What Happens to your Online Accounts When you Die?

If you pass away unexpectedly and have no plan for what happens to your online accounts (your "digital assets"), your Personal Representative may be left with a huge mess to sort out. A Personal Representative ("PR") is someone you designate in your Will to help settle your estate. They gather all your assets, pay bills/debts, and distribute those assets to family or whomever is designated under your Will.

So, what happens to your digital assets when you die? How does your PR gain access your email accounts, cloud storage, iTunes, PayPal, eBay, gaming profiles, etc?  Here is a quick rundown of a potentially complicated situation:

  • Many Terms of Service (remember that long legal thing that you quickly clicked "I agree" to without reading?) expressly forbid access to anyone aside from the account holder. This is because of strong federal privacy laws.

  • Your PR will have to reach out to each company directly (call up Google, Apple, eBay, etc) and prove your death. Once proven, email and social media accounts will likely simply be shut down and deleted without giving the PR any access to the actual content of the accounts. For some things, that's okay. For other things, not so much (like a PayPal account with $30,000 left in it!). Accounts like these end up in virtual limbo, not to mention are sitting ducks for hackers.

  • To gain access to the data itself (such as cloud storage), your PR could easily be required to get a court order to obtain the information. Who knows how lengthy and costly of a process this can be.

Okay, you get it. It's a mess. So, what can you do about it? Plan!

  • Minnesota recently passed the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). This Act provides a bridge between the rights of your fiduciary (like a PR) to step into your shoes and the federal privacy laws. This law enables a fiduciary to do what they need to do without additional headache of getting court orders as described above. 

  • Create and maintain an orderly list of usernames and the associated email addresses. Or utilize a company like EstateMap, which charge a minimal fee and securely store this information for you. You appoint someone to gain access to this account upon your death. 

  • Ensure that your attorney drafts language into your Will (and Power of Attorney, Trust documents, etc) about how to deal with digital assets (e.g. expressly authorizing your PR to access, modify, control, archive, transfer, and delete digital assets). 

  • Additionally, some companies (like Facebook) are providing an online tool for you to appoint a "Legacy contact" on your account which allows this person access to your account upon your death. You can get directions on how to set this up here: Facebook Help Center. Similarly, Google allows you to designate an "Inactive Account Manager" that gets activated after a certain number of months of no activity on your account. 

Regardless of what you do to back up your passwords, be it on paper, on your computer, or on an app, just do SOMETHING! And most importantly, account for it in your estate plan. Specific language should be in every Will or Trust, stating you expressly authorize your Personal Representative (or Trustee or other Fiduciary) to access your digital assets for enumerated purposes. It is just another way to ease the burden on friends and family that have to put your affairs in order after death. 

Please remember, this post provides educational information only and in no way constitutes legal advice.

Reviewing Beneficiary Designations is Important. Here's Why.

Take a minute and imagine the following scenario: your ex-spouse was listed as beneficiary on a long-forgotten life insurance policy through a former employer that you haven't reviewed in 5 or 10 years. You are now re-married with two minor children. If circumstances led to your untimely passing, the funds from that policy may not go to your children or spouse. It may go directly to your ex-spouse. (While there is a law in Minnesota that allows for automatic revocation of beneficiary designation upon divorce, there are important exceptions which I won't go into here. Better to be safe than sorry.)

Whether or not you have a Will or estate plan in place, reviewing your beneficiary designations every few years is always a good idea. It is the easiest way to ensure that these assets transfer to the individuals you want to inherit them. Maybe you never got around to listing anyone as a beneficiary. Maybe you had a child, got a divorce, or otherwise want to remove the person currently listed as a beneficiary.

By "Beneficiary Designations", I'm referring to those accounts or insurance policies (often called non-probate assets) in which you can choose who receives the benefits of the account in the event of your death. Some common examples include qualified retirement plans (such as 401(k) or 403(b) plans), IRAs, and life insurance policies. For each of these types of accounts, you can name a primary and contingent beneficiary (or beneficiaries). Upon your death, the assets in the account are distributed to the primary beneficiary unless they died before you. In that case, the contingent beneficiary would receive the assets instead. 

Bottom line: take the time to review your beneficiary designations each time you review your estate plan or a significant life event occurs. It only takes a few minutes but it can have a significant impact on your loved ones.

Here are a few other potential mistakes to watch out for:

  • Listing a parent as beneficiary after getting married and having children.
  • Not having a contingent or secondary beneficiary.
  • Naming a minor (or even a young adult) directly as a beneficiary instead of a trust for their benefit.
  • Designating a trust that does not exist or is outdated as beneficiary.

Please remember, this post provides educational information only and in no way constitutes legal advice.

Minimal Assets? No Children? You should still consider having an Estate Plan.

No matter your circumstances, having an estate plan is the best way to plan for your "stuff" when you're gone. It allows you to avoid probate, family rifts and negative tax implications. Below are some of the "typical" documents included in an estate plan along with a description of what they are and why they are useful. 

Will: This document which enables you to dictate where your property goes upon your death. Typically, you name spouse/partner (and a back-up) as Personal Representative — this is the person that executes your Will, paying debts, distributing assets, etc. Your spouse/partner would execute a Will for themselves as well with similar provisions in place.

  • Why it's useful: If you both passed away tomorrow without a Will, your assets (personal property, home, cars, retirement accounts, life insurance policies, other bank accounts) would be distributed via state law. Assuming you don’t have children or grandchildren, it would go to your living parents. If your parents are no longer living, then it would likely go to your brothers and sisters (in “equal shares”). If you have a blended family, inheritance rules get complicated quickly.
  • Usually people want to dictate where their assets go upon death, rather than leave it up to the state they live in. For example, do you have a charity you want to give to? Or perhaps close friends that are like family? Are you unmarried but in a long-term relationship and want to give them something? Do you have a beloved pet you want to gift to someone? A family heirloom? Most state laws recognize only blood relations if you don’t have a Will that states otherwise. And if you have no relatives that your assets can be given to, then what? The property "escheats" to the state -- meaning the government gets it. 

