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Digital Estate Planning: More Than a Lifeline

Digital willWhether you think of our connected world as a benefit or as a time waster, there’s no escaping the complex red tape associated with providing access to our digital assets after we pass away. What lives online is neither easy to access nor is it clear cut as to who can get to it.

This is an important focus for all of us, our families and our companies, but it also provides an opportunity for CPA planners to understand digital estate planning in order to help their clients plan for their future.

Not having a digital estate plan as part of your clients’ wills is the same as not having a will at all. In other words, if there is no specific direction given to provide designees access to files, email and even social media accounts, the clients’ wishes may not be able to be carried out. Although there have been small strides made by some states in this digital space, a digital estate plan is absolutely necessary to avoid any questions or ambiguities. Idaho, Indiana and Oklahoma addressed legislation providing access to social media and blogging accounts, while Connecticut and Rhode Island have dealt with access rights to email.

With regard to bank and investment accounts, acquiring these accounts or removing them from the Internet at the family’s request can be extremely dicey; the Stored Communications Act of 1986 makes accessing another person’s account very difficult.

If you do not offer financial planning services, you can consult with a CPA/PFS who can help provide advice in this area. At the very least, encourage your clients to think through, and document, some very important information and take the following steps:

 1.      Make a list of all online accounts and how to access them. This is the core of any digital estate plan. List all relevant online accounts, from banking and investment websites to social media, smartphone sync sites such as iTunes and photo sharing sites, and even your home utilities, including cable modem or DSL accounts. Document the following information:

 

  • Name of the account;
  • Contents of the account;
  • URL address;
  • Username;
  • Password; and
  • Instructions for the account’s disposition, as well as which person is to undertake or supervise the disposition.

 2.      Write out your instructions. This is as simple as creating a list of what to do with all of a client’s online accounts. Consider a Facebook account, for example. Does the profile remain online as an historical timeline and/or tribute, or does the client want the account deleted?  

 3.      Name a digital executor. Designate a person to carry out the digital plan, name this person in the will and ensure the designee knows how to access the digital estate. Give the digital executor power of attorney over digital accounts in order to access them.

 4.      Store your information in a safe place. With digital estate planning gaining more traction, planning services are starting to pop up that will allow your clients to store all their pertinent information in one place. This resource enables them to better protect their most sensitive information. In Password Box, for example, a client can open and enter usernames, passwords and directives for each and every digital asset, and even decide which heir gets which accounts.

Be an Advocate for Your Clients

While these steps may seem like a lot of hoops to jump through, the best way to preserve your clients’ legacies is to make sure all details are completely documented. I’m not advocating for scare tactics, but present your clients with some real-world examples to demonstrate just how important digital estate planning can be.

 

Additional Information

AICPA PFP/PFS members have access to the comprehensive, four-volume CPA’s Guide to Financial and Estate Planning, which is updated annually and provides guidance to CPAs advising clients in tax, estate, retirement, investment and risk management matters, including digital estate planning. Non-members can download free excerpts of the guide.

 

Steven G. Siegel, JD, LLM, Siegel Group. Steve specializes in tax consulting, estate planning, and advising family business owners and entrepreneurs. He has lectured extensively throughout the United States on tax, business, and estate planning topics. Steve is the author of numerous tax and estate planning publications, including The CPA’s Guide to Financial and Estate Planning. He is an adjunct professor of law in the Graduate Tax Program of the University of Alabama Law School, and has served as an adjunct professor of law at Seton Hall and Rutgers University law schools. 

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