Lately, the story of Gene Hackman and his wife Betsy Arakawa made headline news after Arakawa (age 65) passed away in their home a week before Hackman (age 95) did.  While their unfortunate end has garnered widespread sympathy, from a financial planning perspective their situation also serves as a cautionary tale about the importance of thoughtful estate planning.  Hackman and Arakawa had not updated their estate documents in 20 years, which allegedly contributed to an assortment of problems, including the trustee and successor trustee of Hackman’s trust predeceasing him, Betsy’s assets being left to a charitable trust without naming specific charitable beneficiaries, and, not surprisingly, a lack of estate planning provisions for their digital assets.

While providing guidance for your digital assets may be less weighty than appointing an executor, beneficiaries, and a power of attorney, it is an increasingly essential piece of estate planning, which can significantly impact your loved ones in the days, weeks, and months immediately after your death.  So many aspects of our lives are lived online, and we can alleviate significant stress and headaches for our loved ones by anticipating their need to access our digital assets, giving them the authority to do so, and expressing our wishes for how they handle our digital assets once we pass away.

What are digital assets?  Anything of value—financial or sentimental value—that you access with a computer is considered a digital asset.  This encompasses many items that you may want to safeguard in the case your death, including email accounts, social media accounts, digital photos and videos, digital movies and music, online banking accounts, online medical accounts, digital payment accounts, rewards points, and cryptocurrency.

What are the risks or problems that may arise if I do not make a plan for my digital assets?  If you neglect to make provisions for your digital assets prior to passing away or becoming incapacitated, your loved ones may lose financial assets that should otherwise be part of your estate (e.g. rewards points, cryptocurrency, and digital payment account balances), they may lose items of sentimental value (e.g. emails and photos), and/or they may endure major logistical headaches as they try to manage and close out your estate.  For example, imagine your loved ones are just trying to pay the water bill for your house as they prepare to sell it, but they do not have the password for your Fairfax Water account and the legal authority to use it, or perhaps they do have the password for the water bill but not for your email account, so they are stymied by dual factor authentication.

Even you have anticipated the need for loved ones to have a list of countless usernames and passwords after your death, having a third party access your accounts could violate civil and criminal laws without legally valid authorization.  In many cases, unauthorized access could be considered identity theft, fraud, or a violation of privacy laws.  Even if a platform does not pursue legal action, it could block or terminate the relevant account, which still results in losing the digital asset.

How do we protect our digital assets and the loved ones left to administer our estate?  There are a number of steps that you can take to safeguard your digital assets and those who are trying to manage them:

1. Make an inventory of your digital assets and share the credentials for those assets with your executor and successor executor—or with your “digital executor,” as discussed below.  This checklist from U.S. Bank provides a helpful template for starting this process.  (Note, however, that the inventory must be shared and stored carefully since losing credentials for online accounts could result in identity theft while you are still alive.)
   • Consider using a password manager (e.g. LastPass, Dashlane, or 1Password) to store all of your passwords, so your digital executor only needs to be aware of a single set of online credentials.  In that case, you only need to notify him or her of any future password changes for the password manager, rather than for any of the individual accounts contained therein.  Alternatively, you could use a digital vault to securely store not just usernames and passwords but also electronic tax documents, financial statements, digital photos, etc.
2. Include provisions for digital assets in your will.  Name a “digital executor” or “digital fiduciary,” who will have access to and be in charge of administering digital assets after you pass away.  Provide the digital executor with your inventory of digital assets as well as instructions on your intent for the use or disposition of each digital asset after you pass away.  (Note, too, that you could appoint a different person as digital executor in your will than the one named as executor if you have any concerns about the executor’s comfort managing digital assets or any privacy concerns.)
3. Investigate whether any online platforms that you use have a tool that dictates how and by whom your account can used after death (e.g. Google’s “inactive account manager” or Apple’s “legacy contact” tool).  If they do, make sure that the tool reflects your wishes in terms of who can access your account and for what purpose.  It is important to abide by any platform-specific policies because a service provider’s online tool has primary authority in many cases (even over the will and other estate documents) in determining who can access someone’s digital assets after he or she passes away. 
   • Some platforms do not provide any procedures for enabling users to transfer account access to loved ones after death.  Instead, their terms of service dictate that an account will be closed upon the death of the user (e.g. certain social media and rewards platforms).  In this case, make sure to use the digital assets or capture any desired photos, posts, contacts, or other data from that platform and save them through another medium prior to death.

