Consolidating Accounts and Legal Risks: "I think the biggest risk would be for the financial accounts because the person that does know the password that is the key to the kingdom may not understand where their control starts and where their authority ends, And just because they know the password to that bank account doesn't mean that the dollars sitting in that account are theirs or can be transferred lawfully."— Larae Schraeder

In this episode, we talk about the intricate world of digital estates with our expert guest, Larae Schraeder from Schraeder Law.

As our lives become increasingly intertwined with digital platforms, from social media to online banking, the question arises: What happens to these digital assets when we pass away? Larae will guide us through the legal landscape of digital estates, offering essential tips on how to manage and protect our digital presence effectively in our wills and estate planning.

Top Takeaways

1. Digital assets encompass not only obvious items like social media accounts and online banking, but also less obvious ones such as PIN numbers, passwords, and digital files like photos stored in the cloud.

2. A digital executor is someone appointed to manage and oversee your digital assets after you pass away.

3. Simply knowing someone's password does not legally empower an individual to manage their digital assets.

4. Creating a comprehensive list of all digital assets is a fundamental first step in digital estate planning.

5. Handling digital financial assets, like bank accounts or investments, without proper authorization can lead to legal violations.

6. The executor of a digital estate should ideally be tech-savvy as this role requires managing various types of digital platforms and understanding digital security protocols.

7. Platforms like Facebook and Apple ID allow users to set up legacy contacts who can manage digital assets posthumously without needing the password.

8. Digital estate planning should consider security measures such as two-factor authentication which protects digital information but also acknowledges the executor’s need for access posthumously.

9. Active management of digital assets involves not just accessing accounts but properly closing them or managing ongoing subscriptions and payments.

10. While a will may address digital assets, adding specific instructions for each type of digital asset or account can be beneficial.

Memorable Moments

04:46 Identify all digital accounts and secure them.

09:18 Granting authority must be carefully considered.

12:42 Assets like Amazon points are part of estate.

14:54 Formalize will with specific instructions for executor.

19:56 Identifying and avoiding common client mistakes.

21:40 Set up legacy contacts for Apple and Facebook.

We would love to hear from you.

Give us your feedback, or suggest a topic, by leaving us a voice message.

Email us at hello@lookingforwardourway.com.

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Please review our podcast on Google!

And of course, everything can be found on our website, Looking Forward Our Way.

Recorded in Studio C at 511 Studios. A production of Circle270Media Podcast Consultants.

Copyright 2024 Carol Ventresca and Brett Johnson

https://creativecommons.org/licenses/by-nd/4.0/

We are Looking Forward Our Way from the Circle 270 Media Studios in Columbus, Ohio. Hi. This is Brett. We're going to explore a topic that's become an important issue for many of us. When we're updating our last will and testaments and estate planning, we now need to create digital estates. A digital estate or digital will ensures our online and Internet presence is managed after our passing. Today's guest, Larae Schraeder from Schraeder Law, is gonna give us an overview of digital estates focusing on the legal ramifications. Larae, thanks for joining us again.

Thank you for having me. It's always a pleasure.

It's always fun to have you in the studio with us, Larae. Thank you so much. And this is really kind of a new topic that we happened upon, and thank you so much for being willing to come in and talk to us about it. We've had a couple of conversations on digital digital estates, to determine the array of topics under this particular episode, but what I realized in this issue is going to continue to spiral and grow. It's not going to go away by any stretch of the imagination. Just as all of our passwords have multiplied over the years, our accounts have flourished. But before we delve into that topic, let's give our audience an overview of your background, your law practice, and how this topic became apparent to you.

Hi. I'm, Larae Schraeder, as you mentioned, founder of Schraeder Law. We've been, practicing over 5 years, and I am a second career attorney. I worked in financial services industry prior to law school and Looking, and have focused on estate planning and elder law during my time in practice. I, have an office in Upper Arlington, and I see families, of all ages. Right? Young people heading off to college, young people planning for their first child, and and those who are even more focused on planning for end of life because what they've experienced with their own family, their parents, and what they've seen go right and wrong. So our goal is to bring peace of mind to all of those.

