Planners are about to experience their own version of Y2K.
Year 2000 or Y2K was the name given to a technology risk that the business world faced in the last millennium. The issue was whether computer systems that were built to handle dates in a two-digit format could handle the rollover from 1999 to year 2000. Many companies with critical business applications launched Y2K projects to update their systems from a two-digit date format to four digits. These projects involved raising the awareness of the issue, inventorying their software and applications, determining which systems needed remediation, fixing the software and testing and promoting back into production.
So what’s the estate industry’s version of Y2K? In the digital age, we now all own a new class of assets, called “digital assets,” which can have thousands of dollars of value (for example, loyalty points, travel rewards, cryptoassets, blogs, web domains and digital photos.) They too need to be included in your client’s will and estate plan. According to a McAfee Survey, globally we own $35,000 worth of digital assets. Further, your client’s home office is now also digital because he uses e-mail, conducts transactions through apps, communicates digitally with his financial institutions and pays bills online. Your client’s future executor will likely be faced with a locked laptop or tablet. Already a challenging role, without a paper trail, an executor could be without the critical information required to administer your client’s estate and assets. The estate industry’s Estate2K will occur as a result of the impact of the digital age and digital assets on a client’s asset portfolios.
The only difference this time is instead of occurring during the crossover of Dec. 31 1999, to Jan 1, 2000, Estate2K will happen gradually like a boiling frog before the digital tsunami. For the past 30 years since the World Wide Web was born, we’ve been using, engaging and collecting these new digital assets. Although our grandparents may have only dipped their toe into the digital river, 95% of North Americans use the internet. We’re about to face a tsunami of technology either on its own or intermingled with our clients’ physical assets, such as the online access to their investment accounts. We’ll be the first generation to hand over volumes of digital assets as well as a paperless legacy. Being first means there’s no road map, the law needs to catch up, technology providers need to address the issue, tech entrepreneurs are likely to emerge, and consumers need to understand the issue so they can express their wishes.
Focus on Three Factors
Here are three factors that estate planning firms need to focus on about this Estate2K.
1. Digital assets have emerged. Estate firms need to get comfortable with digital assets and keep pace with the emerging law. It will be important for firms to develop and evolve firm process/procedures to advise clients through estate planning and estate administration.
2. A client’s home office has changed. The proverbial paper trail, so critical for the layperson or corporate executor, has now been replaced with e-mail, electronic statements and likely a locked computer or laptop. Estate planners and estate administrators both will be affected. Beneficiaries and family will expect estate planners to advise the testator about how to leave the necessary information for the executor.
3. Clients will have high expectations of the estate industry in the digital age. It won’t be simply a competitive advantage to stay current with the impact of the digital age in estate planning. The application of technology on the estate industry will be as transformative as seen in the financial and retail sectors. Clients will expect the same technological advancement in other sectors and will expect legislators and the law to keep pace (for example, e-wills, tech to accelerate the will drafting processes, technological innovation to capture all estate assets and facilitate transfer).
Get Started
The good news is that it’s starting slow, but it won’t be long before this accelerates. Any firm can start by borrowing all the basic project management practices applied to the Y2K projects within business. It all starts with the “awareness” phase, which involves understanding the issue. It’s time to learn about digital assets and our clients’ digital lives, keep pace with the law as it unfolds and develop firm practices that will help firms remain competitive and navigate this new digital world.
Sharon Hartung, Captain (Ret’d), PEng, MSc, BEng, PMP, CD, is a retired aerospace engineering officer from the Royal Canadian Air Force and former technology executive from IBM. She has been providing information technology management advice to clients for over 30 years.