Can you remember all of your online passwords off the top of your head? Or do you have a list saved on your computer, which is of course password protected? Better yet, are your passwords "organized" in a clutter of post-it notes around your computer screen? Now imagine what you might be leaving your loved ones or your representative with if you die without addressing your digital assets (such as online bank and brokerage accounts) in your estate plan - they may not be able to access them without going to court - or, worse yet, may not even know they exist.
The first step in accounting for digital assets is to conduct an inventory, including any computers, servers or handheld devices where these assets are stored. Next, talk with your estate planning advisor about strategies for ensuring that your representatives have immediate access to these assets in the event something happens to you.
Although you might want to provide in your will for the disposition of certain digital assets, a will isn't the place to list passwords or other confidential information, because a will is a public document. One solution is writing an informal letter to your executor or personal representative that lists important accounts, website addresses, usernames and passwords. Another option is to establish a master password that gives the representative access to a list of passwords for all your important accounts, either on your computer or through a Web-based "password vault."
Accounting for digital assets in your estate plan will leave you with peace of mind and save your loved ones time and frustration during an already difficult period.
Michael Deering is a tax partner at Mowery & Schoenfeld who specializes in estate and gift planning and taxation. He serves as the Director of Taxes. He is the immediate past-chair of the Illinois CPA Society's Estate and Gift Committee and also participates on the Board of the Chicago Estate Planning Council.