Heather Stauffer – Central Penn Business Journal
Imagine forgetting all your passwords and being locked out of your online accounts.
That, legal and financial experts say, is almost exactly the unenviable position your business and personal heirs could be in if you don’t make adequate preparations to pass on your digital assets.
“You’re seeing more and more people who keep all of their records digitally,” says Brian Hinkle, an attorney at Mette Evans & Woodside. Traditionally, mailed statements alert executors to the condition of an estate; these days, bills could be going to an email address that survivors are unaware of or do not have access to.
At Barley Snyder LLP, one decedent had arranged for his mortgage to be paid automatically by electronic transfer, says Brian Ott, partner and chairman of the firm’s personal planning group. The problem was, he hadn’t left the information necessary for an executor to access the account.
“We couldn’t stop that after the fact,” Ott says.
Another hypothetical scenario several local financial planners cite is a decedent who had sold a vehicle and accepted payment to a PayPal account –— but none of her heirs knew about the account and it wasn’t listed in her records, so they didn’t get those thousands of dollars. In a business scenario, it could be even worse.
“The stakes are much higher, because you’re talking about things like payroll and rights of employees,” Ott says.
To avoid problems, experts say, you should compile a list of all your digital assets and the information necessary to access them, keep it in a safe place and update it regularly. You should also ask your adviser to include language in your will and power of attorney giving your heirs authorization to take over your digital accounts.
The will is not enough, because it kicks in only at death, says Andrew Rusniak of McNees Wallace & Nurick LLC. The language should be in your power of attorney, too, in case you are incapacitated –— and, as Hinkle notes, time can be of essence for online accounts, as some may be automatically deleted after a period of inactivity.
Financial accounts aren’t the only ones to worry about.
Andrew Horwitz, vice president of Wilmington Trust, says the legal definition of digital assets is still being worked out, but any online account you have might be of value to your heirs. Maybe it’s the photos you store on a media site and nowhere else or your medical records, a domain name or frequent flier miles.
“Today, people can have thousands of songs stored digitally worth a lot of money,” says Horwitz. “There’s lots of other stuff out there.”
Security and access are two issues you should consider when compiling a list of your digital accounts and passwords, experts say. The information needs to be safe but also easy for an executor or heir to find if necessary.
“Everence doesn’t recommend that our clients give account passwords to us,” says Jamie Detweiler, an adviser at Everence Financial Advisors. Instead, he says, they recommend using tools such as a personal financial affairs directory and a comprehensive financial planning service “that helps people keep track of their accounts in a unified fashion. A feature of this service is the ability to share account information with the members of their adviser team without having to share passwords and digital account access.”
Because people change passwords and add accounts, Horwitz recommends updating digital information at least annually, preferably tied to an event such as a birthday, anniversary or the beginning of a season.
“The law really hasn’t caught up with changes in technology,” says Brian Ott, partner at Barley Snyder LLP and chairman of the firm’s Personal Planning Group.
In Pennsylvania, the most notable attempt to address the legal issue was House Bill 2580, which would give a personal representative “power over decedent account on social networking website, microblogging or short message service website or email service website.” It was referred to the judiciary committee in 2012.
Most other states are similarly situated, local attorneys say, so there has been much attention on the Uniform Law Commission’s model legislation, which was approved at the national organization’s July meeting. It is broader than HB 2580, treating digital assets as equivalent to tangible ones, and in August Delaware became the first state to enact a bill based on it. The legal community is watching to see what happens there.