When protecting your estate, don’t forget about your passwords.
Previously, an estate plan distributing traditional assets like real estate, jewelry, investment accounts, and tangible personal property was enough. Everyone needs an estate plan, including a last will and testament, Power of Attorney, Healthcare Proxy, and possibly trusts. However, today, as explained in a recent article from HeySoCal, “What happens to your passwords when you die?” digital assets may be even more critical than traditional assets. Unless you’ve planned for these assets to be managed by a digital executor, they may become a more giant headache for heirs than any outstanding credit card debt.
A survey of 1,000 adults across the U.S. from All About Cookies found that 67% planned to share login information for banking accounts but not in their wills. This is good news—bad news. Any passwords, account numbers, or account values included in a will become public records when the will goes through probate. User names, passwords, account numbers, or other identifying information should be included in a separate document and not appear in the will.
Thirty percent of people in relationships said their partner has a system to share passwords so they could access their online accounts upon death. This means that 70% of the people surveyed will have to figure out how to access accounts, pay bills, and undo their partner’s digital lives.
Another interesting fact: half of the married people surveyed reported they had an online account their spouses didn’t know about, with a median value of $8,000.
Whether you spend eight hours a day on Facebook or have sworn off social media after your teenage grandchildren shared one secret too many, you probably have a bigger digital footprint than you think. Here’s where most people’s digital assets live:
- Banking Accounts
- Computer/Tablet/Phone User Names And Passwords
- Investment and Retirement Accounts
- Bills and Utility Accounts
- Email Accounts
- Social Networking
- Photos and Videos
- Cryptocurrency Wallets
- Personal Websites
- Business Accounts
- Airline and Hotel Reward Accounts
The report found that nearly 40% of respondents store their passwords in their heads, and 39% were found to use simple, easily hackable passwords because they are easier to remember.
Suppose you name your spouse, an adult child, or a trusted person as your digital executor and ensure they have password access to your digital assets. In that case, your family may be spared cyber theft, identity theft, and lost assets. If you are comfortable using an online password manager, find one that allows you to name someone to manage the assets upon passing. If you’re more of a hard-copy person, use a notebook for your passwords. Go through your digital assets and see if there is a way to name a person as your legacy contact.
Using a password manager, such as LastPass, is a convenient way to preserve your information in a readily shareable format.
In the past, notices from banks, credit card companies, investment companies, and tax bills arrived by mail, so an overlooked account would eventually surface. However, in today’s digital world, a post-mortem asset search is far more difficult. Make it easier for your loved ones and create a plan for digital assets. Your estate planning attorney will know what state-specific laws guide this new asset class.
Reference: HeySoCal (August 27, 2024) “What happens to your passwords when you die?”