So, we're gonna dive into what this digital estate means. It could be simply an email account or, you know, something on Facebook, or or it can be dozens of accounts, extensive hardware, multiple online buying programs, websites, even the IP, intellectual property. Can you, first give us an overview of what a digital estate is and why it's important for each of us to ensure that those accounts are managed correctly after we pass?

Sure. It's really a collection of the information needed to to maintain someone's digital affairs. Even people who don't think they have a digital asset, they often do. So people will say, I don't have Bitcoin. Well, you don't need Bitcoin to have a digital asset. Do you have a phone? Is there a pin? Do you have photos in the cloud or on that phone? You you have digital things even if you don't think you do. And it is possible. A few of our clients don't have a phone.

They don't have a 4 digit password to unlock their phone. But, you know, they might have someone in their life that would be willing willing to set up a profile or to help them transfer money or needs to do things. And so making sure that that power is in place while someone is still living is important because we have digital assets while we're alive that need a plan, and we have digital assets that also need a plan once we're gone. And so part of that estate is the collection of information in order to do it. I differentiate a digital estate from something that would be tangible. Tangible personal property is governed by a certain set of laws in Ohio. I say that it's the stuff that would fall out of the house if you were to pick it upside down and shake it. So that's where I really categorize the hardware, the equipment, the the iPad, just to be more specific, the the the phone, the laptop.

But, it's all of those other things that are just exist, like the passwords, like the PIN numbers, that I would consider needing a separate plan, again, while someone is alive and when they're gone. And making sure that we have a plan in place would include things like who is allowed to access the account and when.

Yeah. It really makes you think about what you do put a password and username too. Just give it just like you said, the PIN on your phone. I mean, if you if no one else knows it, especially if, if you're used to a face rec recognition, and you don't do the you don't do that, the 4 digit or 7 digit, whatever it is now on on a on a phone, you don't realize, like, oh, yeah. Some when I passed, somebody can't get into this phone. They literally can't get into it to to to access phone numbers that may be vital That's right. Too because you don't have the phone book anymore or, you know, that sort of thing. Yeah.

To even be able to call for emergency contacts, right, for notification. Yeah.

But what's really at, at risk here is that things fall through the cracks. So the most important thing is first to start listing everything because you don't really realize how much stuff you have. How many things have you signed into or apps that you've created, and you created a pin where a pin number or a a password to it, and you've forgotten. So really, the first thing we have to do is to get a handle on that digital range of stuff that we have. Listing every account, the programs, and I'm including pieces of equipment just because it could be something just on your iPad, not on your CPU. But since so much of our financial accounts are also in line, do we include those, and are there so many accounts that maybe some type of automatic payment system or reward system is out there? How many times do you have travel accounts or other things that are going on? You don't really think about them as being part of your digital array.

Your your portfolio. You're right. I absolutely agree with you, Carol. The first place to start is an inventory and to add to it and to maintain it. Those would be some key pieces of advice to know all of the places where you have given information that someone is going to need to follow along behind you to close it down someday.

Mhmm.

I've seen problems where, you know, people's accounts have been hacked. Someone's continuing to buy on their Amazon account. They're no longer here. It's a problem, and it's also hard for their surviving spouse every time something comes in the mail, you know, suggesting that their spouse, you know, has committed fraud when their spouse has been long gone. So making sure that we know, oh, we should close down the Amazon Prime account whether or not there's a credit card, you know, at Amazon or any other place. You wanna know these are the places to close it down. Even your public library. Right? You have a library card.

You have numbers everywhere.

Is there anything that we don't include in in our digital asset package?

I have it all in one place, but there are risks that come with doing that. As I mentioned, everything is in one place and could be accessed. But I think the biggest risk would be for the financial accounts because the person that does know the password that is the key to the kingdom may not understand where their control starts and where their authority ends, And just because they know the password to that bank account doesn't mean that the dollars sitting in that account are theirs or can be transferred lawfully. And it becomes even more important after someone has passed away because a simple transfer out of that account is actually a violation of law. Like, those funds are not they're not legally entitled to those funds. They may be trying to avoid probate or avoid the very specific order that the law has established about who is entitled to those funds. Right? There may be a beneficiary that would be shortchanged. There may be, the IRS that's not that's standing in line higher than a beneficiary may be.