Power of Attorney: This document authorizes someone to act on your behalf in financial matters. Typically, you name your spouse/partner (and a back-up person) as your “Agent”. The same document is also created for the spouse, naming you as his or her Agent.

  • Why it's useful: If you were to get in a car accident, this gives your Agent the authority to pay bills and handle financial obligations on your behalf. Although he or she may already have this authority over things like joint checking accounts and a jointly-owned house payment, he or she does not automatically have that authority for things that you have control over in your name alone. This power only lasts as long as you’re living — the power would cease at the time of your death.
  • It is absolutely critical to understand that this power exists in your Agent the moment you both sign the document. This means they could (in theory) leave you and drain your personal bank account. Or sell your property out from under you. Or 100 other terrible things. So a word of caution, only appoint someone you trust a great deal. 

Health Care Directive: Sometimes called a "living will", this document names an agent and informs others of your health care wishes. Typically, you name your spouse/partner (and a back-up) as your “Agent” over health care decisions in the event you cannot make them on your own. The same document is created for the spouse, naming you as his or her health care Agent. 

  • Why it's useful: If you were to get in a car accident, this gives Agent authority to make medical decisions on your behalf. It provides clear notice to everyone involved that you trust this person to make these decisions.  If married, he or she may already have some authority to discuss treatment with your doctor (since he or she is "family"), however this authority is far from absolute. It provides a way to make your preferences for medical treatment crystal clear. It ensures that your spouse/partner can make decisions for you even if your health care directive doesn’t specify what you would otherwise want. Like the Power of Attorney, this document only lasts as long as you’re living.
  • It can be as specific or as general as you wish and includes things like (1) organ donation, (2) end of life care treatment, (3) preferences for artificial nutrition and hydration, (4) preferences regarding mental health treatment, and (5) authorization to release HIPAA-protected information to your Agent. 

 

Please remember, this post provides educational information only and in no way constitutes legal advice.

Written by Jennifer A. Rutz

LegalZoom v Attorney. Product v. Service. Understand what you're buying.

1. You get what you pay for.

Yes, LegalZoom may cost $350 for you and your spouse to have a Will and other documents delivered to your email inbox. Yes, an attorney likely costs double that amount for the same services. But do you understand why those documents are so essential? Do you understand what the provisions within the documents mean? Are you confident that they are correct? If you answered "no" to any of those questions, then you may be leaving it all to chance. 

2. DIY Legal Companies are selling you a product.

This product is one that they "guarantee" is the right product. Does it meet your specific needs? Does it take into consideration common concerns, i.e. blended families, estate tax planning, caring for minor children, real estate held in other states, specificities regarding retirement accounts, etc? You will truly never know until it's too late. 

In contrast, an attorney is providing you a service that doesn't end with the drafting of the documents. It is a service based upon proper schooling, knowledge, and experience. It is a service that most attorneys are passionate about. They are with you at the beginning planning stages. They are with you every few years to review changes in the laws and significant events that have happened in your life. And they are often with you or your family when the inevitable happens and a loved one passes away. They relish the "value added" components of drafting your estate planning documents, in that they get to build a long-term relationship with you and your family. 

3. If the Will isn't valid, the State decides.

If your DIY Will ends up not being valid under state law, then the state you live in decides where your stuff goes. Who do you trust more to get it "right"? Yourself or the state? 

Similarly, if the Will is valid but has major errors or items that were never considered in your specific plan, I can tell you from experience that it costs much more to try to fix it after your death then to do it right the first time.

These are just a few things to consider when deciding whether to create your Will on your own. At the very least, talk with an estate planning attorney (most give free consultations!) and learn whether you can take the risk of a DIY Estate Plan.

Please remember, this post provides educational information only and in no way constitutes legal advice.

Written by Jennifer A. Rutz

3 Reasons Everyone Needs an Estate Plan

1. You are not immortal. Everyone dies. It could happen at any time. Or you could be involved in a serious accident that renders you unconscious and unable to make medical decisions. A Health Care Directive (aka Living Will) provides you the opportunity to appoint someone you trust to make health care decisions on your behalf. It also provides information to this health care agent and your health care providers about your wishes regarding medical treatment, organ donation, and even funeral arrangements. Best of all, it is easy to get set up and inexpensive to enlist an attorney's help. 

2. You will have assets upon death and the total value adds up fast. Do you own your home? Have a life insurance policy? Own a small business? Even if you have significant student or business loans, your assets can add up to real money. Planning now protects your family in the future. A Will includes tax planning provisions (because if your assets exceed $1.6 million in Minnesota this year, you could incur MN estate tax liability) and allows you to dictate, to some extent, how those debts get paid. 

3. You have minor children and/or are cohabitating with your significant other. All parents have very strong opinions on who they would want to be guardians over their children if the parent passed away. A Will is the main way you can state those wishes so the court knows who to appoint. If you are not married but living with a partner, a Will is the place you can list what specific pieces of personal property or assets you want your partner to receive. If you pass away without a Will in this circumstance, your state laws kick in and assume you want everything distributed to family members (it's called "intestate succession" and the rules vary by state). 

Bottom line, estate planning is important for everyone. Don't let "Make a Will" sit on your to-do list for years. Reach out to an attorney you trust (or ask someone for a referral to one) and learn more!

 

Please remember, this post provides educational information only and in no way constitutes legal advice.

Written by Jennifer A. Rutz