As time goes on, more and more of our lives exist online: Mail arrives electronically, memories are preserved in social media posts, and even most of our financial assets are just 0s and 1s in the cloud. But what happens to all that information after we're gone?
"Most people don't think about their online accounts, their passwords, or their memories stored on a server somewhere and wonder, What if no one else has access to this?" says Austin Jarvis, director of estate, trust, and high-net-worth tax at the Schwab Center for Financial Research.
Nevertheless, your digital information is an increasingly important part of your estate. So, how do you ensure your heirs gain control of your digital treasure trove after you've died and also protect it from fraud while you're still alive?
"Hackers and scammers are becoming ever more sophisticated, and deceased individuals are especially susceptible to impersonation, so balancing access and security can be tricky," says Lisa Lang, a senior manager with Schwab's Financial Crimes Awareness team.
To help safeguard, distribute, and dispose of your digital estate, Austin and Lisa weigh in on frequently forgotten assets, best practices, and preventive measures.
Virtually invisible
- Email, phone, and social media accounts: Many of the big tech and utility companies allow you to specify a third party or "legacy contact" to handle your account after your death. For example, you can arrange to have your legacy contact either delete your Facebook® account or memorialize it—after which the word "Remembering" will appear above your name, and your login and password will be deactivated. Google® allows you to assign an Inactive Account Manager who will be notified and have access to your account data in the event of your inactivity or death. Apple® also has a Legacy Contact feature that provides a designated person access to your Apple account.
- Bank, brokerage, and retirement accounts: These assets are part of essential estate planning; however, in an age of online-only banks and paperless statements, your heirs or even your executor may not know of their existence unless you alert them. Toward that end, you should list all such accounts—along with the rest of your heritable digital and financial assets—in your "I Love You" letter (see "When to put it on paper"). Where bank and digital-only assets are concerned, be sure to state whether the accounts make any recurring bill payments. Also be sure to check that beneficiary designations—and transfer-on-death designations in the case of bank accounts—are up to date.
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- Blockchain property: Comprising everything from cryptocurrencies to nonfungible tokens (NFTs), the market value of these holdings may be significant. "Without the key, your beneficiaries won't be able to access your crypto wallet—ever," Austin says. He recommends saving crypto keys—and, in the case of NFTs, their metadata—on a thumb drive stored in a fireproof safe or in a safe-deposit box at your bank, which can be accessed by your power of attorney if you're incapacitated or by your executor after your death.
- Digital-only assets: If you use Apple Pay®, Google Pay®, PayPal®, Venmo®, or other digital payment accounts, you'll need to include them in your estate plan, as well. You can bequeath any balances in your will, but to transfer balances or close the accounts, your legacy contact or executor will need a copy of your death certificate. Most airline and hotel points are transferable, so you should consider gifting those when they're no longer useful to you or list them among the assets of your estate. However, if your points are tied to a credit card, they will be forfeited when the card is closed upon your death.
- Intellectual property (IP): In today's era of digital supremacy, a surprising number of entrepreneurs and influencers have created IP that may continue to have worth long beyond their lifetimes. "If your YouTube channel or podcast could potentially be of value or produce income after you pass, it should be included in your estate," Austin says. What's more, you need to identify not only the inheritor of those assets and income but also how the IP should be managed going forward.
"From the apps on our devices to photos in the cloud and even online gaming, there are just so many places we can leave a digital footprint," Austin says. "However, not all of these need to be included in your estate."
As you're deciding how to handle digital property, ask yourself:
- Is this asset of financial or sentimental value to my heirs?
- Does this present a privacy or security risk after my death?
Depending on your answers, you may ultimately decide to delete certain information or close some accounts entirely.
Long-term security
Digital assets may be protected from natural disasters, but they're susceptible to online threats even after you're gone. Bad actors may continue to use your information for nefarious purposes—and the more accounts you have, the more targets they have. With those risks in mind, Austin and Lisa suggest the following steps to help secure your digital estate:
- Consolidate your accounts: These include not just multiple IRAs and 401(k) accounts but also bank, brokerage, and email accounts. "Besides making your executor's job needlessly complex, each account is also a potential vulnerability," Lisa says, "so think about consolidating in whatever areas make the most sense."
- Use a password manager: "The easiest thing to do is have all your passwords—financial accounts, social media logins, you name it—encrypted and managed using a password manager," Austin says. Because most password managers also have sharing and legacy features, this is perhaps the simplest way to catalog your accounts and grant access to them both during and after your lifetime.
- Back up your digital assets: It's always a good idea to regularly back up your assets to a physical hard drive stored in a fireproof safe or a bank safe-deposit box, along with hard copies of your estate-planning documents (see "When to put it on paper"). "If you're relying exclusively on the cloud to store certain information, what happens if there's a cyberattack and you can no longer access your account?" Austin says. "If it's important, it should be backed up in more than one location."
"We can't say it enough, but both putting your wishes in writing and having conversations with your family in advance are integral to the estate-planning process—at least if you'd like the smoothest possible transition after your death," Austin says. "If you're not sure what to do with certain accounts or assets, consult your attorney or an experienced third party like your Schwab advisor to help think through your options."
When to put it on paper
In addition to the traditional building blocks of a comprehensive estate plan—advance directives, powers of attorney, a will, and perhaps a revocable trust—you should also include an "I Love You" letter, which lays out your decisions, essential information, and wishes all in one place.
"While not a legal document, this is a straightforward way to pass on pertinent information to your loved ones," says Susan Hirshman, director of wealth management for Schwab Wealth Advisory and the Schwab Center for Financial Research. "It may sound simple, but it has the potential to make things significantly easier for your loved ones in the midst of their grief."
The letter can include everything from an explanation of your thinking around how you've chosen to distribute your assets to how you'd prefer your heirs spend their inheritance, and even a record of family stories you'd like to preserve for posterity.
Also essential to include is a list of trusted advisors and their contact information, as well as a comprehensive list of your assets, including physical copies of the deeds to any property, your life insurance policies, and perhaps even your pension and Social Security statements, since surviving spouses and minor children can sometimes benefit from both.
"Being clear with your wishes is always a good idea," Susan says.
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