When my grandmother passed away, one of the painful but necessary steps in the weeks that followed was sorting through her personal belongings. Our relatively small family identified the valuable items in her home, both monetary and sentimental, and discussed which ones we would take. Our task was simple because, much like others in her generation, everything she owned could be seen and touched.
Today’s generations have much more to consider when leaving their estate to heirs. For example, the often-prized nostalgic family photos may no longer reside in an album or shoe box, but an online storage vault or cloud. In an increasingly high-tech world, your estate plan may need an update to include these digital assets. The good news is that with some simple planning and forethought, you can likely accomplish what you'd like to with your online and digital assets. But you need to make sure your wishes are known and your accounts can be accessed by your executor.
How to Start
Just as I recommend for all my clients, anyone can begin developing a digital estate plan by creating a list of all of their online accounts and a central repository for usernames and passwords. It’s important to pass along accurate information, so check all usernames and passwords as you compile your list. There are numerous free and secure apps that can be used to accomplish this. Once you have compiled this list and aggregated your passwords, consider placing this list (or instructions for accessing a digital record) in a secure location, such as a safe deposit box, so your executor can access this when the time comes.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
As you compile a list of online accounts, here are a few recommendations to consider and document for the various types of accounts.
Social Media
Each social media platform has its own policy and procedure to handle the death of a community member. Some will shut down your profile, while others will turn it into an online memorial. If you have preferences for how your accounts be handled after your passing, you should document that in a letter to your executor.
Online Storage
Online file storage is a very important asset to plan for and document as part of your estate plan. For many families, photos are one of the most cherished ways to capture and pass along memories of loved ones. One in three Americans now use online photo storage services. Without specifically directing your executor to pass these digital photos onto heirs, the companies may simply shut down your accounts and delete potentially years of precious memories captured in your stored photos. Take inventory of all your online storage and make plans for where and to whom those files should go.
Just like online storage, without a written plan these accounts may simply be deleted after your death. If there are certain messages, folders or attachments you would like preserved and/or shared, this should be documented for your executor.
Financial Accounts
Over half of American adults bank primarily online, and many have accounts that are not tied to brick and mortar banks. Make sure to document the location of all your online bank accounts so that these assets do not get excluded from your estate distribution wishes. Again, providing your executor with login information will aid them and potentially increase the speed in which your estate can be settled.
Rewards Points/Miles
One final “asset” to consider in your planning is rewards points and miles issued from credit cards, airlines, hotel chains and other accounts. Each company and program is unique, but many do have beneficiary provisions so those hard-earned rewards can still be redeemed.
A best practice is to include in your estate planning documents who you would like these points to be left to just as you would with any other asset. Most importantly, just like your usernames and passwords, create a list of all your various rewards points so your executor will be able to easily locate them and begin the transfer process upon your passing.
Estate Planning Documents
Each state has different laws regarding digital assets and estate planning. Some states allow you to name a digital executor to specifically handle your online estate settlement. Other states, like Georgia, provide your executor with the right to access and control your online resources. In any case, speak with your estate planning attorney about what steps you need to take in your specific state to make sure that all your assets, including digital, are accessible and clear to your executor.
If you are like many of my clients, you may be surprised to learn that you need to take additional steps to plan for your digital assets. Just like all estate planning, it’s important to document your wishes so that your heirs aren’t left making decisions on your behalf or completely missing assets because they are unknown.
I’m certain that your estate looks nothing like your grandmother’s; make sure your estate plan reflects the reality of our increasingly complex world.
-
RMD Deadline April 1: Five Tax Strategies to Manage Your 2025 IncomeTaxable Income The April 1, 2025, deadline for required minimum distributions (RMDs) is fast approaching for retirees who turned 73 in 2024.
-
Rising AI Demand Stokes Undersea InvestmentsThe Kiplinger Letter As demand soars for AI, there’s a need to transport huge amounts of data across oceans. Tech giants have big plans for new submarine cables, including the longest ever.
-
The Three Biggest Fears Keeping Retirees Up at NightHere are the steps you can take to put those fears to rest and retire with confidence so you can relax and enjoy the life you've planned.
-
What Can a Donor-Advised Fund Do for You? (A Lot)DAFs and private foundations go about helping charities (and those who donate) in different ways. Each comes with its own benefits and restrictions to navigate.
-
Estate Planning When You Have International AssetsEstate planning gets tricky when you have assets and/or beneficiaries outside the U.S. To avoid costly inheritance mistakes, it pays to understand the basics.
-
Three Essential Estate Planning Steps to Protect Your Nest EggAfter dedicating years to building your wealth and securing your future, make sure your assets are protected and your loved ones are provided for in the future.
-
Is Chasing the American Dream Ruining Your Financial Life?Too many people focus on visible affluence as a marker of success. Here's how to avoid succumbing to the pressure and driving yourself into debt.
-
Retiring With a Pension? Four Things to KnowThe road to a secure retirement is slightly more intricate for people with pensions. Here are four key issues to consider to make the most out of yours.
-
How to Teach Your Kids About the Tax Facts of LifeTaxes are unavoidable, so it's important to teach children what to expect. Also, does your child need to file a tax return for 2024? Find out here.
-
Revocable Living Trusts: The Good, the Bad and the UglyPeople are conditioned to believe they should avoid probate at all costs, but when compared with living trusts, probate could be a smart choice for some folks.
