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When your client dies, who gets their airline miles?

Now that a new law provides executors with access to digital assets, estate planning needs to include such assets

Jun 19, 2018 @ 1:38 pm

By Amy Florian

When your client dies, who owns the pictures on their Facebook page? Who has control of their electronic bill-payment sites or bitcoin account? Who is responsible for shutting down or memorializing social media sites?

Digital rights ownership is an increasingly complex issue as our online lives continue to expand. Are your clients prepared to safeguard these assets after they die?

If your client does nothing in advance, disposition of digital assets goes according to the terms of service of each individual site, which vary widely. In fact, many survivors have been shocked by sites that do not allow transfer of ownership or access upon death, or that complicate the settlement of the estate. Rules have been more flexible for minors in states that allow parents or guardians to manage deceased children's accounts. Yet some families have had to get court orders to obtain rights to their loved one's digital accounts, a process that can take months or years.

The Fiduciary Access to Digital Assets Act

Several states began to take action by passing a Fiduciary Access to Digital Assets Act. The legislation gives the executor access to all digital accounts and allowed digital assets to pass according to the decedent's will. However, it ran into legal difficulties based on privacy. Some people, for instance, did not want their executor to see highly personal information, such as their emails and texts, and lawsuits ensued.

The acts were gradually amended to resolve these issues until finally, in 2017, states began passing the Revised Uniform Fiduciary Access to Digital Assets Act, or RUFADAA. Forty states have now made it law, and it's pending in five more as well as the District of Columbia. It will soon be nationwide.

What does this mean for financial advisers and estate planners? Digital property now needs to be part of the estate planning process, and you need to help your clients prepare now for their digital afterlife.

(More: Most estate plans aren't dealing with digital assets properly)

Access to Digital Assets

RUFADAA allows the executor or another fiduciary appointed in the will to have access to any electronic or digital sites "necessary" to settle the estate. The necessary sites are largely those involving finances or financial assets, including shopping accounts, automatic bill-paying and online banking. That very narrow provision protects privacy, as it does not allow the executor to access texts, emails, and more private information.

Yet RUFADAA allows for further permissions if the decedent clearly states that in their will. These permissions can cover points such as whether a Facebook page is closed or maintained as a memorial page, whether a blog is deleted or archived and kept, and all your client's other desires for digital sites.

Sites that fall under RUFADAA are required to give access to the named fiduciary or executor, but that process can take time and involves proving to the site that the client died. If usernames and passwords are accessible immediately, airline miles can be transferred, sites can be closed, and other desired actions can happen with less complication. It is important to note, though, that clients should never include usernames and passwords in their will, as it becomes a public document upon death.

Your Two-Step Process

There are two crucial steps to take with your clients:

1. Ensure the will includes your client's intent for the executor or another named fiduciary to have access to digital accounts, details how broad those permissions are, and gives your client's wishes for disposition. For example, can the named person see all the tweets, emails and private personal information, or does access only extend to closing such accounts? What are your client's desires for each site or category of sites?

2. Ensure that your client completes another document giving more specific instructions (i.e., to whom they wish to transfer their airline miles and hotel points), including usernames and passwords. This document should be signed, dated and preferably notarized, and kept with the will so the instructions are accessible to the executor.

To facilitate this, we recommend that clients use one of the available services, such as LastPass.com, that generate secure passwords for every site and store the entire array of information necessary for access. The document then only needs to include the master password to that service, plus instructions for any two-factor authentication, so the named fiduciary can easily open the entire vault of usernames and passwords. Since the password storage service is dynamic, it also allows clients to maintain security by changing passwords regularly, without having to redo the document.

Instead of allowing individual sites to determine the disposition of digital assets, take these steps to keep your clients in control and remove at least some post-death headaches. They will never forget it!

(More: Fintech aims to digitize estate planning)

Amy Florian is CEO of Corgenius, a firm that works with financial professionals and others who help the grieving.

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