Four Steps to Secure Your Digital Legacy

“I think it’s in a red notebook, or maybe it’s a burgundy one?” Dad said to me as I searched for Mom’s bank account password. My mother’s cancer had advanced rapidly, prompting our recent decision to enlist the support of Hospice care, and I was at their home to help. Over the few months leading up to this point, we had discussions about their estate planning, mainly ensuring foundational estate documents such as her will and advance directive were in place. We also reviewed account titling and beneficiary designations to ensure a smooth estate settlement process with a focus on avoiding probate where possible.

Dad thought we had reviewed all the accounts when he suddenly remembered a bank account that was in Mom’s name. Was he listed as a joint owner of the account, or perhaps a beneficiary via payable on death (“POD”) designation? He wasn’t sure, and with bigger things on his mind, I was trying my best to relieve him of worry about the smaller stuff. The account statements for the bank account in question were set up for e-delivery, so I couldn’t confirm the account title on a recent paper statement. If I could log into her account, I could confirm the account title and if any beneficiaries were named. Simple, right?

Mom was creative. She was an artist, a florist, a gardener, a knitter, a jewelry maker, a baker, and a true creator in every way. She also liked to write and journal … there were stacks of notebooks, including all shades of red and burgundy. As you can probably guess, I never did find the login credentials for this surprise bank account.

This experience served as a sharp reminder of the extent to which many aspects of our modern lives are stored and managed online. Of course, in addition to financial accounts (banking, investments, credit cards, etc.), other prominent digital assets and/or accounts can include:

• Smartphone, computer, and tablet lock passcodes and data storage accounts
• Email accounts
• Social media accounts
• Photo and video storage accounts
• Utility and subscription service accounts
• Shopping accounts
• Cryptocurrency keys
• Online betting or gaming accounts
• Airline miles, hotel points, or other transferable rewards programs

Certainly, this list is not exhaustive and as technology progresses, it is sure to grow. According to an article published on tech.co in November 2021, a NordPass study revealed that the average person has over 100 passwords to remember. According to the research, the number increased by 25% between 2019 and 2020.

As such, it’s important to get organized and create a digital estate plan with these simple steps:

1. What: Take inventory of your digital assets and accounts
2. Where: Store your inventory, written intentions, and estate documents in a safe place
3. Who: Designate a digital executor
4. How: Provide instructions on how your executor should handle your digital assets

Organize and Inventory

Find a way to manage your digital accounts that is effective for you. Not only will this help simplify and secure your life, it can also make vital information accessible to those working to settle your estate and fulfill your final wishes. Document your usernames and passwords and keep them in a secure place. This can be low- or high-tech.

• Keep a notebook or paper document. Store it in a secure and locked place that your loved ones can access. Think of a safe, a fire-proof lockbox, or a secure file cabinet. DO NOT store this document under your keyboard or in your top desk drawer.
• Maintain a password-protected spreadsheet or PDF document. Remember to tell your loved ones the password and make sure they can locate this file.
• Sign up for an online password manager. Some password managers are free, while others require a fee. A few examples include Dashlane, 1Password, Bitwarden, and NordPass. Online password managers store all your passwords and other secure information behind one complex password. Password managers can also generate random and difficult-to-guess passwords for your accounts to eliminate using the same password for multiple logins. They often also include a provision for a digital legacy—a method to transfer your login credentials to a trusted individual in the event of your death or incapacity.

Always remember to update your password list or manager anytime you make changes or create a new account. Along with your passwords, you will also want to make note of any two-factor authentication apps or devices you use to protect your accounts. Be sure to store your book, your protected spreadsheet, or password manager information in a secure place along with your other estate planning documents and records and confirm that a trusted contact or executor knows where to find them.

Digital Assets, Executor, and Your Legal Documents

Your digital executor can be the same person as your traditional estate executor, or you may choose to designate another individual. Most people will want to choose their spouse, another family member, or a close friend.

Along with the inventory, we suggest providing your digital executor with clear intentions for each account or asset. For example, you may simply want many of your subscription accounts closed. For other accounts, such as a photo storage account, you may instruct the executor to transfer all content to another account, storage device, or individual, before fully closing the account. Also note that each company (i.e. Google, Apple, Amazon, etc.) has its own terms and conditions that dictate the permissible actions of the executor. Some digital services offer tools to designate what happens to your accounts upon death—Facebook’s legacy contact, for example. If they do not, then the account owner’s digital executor should be able to manage the account.

It’s important to check with your estate planning attorney to see how your digital assets should be handled, as the concept of digital assets is still relatively new and evolving. Currently, 45 states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act. This Act governs access to your digital accounts when you die or lose capacity.

North Carolina adopted this Act under NC Statute Chapter 36F and offers the legal definition of “accounts,” “information,” “online tool,” and “record,” among other important terms within the scope of this Act. Rest assured, the definitions ensure access to the types of accounts listed in this article and many others not listed. If you have a Trust drafted in North Carolina, the provisions should state that the named fiduciary (trustee) has all the powers permitted under the NC Uniform Trust Code (Chapter 36C), unless otherwise specified, in order to ensure your fiduciary legally has access to your digital accounts and assets.

As our lives become more intertwined with technology, it’s important to consider the full scope of our digital footprint when planning for the future. By taking the time to inventory and account for our digital assets in the estate planning process, we ensure that our loved ones can navigate the complexities of our digital lives with clarity and ease, providing them peace of mind during what can already be a challenging time.

This information is believed to be accurate at the time of publication but should not be used as specific investment or tax advice as opinions and legislation are subject to change. You should always consult your tax professional or other advisors before acting on the ideas presented here.