Appointing a Digital Fiduciary for Your Clients' Digital Assets

The American College of Financial Services
January 31, 2017

Discussing difficult subjects like death and incapacity are often unwelcome yet incredibly necessary client conversations. Perhaps one way to ease into these difficult topics is to encourage clients to think about what they would like to have happen with their digital assets.

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What Are Digital Assets?

Although definitions vary, here the term “digital assets” describes the electronic information and files often shared or made available through online portals. These assets can include online files and documents, email accounts, photos stored online, and social media accounts.

What happens to these assets when someone dies can vary by site and by state. It also depends on one’s personal wishes and if he or she has put a plan in place. To help clients decide what should happen to their digital assets, consider three possible options:

  • Their digital assets could be deleted and all access to accounts are denied;
  • They could grant someone full or limited access to the accounts; or
  • They could grant the online company permission to share their data (but not account access) with someone they trust.

A look at a few commonly used online accounts and services provides insight into practical application of these options:

Digital Assets On Google

Google users have access to an Inactive Account Manager, which allows them to control what happens to their Google account and related files (e.g., Gmail, Google Photos, Google Drive, YouTube videos) when they stop using their account. Google recognizes that “many situations … might prevent you from accessing or using your Google account.” It’s true. Not only does this approach allow them to avoid discussing death directly, but Google also recognizes that planning for digital assets also involves planning for incapacity.

With the Inactive Account Manager, users need to determine when they want their account to be considered inactive. This time parameter may be as short as three months without logging in, or as long as 18 months. Deciding on a length of time partially depends on how frequently they currently use the account. Then, users can opt to have their data sent to up to 10 email addresses, or they can opt to have it deleted entirely. Users can also set up an automatic reply scheduled to begin once their account becomes inactive.

Digital Assets On Facebook

The default approach for a Facebook account holder who passes away is to have an account memorialized once a family member or friend notifies Facebook of the death. (Note that the trigger for Facebook to take action is the death of the account holder, rather than an inactive account.) This approach changes the settings of the account but still keeps it active for others to use in memory of the deceased. Alternatively, a user can elect to have his or her account entirely deleted once someone notifies Facebook of his or her death.

Facebook also allows users to select a “legacy contact” who will essentially manage their memorialized page with limited controls. For example, a legacy contact is able to accept new friend requests and can change the profile picture of the deceased.

New Legislation for Digital Asset Directives

While companies like Google and Facebook deserve recognition for their efforts to facilitate the wishes of deceased users, managing the settings on each individual account can become quite cumbersome. As a result, 31 states have started pursuing legislation to create more consistent governance of the digital assets of others.

The Uniform Law Commission has been promoting the Fiduciary Access to Digital Assets Act, which has been enacted in 19 states and introduced in 12 more states. This law describes the roles and responsibilities of what might be called a “digital fiduciary” — a person who is empowered to carry out the digital wishes of another person. This digital fiduciary can be appointed as part of a power of attorney in the case of incapacity, or as part of a will in the case of death. The new law strikes an appropriate balance between the needs of digital companies to protect the privacy of their users, and the desires of users to grant limited or unlimited access to their accounts at their incapacity or death.

How to Painlessly Approach a Sensitive Conversation with Clients

Death and incapacity might not be the most appealing conversation topic you’ll discuss with clients but you can gently open the discussion about digital assets by asking clients what they’d like to have happen to their Facebook profiles in such an event. Demonstrating or explaining company-specific tools, like those available through Google or Facebook, can be helpful and a methodical approach can remove an element of emotion from the conversation. Recommending proactivity can help your clients feel empowered, another way to divert attention from the more negative implications of the topic. If legislation has been enacted in your client’s state, you can encourage clients to revisit their current estate planning documents to make sure they also address digital assets access and/or ownership. For clients whose states have yet to enact the Digital Assets Act, suggest that they proactively communicate with their state representatives via phone call, letter, email or social media.

For financial advisors who wish to act as their clients’ full service trusted advisor, understanding and speaking to financial planning matters of all types is critical. Some conversations will be less pleasant than others, however these are sometimes the conversations that are the most important and can best establish your position as a valuable financial and personal advocate. You can ensure the advice and recommendations you provide are relevant and comprehensive by pursuing continued education and training throughout your career.

 

Advanced financial designations like the Chartered Financial Consultant® (ChFC®) equip financial services professionals with strong expertise across a diverse and complete spectrum of financial planning topics. Learn more about strengthening your career with a ChFC® in the guide, How the ChFC® is a Game Changer in Advancing Your Financial Planning Career.