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Do I need a digital power of attorney?

By Kristin Hoppe

December 9, 2021

Estate planning isn't what it used to be. In the digital age, there's a new element you should be adding to your living will — the digital power of attorney (POA).

Before we dive in, a little background: A living will (also known as an advance directive) makes up roughly one third of an estate plan. It's a document that lets you name different roles if you are unable to advocate for yourself. For example, if you have been incapacitated due to an injury or health crisis, the people named in your living will will manage your affairs on your behalf.

Only about one third of adults have a living will to speak of. But creating one is a gift for both yourself and your family. Now that we increasingly live our lives online, a digital POA is an important factor for your living will and estate plan as a whole.

Related article: Estate planning 101: An introductory guide

What is a digital power of attorney?

To understand this, it's first helpful to understand the role of a POA.

A POA document names specific people who will take care of important matters on your behalf while you are alive but unable to advocate for yourself. This includes both financial and medical decisions. POA is revoked when you die, and then your will goes into effect. You should also make it clear to the executor of your will how they may access your digital accounts and digital assets once this responsibility is transferred.

You can choose more than one POA to manage your affairs, ranging from executive to medical to financial. Now that we often pay bills and manage affairs online, it's a best practice to select a digital POA as well.

A digital POA document gives the authority for someone to act on your behalf if you are unable to do so. This person has access to your online accounts and digital assets and is responsible for making sure your online bills are being paid on time.

What does a digital power of attorney manage?

This could largely depend on the information you need to be managed, and if it is accessible only on certain devices. Digital power of attorney may cover both hardware and data.

Hardware includes:

  • Desktop computers

  • Laptops

  • Cell phones

  • Flash drives

  • Hard drives

  • Tablets

  • e-Readers

Data includes:

Data and digital assets with monetary value

  • Savings and checking accounts

  • Brokerage accounts

  • Shares, stocks, and bonds

  • Retirement accounts

  • Cryptocurrency

  • Trust funds

  • Health savings funds

  • Education savings funds

  • Student loans

  • Mortgages

  • Digital movies, music, and entertainment you own

Data and digital assets without monetary value

  • Social media accounts

    • Facebook, Twitter, Instagram, TikTok, Reddit, Pinterest, LinkedIn, Snapchat

  • Online subscriptions

    • News sites, digital streaming like Netflix and HBO Max, music streaming like Spotify

  • Email accounts

  • Apple or Android accounts

  • Healthcare portals

  • Google Drive or Microsoft OneDrive accounts

  • Digital photos and miscellaneous documents

  • Owned domains or websites

  • Small business software, such as Harvest or QuickBooks

How to get your digital house in order

It's a good idea to prepare your digital accounts before handing over information to a digital POA. Consider it an annual spring cleaning routine. Here are a few steps you can take:

Update digital accounts with beneficiaries

Your will should explicitly state who will receive which of your remaining assets and when. However, to make sure everything is in order, make sure to update the beneficiaries on your digital accounts that have monetary value. For example, your 401(k) should have an option to list a direct beneficiary. Make sure those are all up-to-date and aligned with your will.

Get rid of old accounts

Remember that Hotmail account you haven't used for 20 years? If you still have access to it, close it out — along with any other accounts that are no longer active. This will prevent headaches for your digital POA so they don't have to trudge through old information that is no longer relevant.

Add a digital POA to your estate plan

Alongside other powers of attorney — such as medical — think carefully about who you would like to be your digital POA. Ideally, this would be someone who is fairly fluent in technology and able to navigate password managers and a variety of different account types. They should be someone you would trust with your finances: A family member, a close friend, or a professional. Notify this person in advance so they know that they have been chosen for this task and consent to it. Whomever you choose, select a backup digital POA in case your first choice cannot perform their duties.

Get a password manager

If you don't already use a password manager, now is the time. Not only does it keep your digital assets more secure by diversifying and strengthening your passwords, it's also an easy way to hand over the keys to your digital POA without having to write down each account and password. Your password manager will essentially create this list for you, making your digital POA's life far easier. A quality password manager should also allow you to store notes for each account, such as security questions or other vital information.

Related article: Why you should consider a family password manager

Give straightforward instructions

Where will your digital POA find all this vital information when they need it? Give explicit instructions so they know how to access your digital assets. If you're currently a member of Trustworthy, you can easily add a collaborator to your dashboard so they have your information when they need it.

Trustworthy can help

Planning out your estate is one of the most important things you can do for yourself and your family. Trustworthy helps take out the guesswork and give you a better idea of what to tackle first. We can match you with estate planners, guide you towards helpful templates and tools, and offer a secure location to store, organize, and share your most important information. You can get a two-week free trial here.

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