities for maintaining them.

Also communicate with your heirs about their wishes for any digital assets you're passing on. Do they actually want your extensive photo collection, for example? If you're leaving them cryptocurrency, do they know how to access and manage it responsibly? Inheritances only have value if they are wanted and properly utilized.

The clearer your communication with your heirs, the smoother the process will be. Involve them early, share openly, and welcome their input and concerns. Some people find it awkward to discuss estate planning, but it's one of the most important conversations you can have - especially with the added complexities of digital assets.

Taking the time to comprehensively plan for your digital estate ensures your wishes will be honored, your assets protected, and your legacy preserved. It also shows love and generosity for your heirs by not saddling them with the frustrating task of tracking down your digital life after you're gone. In an increasingly digital world, having a robust plan for your digital inheritance is a crucial component of your overall estate planning.

References

• The article mentions specific policies of major service providers like Google, Apple, PayPal, and Coinbase regarding account access after the owner's death. These policies can likely be verified on the respective companies' websites or terms of service.
• The article provides an example of language that may be added to a will regarding digital assets. This sample language is provided for illustrative purposes and not attributed to an external source.

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