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Helping Clients Manage Their Digital Estate Plans

Advisors can play the "quarterback" role in helping clients manage and implement their digital estate plans once a legal estate plan is in place.

When most of us think of estate planning, likely to come to mind are wills, trusts, and other legal documents designed to ensure that assets are properly disposed of. Many advisors are used to coordinating with a client's estate-planning attorney and ensuring that financial account beneficiaries and titles are up to date. But what about a client's digital assets, such as files, usernames and passwords, social media accounts, and websites?

Accessing and managing an account owner's digital assets once he or she passes away or is incapacitated poses some unique challenges. In an increasingly digital age, clients are more likely than not to have a substantial digital "balance sheet," with some assets potentially carrying actual monetary value (such as cryptocurrency). An abundance of digital assets makes things naturally more challenging for heirs, in that they need to know which online accounts exist in the first place--and then how to access them. Even if an inventory of usernames and passwords has been carefully organized in advance, this alone isn't sufficient to grant someone the legal authority to access or manage someone else's online account (even if deceased).

Thankfully, though, there is now a legal framework in place in (nearly) all states to reduce the confusion surrounding digital estate planning--and advisors are arguably in the best position to help clients manage their digital estate plans.

RUFADAA and Digital-Asset Rights Management
Originally drafted as the Uniform Fiduciary Access to Digital Assets Act (UFADAA) by the Uniform Law Commission, RUFADAA (the "R" standing for Revised) was finalized in 2015 in hopes of providing state legislatures with a model law that would address the need for fiduciaries to access and control digital assets by essentially mirroring existing fiduciary powers over nondigital assets. Prior to RUFADAA, access to someone else's online accounts was primarily governed by the service provider (Facebook, Google, Twitter, and so on) via its "terms of service" agreement. Many (if not most) of these agreements do not have provisions that allow for a person to access someone else's account in the event of death or incapacity, and instead state that services effectively end if the account holder passes away. The logical workaround to this roadblock would be to make sure a trusted contact or heir has access to your account credentials, but having them log in as you would technically be an unauthorized access of your account, and even a potential crime.

With RUFADAA legislation now enacted or introduced in 47 states/territories, executors and other fiduciaries now have a legal framework for accessing third-party accounts in the vast majority of the United States. Specifically, RUFADAA establishes a three-tiered system of priorities in determining how someone's digital assets should be handled if a fiduciary requests access from an account or service provider. The first priority is a service provider's own tools (if applicable) that allow a user to specify a trusted contact to manage their account after a certain period of inactivity or their death, such as Google's Inactive Account Manager. 

Notably, since these tools have first priority under RUFADAA, they override all other instructions a person may have in existing legal documents, such as a will, trust, or power of attorney. These and other documents that are part of a person's estate plan are given second priority under RUFADAA but will be the default instructions should someone not make use of a service provider's online tool (or if a tool does not exist). In the event someone does not provide instructions about using a service provider's tool or via their legal documents, the service provider's terms-of-service agreement (priority three) decides how and whether to grant access to the accounts. Given these priorities, it's of paramount importance to incorporate digital assets into the estate-planning process.

Advisors Uniquely Positioned to Assist
While some advisors handle estate planning in-house, most are likely to coordinate with a client's existing estate-planning attorney or provide a referral if a client does not yet have one. Given the ever-evolving landscape of digital assets and the somewhat transactional nature of obtaining legal estate-planning documents, advisors are arguably in the best position to play the "quarterback" role in helping clients manage and implement their digital estate plans once a legal estate plan is in place.

Start by encouraging clients to create an inventory of all digital assets and incorporate updates to this inventory into your review process. Ideally, clients should be following cybersecurity best practices and using a password manager, which is one of the best tools to help create the inventory (at least with regard to online accounts and other electronic credentials) and ensure it stays up to date. The inventory should include (but may not be limited to) all electronic hardware where files or other information are stored (such as computers, external drives, and smartphones), online accounts (email, social media, and so on), website domain names, cryptocurrency, and any intellectual property. (Note that actual usernames and passwords should be stored in the client's password manager and should not be accessed by advisors.) For advisors looking to go beyond an inventory and provide more value, specialized tools such as Yourefolio and Everplans offer features such as customized client asset maps, estate flow charts, cloud document storage, and much more.

Once the inventory is created, instruct the client to store it in a secure but accessible location and discuss how the client would like to handle the management and/or disposition of their digital assets in the event of their incapacity or death. This is a conversation the client may also have with his estate-planning attorney depending on the attorney's process--though better to empower your client prior to beginning the process of updating legal documents. If clients have a trusted contact or "digital executor" in mind, they should at a minimum ensure that said contact has the legal ability to access their password manager if needed. LastPass, for example, allows users to specify an "emergency access" user who can request access to the owner's account. Once the request is made, owners have a certain period of time that they've specified in advance (from immediately to a full month) to deny the request. If not denied (presumably because the owner is incapacitated or has passed away), the emergency access user is granted one-time access to the owner's vault where he can then share the owner's credentials with his own account or download all credentials as a CSV file.

Lastly, ensure that clients' wishes for their digital assets are accurately reflected via their service providers' existing tools and/or in their legal estate-planning documents. If a trusted or emergency contact tool exists for an online account provider, clients should determine whether the functionality actually meets their needs before using it, given that it will likely take precedence over their legal documents. If gaps are identified in their legal documents, coordinate with the client's attorney to have them updated per the client's newly created inventory.

Of course, clients' digital estate plans should be reviewed and updated regularly, and incorporating constantly evolving digital assets into the review process provides advisors with an opportunity to play an increasingly valuable role in their clients' estate planning.

Access Ben Brown's article archive here. Brown is a certified financial planner and an IRS-enrolled agent. He is the founder of Entelechy, a fee-only financial planning and investment management firm based in Bethesda, Maryland, serving clients in the Washington, D.C., area and nationally.

The author is a freelance contributor to The views expressed in this article may or may not reflect the views of Morningstar.