When I was a kid, my aunt worked at the only bank in my hometown. The classy décor included wood paneling, large windows and a quiet usually associated with libraries. In fact, that bank resembled Gringotts Wizarding Bank from Harry Potter fame (though not as large and unfortunately missing the fabulous underground passage containing the vaults of wizards and witches). Fewer Americans are choosing to walk into any bank these days. In 2013, the Pew Research Center found that 51 percent of U.S. adults banked online; roughly a third of Americans banked using their mobile phones. The lack of overhead allows online banks to charge fewer fees and they can be far more convenient since they generally require simply pulling a cell phone out of a pocket or purse. The problem with online accounts is that most people haven’t quite gotten to the point that they think about their online accounts such as banking, iTunes, eBay or PayPal as items to take up when doing any estate planning. If you are thinking about online banking, here’s an article about what to look for in services and protections.
But if you already have online banking or other online financial accounts, there are a few things you should be aware of when you are addressing inheritance. Fiduciaries for digital accounts need to distribute digital assets as well as tangible assets but they may run into problems with the electronic assets. Here’s a few of them.
- One of the biggest inconveniences of executing a Will for someone with online accounts is the enormous difficulty in discovering what assets you had after you passed away. There’s no simple way to run a search to find Joe Smith’s online accounts. So, the executor of your estate needs a starting place. If your account pays dividends or interest a tax return can provide that information but longer term assets or assets that haven’t realized any gains won’t appear on that record. For everyone’s sake including the executor’s and your beneficiaries if you use an account, keep record of these things and store the information in a safe place (don’t store passwords and account numbers in the same place):
- names of institutions,
- locations of safe deposit boxes,
- lists of real estate,
- places you’ve stashed tax returns, birth certificates, Social Security card, marriage or divorce documents, closing documents, and
- names of legal and financial professionals you work with who have knowledge about your accounts.
- Many businesses that handle client files and assets don’t allow access to those accounts once the client passes. This can leave heirs in jeopardy of having accounts hacked or being used to rack up debt. Confirm with any online financial institution that your power of attorney will be sufficient for an heir or spouse to access the account if necessary.
- Many people today operate websites and blogs that generate revenue. If your beneficiary is interested in running your site, include it in your estate plan. If not, include instructions on how the site should be sold. More importantly make sure that a site administrator will allow a smooth transfer of your ownership. Include names you own but do not use.
- Digital documentation such as photos, video etc. may need to be deleted. You run the risk of them being lost to your heirs or conversely brought to light against your wishes.
A list of accounts should provide detailed instructions on whether the account should be closed, expunged, maintained or printed out.
Make sure you understand what can be transferred. Music, movies and books may not be transferrable even if your heirs have records, account IDs and passwords.
The Uniform Law Commission is in the process of drafting a law that would create uniformity in how we manage, distribute and digital assets. The most important step you can take is hiring an elder law attorney to protect your assets for your heirs if you have considerable online presence.