For certain, when when a pecking order comes up, if there are assets and debts. And and I think that it's it puts someone in a really awkward position to have everything everything. And so, again, I go back to if I were gonna leave a list for someone, it would necessarily include the passwords to those financial accounts. It's going to leave the bread crumb for me to tell them I have an account at this bank or this credit union, but not necessarily, I think it's fine for you to go transfer the money if something were happened to

me. Mhmm. Yeah. Luckily, most of those financial institutions typically have, like, a 2 step verification. So at at least you kinda have a quasi backup that they probably can't get in that easily. But from what I you know, trying to log in to my accounts Looking, oh, yeah. Okay. 2 step and then we all think it's a pain in the butt.

It's like, come on. Come on. You know me. Yeah. But but but but in that scenario, you're kind of like, oh, test 2 step verification. Well, Way. That's good, you know, to to protect your your assets, you know, after you've gone. Yeah.

You described a scenario for your practice. So I'm home doing this and I'm all by myself. It sounds like it might be better for me to look at my digital issues, Amazon account, and, and which is connected to a credit Carol, but an Amazon and the library as opposed to my checking savings and really look at those as 2 different piles. Yes. Okay.

Absolutely. Because I think you would want to give someone a different level of authority. I would want them to be able to shut down my library account, but I wouldn't necessarily want them to transfer the money out of the bank account so it would be zeroed out and essentially zeroed and closed. Right? Even without going into the bank, someone might feel that they've closed it out and done what you what they need to or should do right on your behalf, and it's it's actually creating a personal liability for them. And so by even giving them that information to be, it suggests that that it's okay for them to use. And so I think there are things where I would really want my family members to have my ancestry.com password because of all the work that I saved in the cloud. That feels very different than saying, here's the keys to, you know, my bank account, that I have a beneficiary, you know, set up to receive, and I think that it should go to them and only them. But to know that that is an institution where a death certificate needs to show up so that the bank account doesn't find its way to that beneficiary, I think that's Way sure that

true step that everyone needs to take is to not make any assumptions and really be guided by someone who understands the bigger picture.

Yes. So the process is not necessarily a legal process. It's like creating a trust or a last will and testament, but as we create this digital list of accounts, an individual needs to designate an executor who will manage these accounts. What does Ohio law provide in guidance and parameters, in this process?

I would, again, call a digital executor an executor of sorts.

Okay.

Generally, an executor that is officially appointed by the court to be in charge of assets, would have the power of the court to walk into an institution and reset pins and passwords and take control of those assets so that they can be put into then, the estate account. So just calling someone your digital executor doesn't empower them, and giving them your password doesn't empower them and give them the authority to do it. Though they may feel they have authority, most formal legal processes that exist for your other property, real estate or tangible property, can cover can be written broadly enough to cover those digital affairs.

Okay.

So I hereby give my executor the power to sell my real estate, the power to distribute my, you know, any cash that I have in my estate, bank account, what what have you, refunds from other people, and I give them the authority to handle my digital affairs.

K. Simple as that then. Well, as simple as it can be. Let's put it that way. Okay.

Okay. But then that person has a legal duty as a fiduciary, and they have court oversight. And so I find that that would be the safest approach for handling, especially, the financial accounts.

We've already discussed that notion that just because you know the password doesn't give you really any rights or authority, whether it's a relative, even a spouse, friends. They they really need to understand complications of what is happening. And you have had this situation come up recently, that's sort of how we got this conversation going about this particular topic, let's discuss those parameters that you feel individuals should really follow before proceeding to manage accounts of those who have passed.

Again, if there's any money or something that can be turned into money. So what I mean by that is Amazon reward points, right, as an example, they can be converted to cash. That would be an asset of the estate. And so even going in and liquidating frequent flyer miles, again, those are the sorts of things that are worth something something of value. And someone needs to, you know, be, aware that they're creating personal liability because even a spouse may not be the first person in line for those funds. Ohio has a very rigid order, of who is to be paid back if there are assets in the estate or who is to be paid, not just paid back, but the the person who has, you know, funded the funeral bill. They're in line ahead of any other person, even a spouse. Right? We're gonna make sure that, people get buried.

