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to roth or not to roth

Does your estate plan account for
today’s technology?


If you're like many people today, you conduct a good part of your business and personal lives electronically. These activities generate valuable "digital assets" - which may be stored online or on a variety of computers and handheld devices.

Without addressing these assets in your estate plan, your family or other representatives may not be able to access them without going to court and, in some cases, may not even know that they exist.

What are digital assets?

Digital assets include e-mail accounts, online bank and brokerage accounts, online photo galleries, digital music and book collections, and accounts with social networks like Facebook, Linkedln and Twitter.

For a business, digital assets might include we sites, domain names, client and other databases, electronic invoices, e-mail correspondence, and a variety of important records and documents mat are stored electronically on the company's servers or on a Web-based storage site.

Why is planning so important?

Traditionally, when a loved one dies, family members go through his or her home to look for personal and business documenents including tax returns, bank and brokerage account statements, stock certificates. contracts, insurance policies, loan agreements, and so on. They may also collect photo albums, sare deposit box keys, correspondence and other valuable items.

Today, however, many of these items may not exist in "hard copy form. Unless your estate plan addresses these digital assets, how will your family know where to find them or how to gain access?

Suppose, for example, that you opened a brokerage account online and elected to receive all of your statements electronically. Typically, the institution sends you an e-mail - which you may or may not save - alerting you that the current statement is available. You log on to the institution's website and view your statement, which you may or may not download to your computer.

If something were to happen to you, would your family or executor know that this account exists? Perhaps you save all of your statements and correspondence related to the account on your computer. But would your representatives know where to look? And if your computer is password protected, how would they get in?

Even if your family knows about a digital asset, they'll also need to know the username and password to access it. If they don't have that information, they'll have to get a court order to access the asset, which can be a timeconsuming process - and delays can cause irreparable damage, particularly when a business is involved. If your representatives lack access to your business e-mail account, for example, important requests from customers might be ignored, resulting in lost business.

What should you do?

The first step is to conduct an inventory of all your digital assets, including any computers, servers, handheld devices, websites or other places where these assets are stored. Next, talk with your esies outlined here help your representatives identify and gain access to digital assets after you're gone. But it's also important for your estate plan to deal with ownership issues involving digital assets. This can be done in your will or by using a trust that provides the trustee with the authority to manage digital assets and transfer them to your beneficiaries according to your wishes.

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. For one thing, a will is a public document. For another, amending your will each time you change a password would be expensive and time consuming.

One solution is writing an informal letter to your executor or personal representative that lists important accounts, website addresses, usernames and passwords. The letter can be stored in a safe deposit box, with a trusted advisor or in some other secure place. However, the problem with this approach is that you'll need to update the list each time you open or close an account or change your password, a process that's cumbersome and easily neglected.

A better solution is to establish a master password that gives your representative access to a list of passwords for all your important accounts, either on your computer or through a Web-based "password vault." Another option is to use one of several online services designed for digital asset estate planning.

Next steps

The strategies outlined here help your representatives identify and gain access to digital assets after you're gone. But it's also important for your estate plan to deal with ownership issues involving digital assets. This can be done in your will or by using a trust that provides the trustee with the authority to manage digital assets and transfer them to your beneficiaries according to your wishes.
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