If your estate planning documents are more than a decade old, they likely do not include any provisions related to digital assets.  We suggest reaching out to your estate planning attorney and following the three steps above (steps 1 and 3 can be completed without the attorney’s help) to avoid your loved ones having a difficult time managing and protecting your digital assets after you pass away.

The U.S. stock market (represented by the Russell 3000 index) has dropped around 10 percent in the past month, as investors have been rattled by frequent changes in federal government policies and uncertainty as to how those changes will impact the U.S. economy. As always, this market volatility has sparked some concern and anxiety among investors about what will happen next and whether they are adequately prepared to handle a continued downturn, if that is what the market delivers. In light of these concerns, Dimensional Fund Advisors recently published an article entitled, “Investing Can Be a Roller Coaster: Three Tips for Riding Out the Ups and Downs.” The article reminds investors:

With respect to Dimensional’s third tip, note that international and emerging market stocks have held their ground (remaining approximately flat) over the past month, while bond funds have ticked upward. If you need to withdraw funds from your investment portfolio, we will typically sell whatever segment of your portfolio has performed well recently. We do not need every asset class in the global stock market to be soaring all of the time. While U.S. stocks are down, we can use international stocks or bonds to meet your spending needs.

If you have concerns about this recent market dip, please do not hesitate to call or email us anytime.

The perks of getting older include more than just eminent wisdom and senior discounts.  As of January 1, the IRS rolled out a new rule that enables workers aged 60 to 63 to direct more tax-deferred savings to their retirement accounts.  At the end of 2022, Congress enacted significant changes to retirement plan rules as part of an omnibus spending package, known as SECURE Act 2.0.  We wrote a blog article at the time about the relevant changes for our clients and another blog article last January about the changes that went into effect in 2024.  In this new calendar year, one more provision of SECURE Act 2.0 is now being implemented:  the “super catch-up,” allowing additional retirement plan contributions for those aged 60, 61, 62 and 63.

Over the past few decades, the prevalence of pension plans has decreased and reliance on employer retirement plans has increased in providing for living expenses in retirement.  Many older workers may not have had the ability to save enough in the early years of their careers, so this “super catch-up” aims to incentivize those on the brink of retirement to increase their savings.  Especially as many workers are in their peak earning years in their early 60s, the ability to save current-year taxes by deferring more pre-tax income into their retirement plans can be very attractive.

Prior to January 2025, any worker aged 50 and over, who participated in a 401(k), 403(b), or 457 plan, was eligible to make a $7,500 catch-up contribution in addition to the annual contribution limit of $23,000.  This year, the annual contribution limit increases to $23,500 (since it is indexed to inflation) and the normal catch-up contribution limit remains at $7,500, so most participants 50 and older can contribute up to $31,000 to their retirement plans.  Under the change in SECURE Act 2.0, however, participants aged 60 through 63 have a higher catch-up limit, which is equal to the greater of $10,000 or 150% of the normal catch-up contribution limit.  For 2025, this means that the “super catch-up” is $11,250, as shown in the table below.  (Note that if you attain age 50 or age 60 at any time during the calendar year, you are eligible for the increased catch-up provisions.)

Age	Catch-up Contribution Limit for 2025	Total Contribution Limit for 2025
Younger than age 50 during the entire tax year	None	$23,500
50-59 at any time during tax year (regular catch-up limit)	$7,500	$31,000
60-63 at any time during tax year (super catch-up limit)	$11,250	$34,750
64+ at any time during tax year (return to regular catch-up limit)	$7,500	$31,000

One other SECURE Act 2.0 provision, which impacts retirement plan savings, is still yet to be implemented.  SECURE Act 2.0 originally mandated that, starting in 2024, any catch-up contributions to 401(k), 403(b), or 457(b) accounts for high income employees (earning wages over $145k from the same employer in the previous calendar year) would have to be made to the Roth version of their retirement plan.  If a Roth version of the retirement plan was not available, then no one would be allowed to make any type of catch-up contributions to that plan.  However, given the amount of logistics required for employers to adapt to this change, the IRS decided to delay implementation of this provision until 2026.

If you have any questions about how these changes impact your financial plan, please call or email us any time.

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