Personal Finance: These days everybody dies twice - once in real life and once online. And you need to be financially prepared for both.
Dealing with your virtual death: an ugly legacy if your online accounts cannot be traced
Your virtual death could prove far more troublesome than the paperwork resulting from your demise. You need to be prepared or your relatives will face an ugly legacy if your online accounts cannot be traced. Harvey Jones writes
The internet has changed our lives in so many ways, it is hardly surprising that it has also changed the way we die.
These days everybody dies twice - once in real life and once online. And you need to be financially prepared for both.
As we live more and more of our lives online, we also store more of our wealth there.
Your digital death could leave an ugly legacy for your loved ones if they cannot track down your online bank and savings accounts, or pension and investment portfolios.
They may also struggle to get access to personal effects such as music, movies, photographs, blogs and social media, or even to tidy away your Facebook and Twitter profiles.
This is a particular problem for internationally mobile expatriates with savings, pensions, investment and insurance plans scattered around the world, in a range of offshore and onshore jurisdictions. Any one of these could be worth tens or even hundreds of thousands of dollars, meaning a financial disaster if they cannot be traced.
Your money could be lost in cyberspace, because your loved ones either are unable to find where it is kept, or do not even know it is there.
The problem will only grow as banks and other financial organisations switch to paper-free statements, says Steve Gregory, managing partner at the financial services company Holborn Assets in Dubai. "This means you will no longer automatically leave a paper trail for your family to follow when you die."
James Thomas, regional director at Acuma Wealth Management in Dubai, says you must tell your loved ones how to find your account details while you are still healthy. "People like to be private about their financial affairs, but if the worst should happen, sorting things out will be much easier if surviving family members know what assets you have, and how to find them."
He recommends writing out a full list of all your assets and accounts and giving a copy to the executors of your will. "You don't need to give out user names and passwords, just the institutions and account details, to give them a list of companies to contact."
If you have a financial adviser, you should also give them a copy, Mr Thomas says. "This gives the executors a point of contact so they can discuss how best to deal with the situation. It is often a big help to grieving families who need some guidance about how to sort out your finances."
You also need to update that list regularly. It is all too easy to forget to add new accounts to the list, or amend the details on existing ones, so that it quickly goes out of date.
If your digital wealth is spread across different countries, it will be subject to multi-jurisdictional laws, says Ludmila Yamalova, managing partner at legal consultancy HPL Yamalova & Plewka JLT in Dubai. "Digitally-stored financial data, which can exist either in the cloud or in multiple jurisdictions, creates further complications. Pension or investment accounts with foreign financial institutions may be subject to different laws."
As national legislation evolves to catch up with this new reality, it is more important than ever to prepare a proper will, Ms Yamalova says. "You may need to consult different legal experts in different countries, and even draft multiple wills, depending where your assets reside."
To make things easier for your loved ones, those wills should be as clear and detailed as possible. "Keep a thorough record of all your passwords and access information for all your assets, with clear instructions on how to deal with them. And designate your beneficiaries ahead of time."
Any assets you hold in the UAE will be subject to local jurisdiction, irrespective of your nationality. If you have a will written in another country it won't necessarily be invalid in the UAE, but there is no guarantee that it can be enforced either. "It will have to be validated in the UAE, which can only be done by local courts," Ms Yamalova says.
Expatriates who are Muslims, however, may be subject to Sharia regulations, even if they have chosen differently in their wills.
This is a complex area, with no black-and-white answers, Ms Yamalova says. "Real estate assets located in the UAE, for example, are subject to Sharia irrespective of the existence of the will. Although how Sharia courts will dispose of expat-owned real estate still hasn't been settled."
Accounts and assets are likely to be frozen until the court has reached its final judgement. "This means joint bank accounts will also be frozen, which could cause financial hardship. Given the complexity, you should seek proper counsel in advance," Ms Yamalova advises.
What happens to your social media data when you die is also complicated, especially since that can also reside in multiple countries. In practice, it largely depends on the service provider.
"Facebook gives you the option to request that your account is removed, or turned into a memorial site. It also provides guidelines over who should have the authority to make any decisions regarding your account."
Twitter can deactivate an account at the request of the valid parties, but says it is "unable to provide account access to anyone, regardless of his or her relationship to the deceased".
"Other providers delete accounts after inactivity, or refuse to allow any changes, leaving your data frozen in time," Ms Yamalova says.
It may be a wise to store your passwords and documents in a digital safe, such as Cirrus Legacy and Legacy Locker, which will only release them to authorised parties.
Google has just introduced a digital will service, Inactive Account Manager, allowing an authorised person to delete the old account.
When people died in pre-digital days, they generally left plenty of paperwork, so relatives could find where the money was. That is not so easy if your personal and financial data is buried somewhere on the Web, or if you have a massive digital music collection but your family can't access it.
Digital death is a relatively new phenomenon and most of us are not prepared for it. It is about time we were. Because your virtual death could be far more troublesome than the paper version.