As paper continues to be replaced by plastic and more purchases than ever are made on the internet, families must increasingly plan for the future by taking a hard look at their “digital assets” and how best to protect them.
Online shopping and banking has become the norm in 2017 — Amazon is the nation’s ninth-largest retailer, according to the National Retail Federation, and a late 2015 survey from Bankrate showed that four in 10 account holders hadn’t visited a physical branch of their bank in the last six months, a trend that will only trail upward in the years to come.
Despite this shift into the digital sphere, many Americans tend not to consider the connection between their online presence and their estate. It’s a mistake that can have consequences for the loved ones who are left to sort through their affairs; the 2017 Identity Fraud Study released by Javelin Strategy & Research in February found that 15.4 million U.S. consumers lost more than $16 billion to fraud in 2016, and account-takeover losses increased more than 60 percent between 2015 and last year.
Much of that fraud now occurs without access to a physical bank card or checkbook, from ransomware and data breaches involving entire stores and hospital systems to the email phishing scams and cyberattacks that made last year a record year for fraud both on and off the net.
The problem becomes even more complicated when stolen data can’t be recovered because its owner is deceased. Online accounts that people might never consider in their estate planning can become a headache when hacked — your iTunes account is linked to your checking account, after all. Ensuring that your personal information is safe in the Information Age means covering your bases and making your accounts accessible to the right people.
While planning for the distribution of your estate after your death is never fun, it is the first and most important step to making sure your assets are used as you see fit after you’re gone. For most, that means divvying up property, giving power over for bank accounts and bequeathing the key to a safety deposit box. In 2017, it should also mean giving out passwords and setting out language in your will that establishes set guidelines for managing your online presence.
While a growing number of governments are enacting laws that clarify the rules for executors managing virtual accounts, the fact that most online accounts are governed by a terms-of-service agreement and subject to the privacy laws of the territory in which they’re headquartered means people should seek legal advice regarding their PayPal account just as they would about their house or car. Many of the most popular websites are based outside Canada, creating the potential for a conflict in laws that should be taken into consideration during the estate planning process.
Tools offered by a service that allow secondary access to an account are an easy way for people to ensure that their loved ones have access after their death. A prime example of this is Facebook’s legacy contact feature — a person can establish a legacy contact who has permission to manage his or her account after their death by taking a few minutes to change their account settings.
If these tools aren’t available on the platform or aren’t utilized, control of a decedent’s online accounts are governed by what is laid out in his or her will. Failing that, an account’s service agreement dictates what happens to the account, and generally, access is limited to the person who agreed to the service.
Imagine it: months after someone’s passing, a fraudster gains access to their still-active Amazon account, spending hundreds or even thousands of dollars before their grieving family realizes what has happened. It’s a scenario that can be avoided with the proper planning and foresight, and a consideration that shouldn’t be overlooked in the estate planning process.