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Storing Passwords in Case of Death

Storing Passwords in Case of Death
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Deborah Placet had no idea how to access her husband’s cryptocurrency and other digital accounts after his unexpected death at age 52.

Despite having the resources to hire IT forensic experts to help access accounts, including her husband’s IRA, it’s been three years. Deborah Placet still hasn’t been able to gain access to her husband’s Bitcoin account. Placet and her late husband were financial planners and should have known better. However, they didn’t have a digital estate plan. According to Barron’s article “How to Ensure Heirs Avoid a Password-Protected Nightmare,” her situation offers a cautionary tale.

Our digital footprint keeps expanding. As a result, there’s no paper trail to follow when a loved one dies. In the past, an executor or estate administrator could have mail forwarded and figure out accounts, assets, and values. Not only don’t we have a paper trail, but digital accounts are protected by passwords, multifactor authentication processes, fingerprints, facial recognition systems, and federal data privacy laws.

The starting point is to create a list of digital accounts. Instructions on gaining access to the accounts must be precise because a password alone may not be enough information. Explain what you want to happen to the account: should ownership be transferred to someone else, who has permission to retrieve and save the data, whether you want the account to be shut down, no data saved, etc.

The account list should include:

  • Social media platforms
  • Traditional bank, retirement, and investment accounts
  • PayPal, Venmo, and similar payment accounts
  • Cryptocurrency wallets, nonfungible token (NFT) assets
  • Home and utility accounts, like mortgage, electric, gas, cable, internet
  • Insurance, including home, auto, flood, health, life, disability, long-term care.
  • Smartphone accounts
  • Online storage accounts
  • Photo, music, and video accounts
  • Subscription services
  • Loyalty/rewards programs
  • Gaming accounts

The executor (Personal Representative) may access some accounts using a username and password. However, others are more secure and require biometric protection. This information should all be included in a document. Still, the document should not be included in the Last Will since it becomes public information through probate and is accessible to anyone who wants to see it.

Certain platforms have created a process to allow heirs to access assets. Typically, death certificates, a Last Will or probate documents, a valid photo ID of the deceased, and a letter signed by those named in the probate records outlining what is to be done with assets are required. However, not every platform has addressed this issue.

Compiling a list of digital assets is about as much fun as preparing for tax season. However, without a plan, digital assets are likely to be lost. Identity theft and fraud occur when assets are unprotected and unused.

Just as a traditional estate plan protects heirs to avoid further stress and expense, a digital estate plan helps to protect the family and loved ones. Speak with your estate planning attorney to create a digital estate plan as you are working on your estate plan.

Reference: Barron’s (Dec. 15, 2021) “How to Ensure Heirs Avoid a Password-Protected Nightmare”