Brendan Freeman:
Welcome to The First Business Bank Podcast. I'm Brendan Freeman, president of Private Wealth at First Business Bank and I'll be your host for today's episode around digital assets. With me today as my colleague and trust advisor, Jennifer Verbrigghe here at First Business Bank. Jen, would you mind taking a moment to introduce yourself to our audience?
Jennifer Verbrigghe:
Yeah. Thanks Brendan. I'm Jennifer Verbrigghe I'm a vice president and trust advisor with First Business Bank. I've been working with families and advising clients in the financial services industry for over 20 years and I'm happy to be here today to discuss digital assets.
Brendan Freeman:
Well, we're glad you're here. Why don't we just jump right in and get started. In your role as a trust advisor, Jennifer, you work with many different situations where you're helping individuals, you're helping families and you're oftentimes consolidating assets. This can be during their life as well as when someone passes away. Can you take a minute to just describe your role and some of the things that you interact with on a day to day basis?
Jennifer Verbrigghe:
Sure. So as we go through a life, we accumulate different types of assets. We switch jobs, we inherit assets and inevitably what that means is, it really makes our financial lives get more complicated. So as people retire, even long before retirement, they often seek out some simplification and also some more sophisticated advice as their situation gets more sophisticated. Financial rules and concepts can get really complicated and can be difficult for any one individual to educate themselves effectively so that they can manage their own financial situation and also do it well. So simplification really goes hand in hand with financial planning.
Jennifer Verbrigghe:
And at First Business Bank, we really believe that's a good starting point for a relationship with our clients. So just a quick overview of what that involves is, really, you look at cataloging all your assets and liabilities, including those investment allocations, because as you get different accounts across different places and 401ks and IRAs, you kind of lose track of what that investment allocation really looks like. You may be taking more or less risk than you really should be.
Jennifer Verbrigghe:
And then we look at really, what are your goals? Because your assets serve a purpose and what are those assets there to do for both you and your family? Then last we look at, do you have enough assets and cash flows in order to support those goals throughout your lifetime?
Jennifer Verbrigghe:
Then that's all wrapped around too what we look at estate planning. Estate planning documents are very important for families because you really want to make sure that your assets pass down to the people you want it to go to, but also to do it efficiently, both from a tax perspective and from a timing perspective.
Jennifer Verbrigghe:
So First Business Bank has a trust department and I'm a trust advisor within the trust department. And the benefits of working with a trust department can be really quite significant. Some families really want or need a corporate trustee, because those family situation situations can get quite complicated and a third party who can handle the legal and financial aspects of being a trustee, or settling in a state can be super valuable, especially since it's a third party that really doesn't have any skin in the game. So I like to tell people that we can be the bad guy when families need us to be the bad guy. That can be very valuable to our clients and allow them to focus really on their families.
Brendan Freeman:
All right. So high level, you can kind of consolidate all this information. You can put it into, I guess, a program for financial planning and really show the different assets that you have as well as maybe run some different scenarios. But then at the end of the day, you can also serve as a corporate trustee and be a bad guy when needed. So that's kind of wearing two different hats there, but I know firsthand in watching you work, that you do quite a great job in showing family's assets and trying to understand where everything is and that can be really helpful, especially in a situation where someone might be mourning and we need to step in and help them through that time.
Brendan Freeman:
That gives us a little framework. Why don't we jump into the digital side of this? With so many elements and this is probably commonplace for all of our listeners today with so many of our financial elements online today with different online accounts and managing lots of different passwords and that kind of thing, tell us and the audience about how that has changed and perhaps any insight that you might have around password managers, around managing accounts online, that kind of thing.
Jennifer Verbrigghe:
Yeah. Technology has certainly had huge benefits on our lives and made certain things easier. However, at the same time, it also has complicated things.
Jennifer Verbrigghe:
So one thing I worry about for myself and for my clients is fraud and theft. The best way to prevent fraud and theft is really by educating yourself. So when I talk to people about this, I really caution them about being suspicious and if anything causes you to even hesitate, don't act, take a moment, step back and maybe do some research first.