Sometimes the spouse doesn't have the funds to advance for that. So we're gonna make sure that that IRS gets paid. We're gonna make sure that Medicaid Estate Recovery gets paid if that's, you know, an issue. A spouse has a certain place in that line, and we wanna make sure we don't do something that, accelerates or changes that because, again, the person who's making that transfer, can. And the bank records will show the truth. Right? It's very clear the moment of death, and it's very clear what time someone logged on. It's also very clear when a transfer was made, and so you can't really pretend, that, oh, I didn't know she died last week. I just realized that it was stuck in her name when the bank teller wouldn't let me have the account, so I went home and logged on.

Right? So there's an audit trail now that I think people should be aware of as well that it's harder to hide.

So once an individual has developed that list and there's more information the executor would need. I mean, just because someone knows the password to the face to my Facebook account, they may not know what I want them to do with that account. I may want everything deleted, I but I have photos that could be sent to my family, and I have travel Forward, like you mentioned, that may be passed on to another. After creating a list of individual accounts and passwords, how can we leave directions for continuation or deletion of each of those accounts?

So we can formalize it as part of our last will and testament. You can give specific instructions and say the executor is to do this with this account, this with this account. Very few people go to that level of detail, in such a formal way, but it is also possible to leave a memo of instruction and say, hey. My executor's supposed to do this with my pets. Right? This is the friends this is the list of friends who've spoken up to say they'll take care of, you know, my dog. This is, you know, how I would like for you to honor my digital wishes. This is how I'd like for you to handle the details in my Christmas collection or whatever whatever you have. I have left some specific instructions related to my family history and my research because I take it very seriously, and it may not be the person in charge of the the all the financial accounts.

They may need to outsource a little bit of that. And so the more that we give them instructions on what to do, the better.

Okay. Larae, we've been sitting here joking with Brett. I'm on the podcast with Brett. Okay. I need to tell him he this the only the only digital asset that I have that he's gonna have to deal with is this podcast program. I don't wanna delete it be I don't think he'd wanna delete it. But I may just say, okay, Brett, you need to rename it when I'm gone. I mean, is that That's an ask.

That's an ask.

That's an ask. Are you asking formally right now? No.

No. I haven't decided. Hey.

You haven't decided. I would recommend that be in some sort of contract because your will isn't gonna make it so right.

Well, exactly. Yeah. My will doesn't even talk about this, isn't I mean, when you think about Our podcast is not really an asset per se, although it is kind of an asset of your company.

Right. Well and I and, you know, you bring up a good point though. Okay. Let's look at this because you you may have, commercial adventures or certain things that you'd like. Let's say you have a hobby and you have a Facebook page with 3 or 4 other people. What do you do with that? That I think that's a really good question. Okay. Do you wanna still be you still wanna be part of that Facebook hobby group or that you you, are administrator Forward? There's a lot of things that you don't think about.

It's like, well, I don't make any money on it, but yeah, but you're gone. What do you want your other group members to do for you with you when you've passed in that Facebook group? Your hobby Facebook group, you know, your underwater weaving group, you know, that sort of thing. You know?

It's been a really long day.

But but but I think it's a that's a legitimate thing.

I think it's important to identify who you're going to trust and make sure they have the access to do it. So if you were to say to someone, I need you to get into my laptop and delete my search history. Right? They need to know what you've expected of them, but then you would need to leave them access. But, again, that laptop may not be

Yeah.

Available available today. Right. And it is certainly not. And so I think, you know, a memo of instruction saying this would be my request. Would you please honor it?

Mhmm.

Right? Is it it's about as far as you can get in many circumstances.

Well, true.

Short of a contract that would be enforceable, but then if you're dead, again, your state would have to enforce that contract. Right.

And I'm sure they've got a lot of other things they've gotta take care of maybe down the list. Maybe.

Maybe. I you know, I I really this is this is kind of interesting. In my particular situation, you know, I I'm not married, and I don't have kids, and I have no siblings. So my cousins play a really big role in my world and in what happens when I pass. They don't know, Brett. They don't you know, they know I do the podcast program. They even listen to the podcast. Some of them better be listening to podcasts.

