Why your digital footprint needs an estate plan

Make sure your heirs and executors have what they'll need.

Deanne Gage 25 July, 2014 | 6:00PM

If you've drafted or updated your wills and powers of attorney, congratulations! That's sound estate planning. But unfortunately, that's only the first step in getting your financial affairs in order. The digital world has created a slew of other issues that must be considered to make it easier for our heirs and executors to settle our estates.

For instance, do your heirs know the passwords to your LinkedIn or Facebook pages? Many people would like to have those web pages shut down immediately upon death -- hard to do without knowing the correct login and password. Then there are things like the passwords to your cell phone or computer. Often that's where the deceased's contacts are listed, so a password may be needed, even just to notify friends, family and clients of your death.

These are issues our parents didn't have to worry about but our digital footprint needs an estate plan too, says David Christianson, author of Managing the Bull and a financial advisor with Christianson Wealth Advisors/National Bank Financial in Winnipeg. "Most people don't have something definite set up and most are struggling just to keep track of their passwords today," he explains.

In the case of two spouses, one often knows all the passwords and the location of the financial accounts and information. That's natural since one of the two spouses tends to manage the finances for the household, says Mark Halpern, CFP, TEP and president of illnessPROTECTION.com in Markham, Ont. But it's also where estate planning tends to fall apart.

 
David Christianson

That's why Halpern created what he calls an estate-planning toolkit (downloadable at www.illnessprotection.com) where people fill out all of their particular information and store it in an accessible place.

The toolkit includes everything from financial accounts, insurance policies, loyalty programs and digital passwords. "It has to be put somewhere that someone other than the spouse knows its whereabouts at all times," he says. "After all, there could be a common disaster where both spouses die together and perhaps there are young children. Ninety-nine percent of the time people are not prepared in that case."

At 20 pages, it will take considerable time to fill out (and find!) all the appropriate information. But make no mistake, it is time well spent. Your executor and heirs will thank you for doing so, says Halpern.

Christianson jokes that he likes to keep his account numbers and passwords on a piece of paper above his computer so he can see them at all times and not forget any of the information. Fear of the information falling into the wrong hands is what prevents people from disclosing the information, he says.

 
  Robyn Thompson
 

He provides clients with an organizational binder, the whereabouts of which is known to trusted family members or executors. This should include details of online accounts. Christianson recommends that password clues be given separately to those trusted people. Since passwords have to be changed periodically, putting them in a safety deposit box may not be practical, he notes.

Clients are often confused about what to put in a safety deposit box. A good rule of thumb is to store anything you have a fear of losing, says Robyn Thompson, president and financial planner at Toronto-based Castlemark Wealth Management.

Specifically, she advises secure storage of original life insurance policies; home insurance policies; birth, marriage and death certificates; stocks and bonds in certificate form, original deeds, titles and mortgages; special jewelry and things like photo negatives or photos as part of your family history that you want to pass on to the next generation.

 
Mark Halpern

But don't keep anything in a safety deposit box that you need in case of an emergency. "Banks are closed at nights, weekends and during holidays so they are not always accessible when you need the information," Thompson notes. "Something like a power of attorney needs to be accessible. You need your passports in case of emergency, especially with tight border control."

She also draws the line at wills preferring it to be stored in a fireproof safe at home or with your estate lawyer or advisor. A copy of the will, however, can go in the safety deposit box.

You'll have to keep in mind who has access to your box if something happens to you. If you're not careful you could find yourself having "directives locked in the box without anyone else having access to it." The bank will release any instructions in your box to your executor but only after that person proves he or she is in fact the executor. And remember, your executor has to know you actually have a safety deposit box or where they can find all the other information.

About Author

Deanne Gage

Deanne Gage  Deanne Gage is a Toronto-based writer who has specialized in personal-finance issues since 1999. A recipient of several journalism awards, including one from the Investment Funds Institute of Canada, she is also a former editor of Advisor's Edge and Advisor.ca. She can be reached at deannegage@gmail.com.