Jennifer Verbrigghe:
In fact, if somebody is trying to defraud you or con you or scam you, they've probably already tried it on someone else. So a simple thing such as a Google search about what they're trying to do can be really helpful and effective in helping you understand if this is a legitimate request or not.
Jennifer Verbrigghe:
So some things you can do to really safeguard yourself is first off is create safe, strong passwords. You'll also see a lot of financial institutions now have what is called a two-factor authentication. So that's that you go to log in and then first they send you a text message with a code that you also have to type in.
Jennifer Verbrigghe:
I know that can be an extra step. It's a bit of a hassle, but that's really there to protect you and to protect your assets. Because believe me, you do not want to be in a situation where somebody has access to your, especially your financial assets, but also some of your other assets. That's really more of a privacy concern. So just please keep in mind that that's there for your own protection.
Jennifer Verbrigghe:
So if you receive notice that somebody has tried to hack your account, I just got about 30 emails from Venmo last week, telling me somebody tried to get into my account, which wasn't me. So the first thing I did was A) transfer all the money, because I had quite a bit in there, transfer that money out to my checking account and then I changed my password. So that's a good thing to do is, just to change your password when you get those emails, because it means somebody is trying to access and you don't want them to be able to do that, or it's possible they already have.
Jennifer Verbrigghe:
Also, I caution people don't click on links or emails or text messages, unless you are absolutely certain that is a legit sender and you know what that is about, because they can then try to access other things within your computer, within your iPad or your phone and they can start fishing around for other information that you don't want them to have.
Jennifer Verbrigghe:
The last point I'll make about this though, is really, it seems like a lot of fraud comes through a shield of the IRS. I think that they do that because the people are a little afraid of the IRS and they feel a sense of urgency when they hear from the IRS. But what I tell people is, the IRS is never going to call you and ask for any information. They already know more about you than you want them to know so they're never going to call you and ask you for any information or any financial information. They already know so much about you. So always be cautious about any requests that appear to be coming from the IRS.
Jennifer Verbrigghe:
Then in this day and age, we really have so many passwords and Brendan, you mentioned password managers.
Brendan Freeman:
Sure.
Jennifer Verbrigghe:
I remember back in like 2005, I had like a post-it note on my monitor with like three passwords and that was sufficient for my entire digital life. That is no more. I mean, I can now sit at my son's soccer game and vacuum my living room and change the temperature on my grill, which is pretty cool-
Brendan Freeman:
Wow.
Jennifer Verbrigghe:
... actually, but it also means-
Brendan Freeman:
That is pretty cool.
Jennifer Verbrigghe:
Yeah, but it also means that a thief can steal from you from the comfort of their own living room, right? So what people use, and I know what companies use a lot is, they use password managers. These are a good tool to help you not only create strong passwords, but so that you don't have to remember all those passwords. I mean, the days of creating passwords of like 123456, those should be over and you can't really do that anymore or you will get into trouble.
Jennifer Verbrigghe:
So there are tools, like, for example, if you're an Apple user and you have an iPhone and an iPad and Apple, if you go and you create an account, it'll ask you if you want them to create a strong password for you, which is like a ton of different digits and you'll never remember. So it also asks you if you want them to save that password. So that's actually, I think something that people have used a lot. I've used it and I think it's a good tool, but the great part is, if you have multiple apple devices, it'll save it within your apple account so you can use those password from multiple devices.
Jennifer Verbrigghe:
The bad part is if you have other devices that are not Apple, it's not going to work for you there. So there's some other password safe or password manager tools that you can use. Like I know at First Business Bank, we use something called Password Safe. There's other ones so you can do all kinds of research online and see which one will fit best for you. Some cost money, others are free.
Jennifer Verbrigghe:
There's ones that I've found that tend to get really good reviews like Dashlane or 1Password, so there's all kinds of things out there that you can use, but just look for something that works for you. And just, I do not recommend the old fashioned spreadsheet with the list anymore, because that can be a security risk in and of itself.
