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Is a digital last will and testament right for you?

There are risks with relying solely on a digital end-of-life site to archive your estate plan.

Holly Isdale, an estate attorney at Wealthaven, has watched the rise of a new twist in estate planning — digital document archives — with a mixture of fear and interest. These cloud-based storage services are becoming a more popular and inexpensive way to store vital financial, legal and health-care documents online, along with more unique personal assets, such as family photos or recipes.

But Isdale worries that these new end-of-life planning sites may present risks that leave heirs with a digital disarray rather than a clear picture of loved ones' assets and wishes.

Cloud computing online storage vault
Belekekin | Getty Images

"We're attracted by the newest shiny thing," Isdale said. "But figure out what works for you."

This flurry of digital end-of-life planning sites, such as Everplans, AfterSteps and Principled Heart, do serve a real need.

Heirs often struggle to find documents after a loved one's death. Damien Lanyon, founder and CEO of Del Mar, California-based Lanyon Advisory Services, has seen it firsthand with clients and he became frustrated. One client, a widow, spent seven years searching for investments after her husband died; others spend months locating documents. So Lanyon began looking for a better way, and for him digital vaults that can hold key documents, like wills, trusts and medical directives, are a good option.

"People don't know they need these services until it's too late," Lanyon said. "So it's a chronic problem."

If you or your advisor do use a digital archive, additional precautions are warranted. Chief among them is the fact that most of these sites are technology start-ups.

"When dealing with estate planning, you want a site to be permanent," said Jamie Hopkins, associate professor of taxation at The American College of Financial Services. "But there's no go-to source for online end-of-life planning yet."

Take Estate Assist, which was recently shuttered after being bought by a larger company — it declined to reveal the buyer. Site founder Woodrow Levin started the site after his family had a long search trying to find his grandmother's assets after she died. "This is a time to start healing," he said, rather than hunting for accounts. He wanted Estate Assist to be a place where documents can be easily uploaded and retrieved.

But getting traction in a new niche makes these business models likely to take a buyout quickly or fold.

"The challenge is gaining trust from consumers and building staying power," said Levin, who sold his business because of the difficulty in gaining customers, among other hurdles. "It will be hard to build a large, independent digital estate-planning business."

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Before Estate Assist was shut down, customers were give a 30-day notice to download their documents, Levin said. "We also contacted people and reminded them to do it," he added.

"People don't know they need these services until it's too late. So it's a chronic problem." -Damien Lanyon, founder and CEO of Lanyon Advisory Services

All companies are vulnerable to a hack or business failure, but Hopkins said with start-ups that risk can be even higher. That may be a given in the world of Silicon Valley, but it should compel more due diligence when the start-up service is being used to store sensitive documents.

According to start-up tracker Crunchbase, Estate Assist was founded in 2014. Everplans was founded in 2012 and AfterSteps in 2010. Launch dates of the services, though, can be years later — Everplans launched its service in 2014, for example.

Experts also warn consumers that they still need to consult an attorney, since laws vary from state to state.

Paper wills, for example, must also still be filed away, since only a few states, such as Delaware and Nevada, honor digital ones, Isdale said. And court precedents governing digital wills are few and far between. A few years ago an Ohio court judge ruled that a will that was written and signed on a tablet computer was legal. But rules and guidelines are still being hammered out in many states, Isdale said.

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Some of these hiccups may become known too late because those who are attracted to the digital archive approach in the first place tend to be "do-it-yourself" kind of people.

"A lot of do-it-yourselfers aren't consulting attorneys," Hopkins said. In addition to the more complicated legal issues, attorneys are more likely to stay on top of the basics, like updating documents stored online with important new information.

Isdale said if the most recent copy of a legal document isn't uploaded, it could be contested. "You have to stay on top of these digital documents," she said.

From morbid to mundane

Despite the risks, Hopkins acknowledged the value of end-of-life planning sites. Digitalized documents and accounts are easy to find. "Putting everything in one spot makes the process easier," he said, "if it's done the right way."

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After her older brother died, Everplans co-founder Abby Schneiderman realized that a digital platform could — and should — do much more. She wanted to help people during every stage of the end-of-life planning process. "The whole end-of-life planning area is confusing and overwhelming," Schneiderman said. "But technology can make the process simpler."

Consumers can digitize wills, bills, life insurance documents and even health directives using Everplans. Schneiderman said the site also includes annual checkups, which remind people to update their document information, lists every state's health-directive forms and digital estate laws. And an Everplans offshoot, called Funeral Update, even sends out funeral invites.

Starting a national conversation about end-of-life planning is one of Schneiderman's goals. The site has posted thousands of stories on the topic, including what to wear to a funeral. "Talking about death is becoming a national issue," she said. "We're trying to take the conversation from morbid to mundane."

Schneiderman said consumers who fear that their documents will be hacked can choose which ones to upload. She noted that site information is encrypted. "We built the site with security in mind," she said, adding that the site has just upgraded its authentication process.

For some people, using Excel spreadsheets or putting documents in secure but more general cloud-storage sites, like Dropbox or Apple's cloud service, may work well enough, Isdale said.

Schneiderman said a digital vault like Dropbox merely stores documents. "Our site is a guidance platform that walks people through important information step by step."

Whether in a drawer or digitally stored, Isdale said keeping the estate-planning process simple should be the goal.

By Constance Gustke, special to CNBC.com