But, I need to let them know. Okay. Anything to do with the podcast, offer to Brett, offer to Brett.

Right.

There's no money.

Just to be clear.

That's no money. We've established that.

Nobody involved. But but yeah. And I would not have thought about that.

Yeah. No. It makes sense. That makes sense.

Yep. Okay. Okay. My brain is still working on a Friday afternoon. Yeah. Okay. So, in all these conversations, who you know, you need to find somebody who can be your, quote, unquote, digital executor. Does the individual have to be tech savvy? Does it have to be a relative? Most importantly, how can I ensure that this individual is really going to take care of my accounts because it's not covered by law? What do you suggest to folks?

I think someone you trust. And I think, again, to maintain that that list of people that you would say, hey. I would love for you to take control of this asset and make sure that, things are handled appropriately for this account or that account. Facebook, Looking. Right? All of the other ones where you would maybe want to, direct that. Not everyone stays healthy. Right? They might have a health crisis of their own. So just because you've nominated someone and left instructions to them, things may change.

And so this is probably even more important in a fast changing world that we keep this person up to date on, what they can find and where and what your wishes are.

Right. Okay.

So if you run across common mistakes that clients been making or maybe you Our that into best practices. I I don't know. It that that you've kinda go, woah. Woah. Woah. Don't do that. Or or or maybe just in the choice of the executive. I think you've kinda covered that, but at the same time, maybe it's that digging deep in your mind Looking, how to make that choice? Maybe you get 3 or 4 people on that list that, yeah, all 3 of those are tech savvy, but I don't like how you know, that that I don't know.

They're they're they again, is it best practices or just learn from these mistakes?

I think tech savvy would be an important consideration in picking someone for this. I really do. The other thing I would say is we have counseled people who have already transferred money out of someone's account who has passed away and people who are tempted to do so. And I think that, again, given the way it creates personal liability for them, that would be a common mistake that I would say they could tend to avoid if anyone is tempted and thinks it's really easy. And, you know, like I said, there's an audit trail. There's not not likely, that you can just get away with it when it comes to the the dollars behind the passwords.

And I I would think that just because they are tech savvy doesn't mean they wanna do it too. I mean, it's a lot of work. When I look at my list of passwords, oh my gosh. They just go on and on and on. Who wants to deal with that?

Yeah. And then you have that, okay, you're allowing this person to delete those social media accounts. How weird is that that you delete someone's life from Facebook?

Right.

If you think about it. It is. It's it's it's kinda sobering.

That's right. And you also need to, you know, weigh carefully who you pick because of that.

Yeah.

Right? So I have a legacy contact set up for Facebook. I have a legacy contact set up for my Apple ID, and I would encourage others to consider it. It's part of the settings, and now the functionality exists for some of the larger platforms. It's within a family checklist for Apple right beside emergency contacts, location sharing, that you can pick someone to to receive your Apple ID password. And for Facebook, you know, there's a memorialization, setting where you can, again, choose a legacy contact. And I think that that person may or may not need to be your executor. They're maybe your Facebook friend, back to your point, about we've got a a shared Facebook page that we want to continue in perpetuity Yeah. Or not.

I think we're gonna end up having to cover this topic again as we get to be more savvy in all of the issues maybe, and we're gonna come back at you with with more questions. But for right now, we always provide our guests with an opportunity for last words of wisdom. So anything you want to make sure that the listeners really heard from you today.

I think this is something they have more control over than they realize by, again, picking the right people, identifying the accounts, and then knowing that there are parameters. So, again, they may not have to leave passwords, and they might not wanna put someone in that awkward position. But they also don't need someone going from bank to bank to bank to see if there was an account there. We've had people need to do that too. So think about, you know, the people that are catching the ball on the other end and, and how you can influence that for them.

So it's not just getting rid of all the paper and the files in your basement. Right?

There's

a whole lot of stuff in the cloud that you wanna think about too.

Yeah. Exactly. Well well, many thanks to Larae Schraeder for joining us today. Listeners, thank you for joining us. Don't forget to check out our show notes on the website for contact information and the resources we've discussed today. You can find all of this information at looking Forward our Way, and we're looking forward to hearing your feedback on this or any of our podcast episodes.