Brendan Freeman:
Wow. Great insight. And yeah, the days of the post-its are definitely gone. The days of the spreadsheet are gone. And so you have to find other ways to keep your information safe. And there certainly are just a lot of passwords that are out there. That kind of goes to my next question, thinking about passwords and thinking about digital assets, what happens when you die? You are in the situation oftentimes where you're working with families and they might have financial assets that we help to manage or were very involved in here at First Business Bank. But what about the passwords and what about digital assets and thinking about this from an estate planning perspective, how do you address some of those concerns?
Jennifer Verbrigghe:
Yeah, so that topic is really become a big one as we become more reliant on digital tools. I just attended an estate planning symposium just a few weeks ago. It was like six hours long and they spent an entire hour on digital assets because it is getting more complicated.
Jennifer Verbrigghe:
Of course, it has taken a while for the laws around digital assets to catch up to the technology really, because it's reactive. So fortunately, most states have passed a version of the RUFADAA. That's an acronym of course. It was written in 2015, but RUFADAA stands for the Revised Uniform Fiduciary Access to Digital Assets Act, which is a bit of a tongue twister. But in short, this is a law that allows executors or trustees and powers of attorney access to online accounts for deceased or incapacitated individuals. The caveat to this is that an individual must give express written consent through a will, a trust or a power of attorney in order to do so. So the reason is that the required consent is really for privacy reasons.
Jennifer Verbrigghe:
In fact, originally it was called UFADAA and then they changed it to RUFADAA, because they revised it. Originally, they came out with these sets of guidelines that really gave what some privacy advocate said was too much, but you need to protect people's privacy even after they're gone. So that's why it's called RUFADAA. The reality is, is that everyone doesn't want their executor to be able to access every email or communication that they've ever written and that can also be a violation of other people's privacy as well.
Jennifer Verbrigghe:
So I did a quick experiment the other day and I just went on to my, just, just not on my cell phone and just looking at the apps I had. I listed every online account that I had just that I used through my phone. I came up with over 40 different logins. So it's like 40 different places where some sort of information, even if it's just my name, is stored.
Jennifer Verbrigghe:
So many of these accounts I don't really care about and I wouldn't lose sleep over if somebody hacked. Like if somebody wants to hack my electronic vacuum cleaner account and do some unauthorized vacuuming, I say, "Go for it." That would actually be kind of nice.
Jennifer Verbrigghe:
But when you're talking about financial accounts or-
Brendan Freeman:
Sure.
Jennifer Verbrigghe:
... or accounts that are linked to financial accounts, think Venmo and Amazon and Ticketmaster, that's when it really gets more important to manage. So RUFADAA now provides an avenue to allow those fiduciaries to identify access online accounts and so that assets can be distributed to beneficiaries. It doesn't change how assets are distributed to beneficiaries or how they're passed on. It simply gives those fiduciaries the ability to access email accounts, to access other types of accounts so that they know and can identify those assets that need to go down to beneficiaries.
Jennifer Verbrigghe:
So, I mean, think about even accessing somebody's phone. Everyone has, well, not everyone, but most people have a code that you have to type in and access someone's phone. So if you're trying to log in, I mentioned two-factor authentication earlier, you're trying to log into someone's bank account, requires two-factor authentication, but you can't get into the phone, well, you're kind of stuck anyway. So this is a law that helps. It's not going to solve all the problems, but it does help to give that ability for fiduciaries to be able to access digital assets.
Jennifer Verbrigghe:
I actually have recently, I started seeing this referenced in people's wills and powers of attorney is that ability for clients, or for fiduciaries or trustees to access digital assets and in very specific... I've seen some that are very broad giving access to do anything, including deleting accounts, because if you think about it, that is something that you might want to have done as well.
Jennifer Verbrigghe:
So this is a conversation that should be had with estate planning attorneys, if you haven't already. And I guarantee you that going forward, estate planning attorneys are going to see that as an item that needs to be checked off on your documents going forward, because it's really very important.
Brendan Freeman:
Jen, so much good information there. You think about it, the criminals have evolved as technology has evolved and so your protection has to evolve with that. We get the question all the time of how often should you look at your estate plan and kind of review that. And in this scenario, there's a lot of reason to look at it and there's more decisions unfortunately, to make as to who might handle these things, but trying to get in front of those decisions and plan for those decisions, it's important.
