Late last year, Brian O’Connell raised awareness around the issue of planning for a client’s digital estate as a guest blogger on the Cavalier Strategy. Since then, there has been a flood of coverage on this topic from multiple media outlets, reinforcing the same points that O’Connell raised in his post.
There are, as is usually the case, some additional twists and turns to this issue, and Steve Parrish, a frequent contributor to Forbes and National Advanced Solutions Director with the Principal Financial Group, makes some solid recommendations in his recent insight on this topic.
the hidden traps
Even doing everything right is no guarantee. There are subtleties in this developing area of planning that are difficult to anticipate.
Case in point is the example from Parrish’s column on Forbes.com regarding the trouble a widower faced upon his wife’s death with an electronic banking account.
It seems that the electronic access to the account in question was tied to the deceased wife’s user name and password. The bank shut down the username and password upon her death as is their policy. The account was fine in every possible way save one: He simply could not access it electronically upon her death regardless of the fact that it was a joint account and he had a power of attorney.
They did everything right, except set up individual access credentials for each of them.
The other area of exposure explored in Parrish’s column is how digital assets are handled in the business world, particularly in the age of Bring Your Own Device (BYOD) digital assets – devices including personal smart phones, laptops, tablets and others used for business.
IT departments struggle with these issues at the time of an employee’s separation from the company. Imagine the magnitude of the challenge when that employee has passed away versus simply moving on to the next step in their career?
What’s on the device? How can the device be legally accessed?
Big questions with difficult answers thanks to laws designed to offer fraud protection. As Parrish points out, there are potential legal issues for both the employer and the heirs of the deceased employee.
lack of uniformity
As with many other aspects of estate planning, the specific challenges a client may face are often dependent on where they happen to live.
While some states have yet to enact any legislation in this area, there are a number of states, eighteen in fact, that have laws on the books, laws currently proposed or have seen proposed legislation in recent history.
While there are some commonalities among the legislation, state to state variation makes it critical to know the current law in the client’s state of residence, as well as understand what changes need to be made to their plan should they move out of state.
a common solution
Even with the new aspects of this issue introduced by Parrish in his columns, the prescription remains the same: Get organized.
Back in November, we introduced our Digital Estate Planning Organizer to help advisors plan the management of their clients’ digital assets upon their death. While it’s a solid resource for many clients, it did not address clients who are employees in a BYOD environment, nor did it address that same issue from the perspective of the business owner.
That leads us to today’s introduction of the expanded Digital Estate Planning Organizer, updated to address the aforementioned additional challenges: Employer-owned digital assets stored in a BYOD environment and the unique needs of the business owner and the management of their digital assets.
The real question is this: How does an advisor start to implement this in his or her practice?
It begins with an awareness of the issues and an understanding that every prospect and client faces these issues whether they know it or not. From there, it’s a matter of a discovery process that starts with a simple question: What have you done to plan for the immediate transition of your digital assets?
There will almost certainly be a bit of blank stare, followed by “What do you mean?”.
Armed with the knowledge and the resources needed to walk them through the issues, you can then guide your client or prospect through the process of planning for their digital estate as part of your normal planning process.