No one should be caught dead without a will or trust to dispose of money and property. But what about digital assets – email accounts, Facebook posts, YouTube videos and other online resources?  Should you have a plan in place for handling those after you are gone?

Many experts say yes.

These days, much of life unfolds in cyberspace, either in images we post of weddings and birthdays or in written material such as personal blogs and love letters. Adventurers may record the gritty details of a daring trek through the Himalayas; young parents may post video footage of a child's first shaky steps. Bank accounts and stock brokerage accounts are also part of the digital realm. So are marketplaces such Amazon and iTunes and services such as Netflix.

Too late, many families are distraught to realize that precious digital property has been lost – sometimes forever – because no plans were made for preserving it or ensuring access to it after a death.  

"There are more assets locked away in people’s computers than they realize,” said Paul DeLauro, manager of wealth planning for City National Bank.  "There are great memories, as well as assets of important legal and monetary value.”

DeLauro cites the example of composer Leonard Bernstein, who passed away in 1990 at the age of 72, reportedly leaving an unpublished memoir, Blue Ink, on his computer in a password-protected file. To date, no one has been able to access this valuable file.   

Another well-known case involves a U.S. Marine named Justin Ellsworth who was killed while fighting in Iraq. His parents, desperate to recover his emails, battled Yahoo in the Michigan courts and won the right to see only about half of their son's correspondence, recalls Richard Magnone, a Chicago-based attorney who specializes in estate planning. “They got the emails they sent to the account, but they did not get the emails sent from the account," which were deemed private, said the attorney, who was not involved in the case.

To avoid such anguish, estate-planning specialists suggest several tips for dealing with digital assets:

1) Make an inventory of key websites and passwords. Most of us have far more online presence than we realize. Many documents, images or transactions may show up mainly online, causing the executor of your estate to be unaware of them. The only way to make sure nothing is overlooked is to compile a comprehensive list.

2) Find a safe place to store the information. Use special care in hiding passwords. "You should not, under any circumstances, put your passwords in your will because that's a public document," said Evan Carroll, co-author of the book, "Your Digital Afterlife: When Facebook, Flickr and Twitter Are Your Estate, What's Your Legacy?" The best place to keep passwords depends a lot on what your circumstances are, Carroll said. For some couples, if there are no relatives or teenage children snooping about, it might be safe to keep them in a drawer. A number of encrypted online services, including PasswordBox.com and SecureSafe.com, have emerged to help those with more complicated lives.

3) Be clear about your wishes. Unless detailed instructions are left, surviving family members may have to guess about what to do. Ideally, directives should be written into the will or trust documents, ensuring that the executor has legal authority to manage the data. The executor also should have access to the password list. You might ask that certain photographs be preserved; on the other hand, you might want a Gmail account deleted entirely if it contains email you don’t want shared.

4) Consider arranging for a specialist to handle digital property. Some estate executors might lack the computer savvy to deal with a long list of social media sites. You might consider appointing a separate digital executor or instruct your executor to seek help from an individual with the necessary computer skills.

Carroll began researching digital estate planning in 2008. He said the picture is complicated by varying policies among Internet companies. Yahoo, for example, forbids anyone to access an account after the death of a user, whereas Google allows family members to gain access to the user's emails by completing certain required legal steps.

Google also has created an "inactive accounts manager" that enables a user to decide in advance what will happen when an account goes dormant. The data can be passed on to a designated individual, Carroll noted, or the account can be deleted.

Federal laws often prevent an otherwise willing Internet service provider from helping an executor sort out the ownership of digital assets, DeLauro said. And few state laws address the subject. The Uniform Law Commission, a Chicago-based organization that helps to draft legislation for states throughout the country, is now grappling with the issue of digital property, said Jean Gordon Carter, an estate planning attorney in Raleigh, N.C.

"Digital assets have exploded in the last 10 years," he said. "My 80- and 90-year-old clients are on Facebook. People are starting to realize there's a whole world to be dealt with." 

City National Bank, as a matter of policy, does not give tax, accounting, regulatory or legal advice. The effectiveness of the strategies presented in this document will depend on the unique characteristics of your situation and on a number of complex factors. Rules in the areas of law, tax, and accounting are subject to change and open to varying interpretations. The strategies presented in this document were not intended to be used, and cannot be used for the purpose of avoiding any tax penalties that may be imposed. The strategies were not written to support the promotion or marketing to another person of any transaction or matter addressed. Before implementation, you should consult with your other advisors on the tax, accounting and legal implications of the proposed strategies based on your particular circumstances.