Jennifer Verbrigghe:
Right and I will say Brendan too, that the person who is given the ability to do that doesn't necessarily have to be the same person or people who are given the ability to settle your estate in general. You can bifurcate those roles. So it doesn't have to be... You may want your uncle to manage your estate, but you may want your son to manage your digital assets because people have different skill sets as well.
Brendan Freeman:
Absolutely. And have to plan for that and consider it and so in spirit, the First Business Bank, we're always trying to prompt you with the right types of questions. So that's really helpful for our audience. Thank you.
Brendan Freeman:
Thinking along those lines, there's also another element. Might not be financial necessarily, but many of us with our phones and with our online content, really cherish videos and photos and other sentimental things that are there on those devices. Any tips to protect those sentimental assets in comparison to what you just mentioned regarding financial assets?
Jennifer Verbrigghe:
Yeah, sure. Yeah, because we've mostly talked about financial assets here, but there are certainly other assets that may not have monetary value, but have substantial personal value, or as I mentioned before privacy. And it may be things that you don't want out in the universe for all of eternity. So these assets also fall under that RUFADAA rule that I mentioned and the ability of fiduciaries to handle upon your death, if you give them per permission. In fact, I have seen documents that specifically give permission to access online photo albums, like you think about like Shutterfly.
Jennifer Verbrigghe:
Some companies offer the ability to appoint someone who could access those documents after you die. So for example, I know Facebook has an option that you can put somebody out there and give them different permissions to be able to do, even if it's just to delete your Facebook count, or I think they can even do something like put a Memorial out on your Facebook page so that people can see that.
Jennifer Verbrigghe:
I know Google has something called Inactive Account Manager, which automatically notifies a certain person that you've designated if you've been inactive for too long and I think it might be 90 days or so and then that person is asked, "Hey, has this person died?" If so, then they are given access to do certain things based on how that was set up. So those types of access is, it's going to vary across all the providers so that's why it's a little tricky, but they're out there as something to do. And then frankly, they're the easiest way to handle things like that after somebody has passed.
Jennifer Verbrigghe:
RUFADAA, the laws that have been put in place for digital assets can be helpful if those types of things haven't been set up, but if you are relying solely on those terms of service and think about those agreements that you make, you have to agree to something in order to create an account, those are the terms of service agreements. If you're relying solely on that, that's going to be the most challenging way to go. And frankly, people might not be able to access your digital assets because those terms of service just really are there as agreements that you're making with the individual who has passed away. Therefore, they're really there to protect their privacy and not so much to pass down the heirs. It's not really the goal.
Jennifer Verbrigghe:
So digital photo albums, I think I mentioned those already. Those are a good example and really if you were to pass away, your friends and family are going to want to be able to access those. It's not like the old shoebox with the pile of Polaroid pictures, but they do have real value to your loved ones. So check out those options that they have on those websites and some of them may have ways that you can easily pass those down to people, but it's important enough that you want to do that.
Jennifer Verbrigghe:
Another thought about pictures and also other types of sentimental digital assets like that is, that having a separate hard drive or a thumb drive and saving them there as well, frankly, can save your loved ones a lot of trouble. But one thing I will note is, that those assets are personal property. Like your computer is personal property, it's not a digital asset and so that really falls under a separate category within your estate planning document. So that's something to keep in mind.
Brendan Freeman:
Again, so much good wisdom there. Thanks Jen, from a perspective of thinking about this as our audience. The more complex you are, the more details you have to figure out, the more planning you have to do. And so if you want these things to pass on to the next generation, you want still to have access to certain parts of this, you really have to be thoughtful. And so thank you.
Brendan Freeman:
Let's go back one more time. We are a bank and so we like to go back to financial and while this isn't necessarily an area that we deal a lot in, from a recommendation perspective, certainly very hot topic right now. We've made it this far in our podcast without talking about cryptocurrency. So, what are your thoughts specifically around maintaining cryptocurrency accounts, because as volatile as it might be, it still might be an asset for many of our listeners. And so what thoughts might you have there?
