So you've crafted a plan for how you want your wealth, possessions and other assets to be distributed after you die. But what happens to your digital assets—online bank and investment accounts, social media profiles like Facebook and LinkedIn, and access to shopping sites like Amazon and eBay? This is a gray area with no definite rules for guidance. But it is possible to set up some common-sense directions to heirs that can help them manage the transfer of our digital presences along with our more tangible assets.
Complicating matters are the Terms of Service agreements we all agree to whenever we set up an online account or social media profile. Buried within the legal jargon in these agreements is language that spells out how our accounts can be closed out or transferred in the event of death. It may seem easy enough just to give a family member access to these digital accounts by sharing usernames and passwords. But by clicking “I agree” in the Terms of Service agreements, we actually enter into a contract with the site manager. Sharing information like passwords with others is a violation of the contract, and can be considered an illegal offense according to federal law.
Every day we enjoy the benefits of an interconnected world. We might start our day with a cup of coffee that originated in South America, check our email on a smartphone designed in California and manufactured in Taiwan, then shower and change into clothes woven from Egyptian fabrics before driving a German-made car or riding in a French-built train to work.
As consumers, we rarely think twice about the benefits of access to the cornucopia of goods the global market has to offer. Yet, as investors, we will often concentrate our portfolios in favor of our home market at the expense of global diversification. For example, while US stock markets represent just over 50% of the value of global equity markets, many US investors tend to allocate around 70% of their equity assets to domestic stocks.1 This phenomenon, which can be observed across countries around the world, is known in the investment community as “home-country bias.” Given that certain frictions may be associated with investing abroad, a home-country bias may make sense for an investor in certain cases. For example, for tax-deferred investors in the US, foreign dividend tax withholdings may present a disadvantageous tax drag on international investments. In general, however, neglecting the benefits that global diversification has to offer may increase risks and decrease the investment opportunity set.