It's taken almost six months for Kelly Pedersen, founder of Caissa Wealth Strategies in Bloomington, Minn., to close up a deceased client's estate. Part of the process: working with companies to tie up the loose ends of the client's digital assets.
A bill that was introduced in 11 states this month may help provide answers. The legislation is called the revised Uniform Fiduciary Access to Digital Assets Act, and it provides guidance and structure for accessing online accounts upon an individual's death.
Ms. Pedersen, who is the client's personal representative, has had to reach out to every vendor because each one requires a different protocol for gaining access to these online accounts.
"It has been very painful," she said. "It would be extremely beneficial to have a uniform way of doing this and specialized access for personal representatives, because otherwise if we do not have that, most personal representatives are just going to leave it alone."
Digital assets include anything a person may have online: email accounts and their messages, social media accounts, images posted on Pinterest and the contents of a PayPal, eBay and Etsy account, for example.
The bill, which is hosted by the Uniform Law Commission and contains the combination of two pieces of legislation that battled it out this time last year, grants a personal representative access to the deceased's computer files, online accounts and virtual currency, as well as the contents of electronic communications if specified by the person in a will, trust, power of attorney or other record. The original bill, as well as its counterpart called The PEAC Act, were tabled last year in all but one state, Delaware.
This month it was reintroduced in Florida, Hawaii, Indiana, Michigan, Nebraska, Oklahoma, Pennsylvania, South Carolina, Tennessee, Washington and Wisconsin, to be reviewed by the states' House and Senate.
Such a bill, if enacted, would provide a floor for clients to clearly identify how they want their digital assets maintained upon their death, and personal representatives would more easily work with companies to access those accounts. The revisions include more strict privacy policies, stating that an individual must give explicit instruction for an appointed representative to gain access to the contents of the accounts.
If the client does not provide direction, the personal representative must abide by the company's terms of service. Some companies restrict what can be shared in their policies.
Technology vendors are already addressing this issue, such as Everplans, an estate planning portal for advisers and their clients to hold documents, client information and account credentials.
Another is Directive Communication Systems, which holds account information and grants access to personal representatives when given proof of appointment.
"For financial advisers, having that visibility of your clients' activities, both alive and at the time of passing, can make that estate or that client's portfolio more efficient," said Lee Poskanzer, chief executive of DCS.
He said in some cases, families or friends may not know of all the accounts a client has, including financial ones, because statements are sent to an email address. This could pose a problem for closing up an estate or informing the IRS at tax time, he said.
As for other accounts, like PayPal or Pinterest, there is intellectual property that may have value, said Leslie Beck, principal of Compass Wealth Management in Wood Ridge, N.J. Though she has never encountered an issue with her clients, she sees it as a risk.
"Certainly my younger clients are storing more and more things in the cloud and have these types of accounts, and it is a big issue," she said. "I am advising, especially younger clients, to make sure they include this type of information in their wills."
Ms. Pedersen says shuttering a deceased client's footprint is important, because it prevents potential fraud. If an account with links to bank accounts or credit cards remain open, a hacker could find his or her way in and wreak havoc.
"They may not get caught for a while," Ms. Pedersen said. "You are that much more vulnerable."