Jennifer Verbrigghe:
Sure. We get a lot of questions about cryptocurrency. So as long as you're not asking me about any investment advice regarding cryptocurrency, or where it's going-
Brendan Freeman:
I am not. I'm not. Promise you that.
Jennifer Verbrigghe:
... that I have no idea.
Brendan Freeman:
Okay. I promise you. We're not asking that.
Jennifer Verbrigghe:
Yeah. So what I'll say first though, is that cryptocurrency is... Obviously, we've all heard the stories. It is not covered by that RUFADAA law if it's traded directly on the blockchain. So we've all heard about the people who have lost their passwords or keys or died and no one was able to find them or recover them. And frankly, that's a huge risk because it's just gone. If you don't have that key and there's no custodian holding that, it's gone.
Jennifer Verbrigghe:
So I think a lot of people now, especially clients that I talk to, they're more likely to use a custodian type of account. Like I'll use Coinbase as an example, mostly just, I'm not advocating for Coinbase, it's just really one that I've probably heard the most. Those do actually fall under RUFADAA. So you're really decreasing your risk there because there, if you die, it is actually an account titled in your name or your trust or whatever, whereas opposed to those accounts, or the cryptocurrency that's traded directly on the blockchain. There's no titling and so there's no way to recoup that. It's just whoever holds the key.
Jennifer Verbrigghe:
So that's my biggest thing is that I would just note that, make sure people know about it though, because I've heard stories too about going in and you see like a code. Well, what does that mean? Like what you have to know what that goes to otherwise, it's meaningless. So make sure that somebody is aware if you are really investing. Especially if you're investing a fair amount in these cryptocurrencies, make sure somebody's aware and somebody that you trust because you're really giving them access to take that money as well. So that's my one note about that.
Jennifer Verbrigghe:
But I also wanted to just mention NFTs because I think those are becoming more popular. So those aren't non-fungible tokens. So you may have heard about somebody buying at Sotheby's, buying an NFT for absurd amount of money. So definitely getting more popular. And those are actually so new that they aren't covered under the law at all, because they're just so brand new it wasn't contemplated. And I think we're going to see probably more of those things that the laws are going to have to continue to evolve as the technology evolves. It's never going to happen as fast as the technology. It's always going to be on a leg and so we just need to keep that in mind that eventually the laws will hopefully catch up to the technology.
Brendan Freeman:
So much to consider. Great, great insight. Thank you, Jen. Last question for you, any final thoughts and kind of in summary for our listeners, anything that you wanted to talk about we didn't mention?
Jennifer Verbrigghe:
Yeah, I would just say that this is a complicated topic and so it can feel a little overwhelming, but there are opportunities to sit down with your trust advisor, review your documents, see if it really does have any verbiage about those digital assets. But like I said, if you haven't revised those documents the last few years, probably doesn't. So it might be worth a quick call to your estate planning attorney to see what you can do to get that verbiage included in your estate documents.
Jennifer Verbrigghe:
And then I would treat digital assets just like your personal assets and your financial assets, where you make a list for your heirs so that people can know where to go looking for these assets. I mean, there may be these other tools out there to help fiduciaries once you're gone, but it's always easier if there's a list that they can go by.
Jennifer Verbrigghe:
Then just from a security perspective, if you aren't using an account, delete it. Be more stingy, I would say, about signing up for new accounts too, because the more you throw out there into the universe, the more access people have, or the more doors they have open for them to commit fraud against you.
Jennifer Verbrigghe:
So, we started talking today about simplification, and I would end with that too, because the sloppier your digital life is, the higher the risk you're taking. So keep it simple and make sure you're planning for those assets because they really do have some true value.
Brendan Freeman:
Well, very valuable information. Really appreciate all your insight today. I want to thank our guests, Jennifer Verbrigghe for joining us today in this discussion. I also want to thank our audience for listening into this podcast. We invite you to look at our website, firstbusiness.bank for more resources like this podcast. There, you can experience the advantage of First Business Bank. If there's any way we can help, please reach out to us.