By FPA member, Catherine M. Seeber, CFP®
Last Updated: February 11, 2013
You're standing waiting for public transportation, waiting in line for groceries, sitting around with a bunch of friends……how many people do you see looking down at mobile devices?
Gone are the days of physical document trails and the passing down of photo albums. Think about it, if you were to die tomorrow, how much of your information is digital? Who would have access to both your financial and personal information? What information would you actually want to have available?
The first thing you should do is separate your digital accounts into two categories: financial and personal (business is assumed controlled by your employer, for argument’s sake). Examples of financial data would include online bank accounts, brokerage accounts, medical history with your insurance provider, life insurance companies, credit card accounts, tax prep service accounts, etc.
Personal data examples would be social networking sites (LinkedIn, Facebook, Twitter, email, Match.com), photo galleries, home computer hard drive, iPhone data and applications, reward programs/benefits, marketplace accounts (eBay, Amazon, iTunes), etc.
There are laws being created and reviewed to address these privacy issues that go beyond the scope of this discussion and have been developed as a result of horror stories (suicide investigations, spouses left with no online access to joint bank accounts, etc.). The laws are vast and complicated but that shouldn’t stop you from passing on the keys to your digital kingdom.
To assist, sample language has been developed for your estate planning documents such as your power of attorney and will. As you have given thought to with whom you would trust to handle your matters, think of who you would like to appoint as your digital executor. Would it be the same person? Written authority may grant an attorney-in-fact specific powers to administer digital assets. At the very least, a will should include specific powers to handle digital assets and a definition of digital assets. Finally, it may be desirable to reference an external list of digital assets and relevant user names and passwords for your finances.
Your non-financial digital assets, however, are a different story. Before you create this list of who you would want to grant access to and to what, you should review the terms of services on your digital social media accounts. The terms of service for social media sites can take precedence over your estate planning documents and state laws.
At the very least, make a comprehensive list of the websites where you frequent and how you access them. There are likely a number of sites you view routinely and don’t realize should be part of your inventory. Pay attention and begin documenting the sites where your electronic entry is password-protected.
There are also recommended storage options for this information. Some planners recommend that the list be kept on a USB flash drive or similar device, and then stored in a fireproof safe or other secure location. Another option is to pay a minimal fee for cloud storage services. In either case, it is a good idea to let family members and your financial power of attorney know where to locate the information.
It is essential to plan ahead so your fiduciaries and family members have full access to your accounts and devices in case of an unexpected period of incapacity or death. Creating a list is just the beginning. You should discuss this with your financial planner and consult with an attorney licensed to practice in your state concerning your own situation. And once you create the list, be sure to keep it updated.
FPA member Catherine M. Seeber, CFP®, is a Principal and Senior Financial Advisor with Wescott Financial Advisory Group, LLC, an SEC-registered, fee-only investment advisory and wealth management firm. Cathy also serves as the Chair of the Financial Planning Association (FPA) of the Philadelphia Tri-State Area Chapter.