Passwords are important in passing digital assets.
We live in a digital age.
Banking can be done online.
You chat with friends online.
Photos can be shared and stored in the cloud.
According to a recent Kiplinger article titled “Your Estate Plan Isn't Complete Without Fixing the Password Problem,” these facts alone make digital estate planning important.
This will place your loved ones and your executor in a difficult position.
How can they access your funds to make necessary payments and disbursements?
You should include your passwords in your estate plan now.
Death can call unexpectedly.
Ask the family and clients of Gerry Cotton.
He was the CEO of a cryptocurrency exchange.
When he died, the password to the cold locker storage for the exchange was lost.
This left $190 million in investor funds inaccessible.
What can you do?
One simple way is to provide passwords to a trusted family member.
Another option is to write down the passwords and keep them in a safety deposit box.
When you die or are incapacitated, the executor or the power of attorney can then access the safety deposit box.
Although this is a more secure option, it will take more effort and vigilance to keep passwords updated.
Practical tip: contact the financial institution where your safety deposit box is located and follow its required process to ensure that your executor or power of attorney is authorized to have access right now.
The third option is to secure them in a digital wallet.
What is a digital wallet?
It stores your passwords in an encrypted file on the cloud.
I have used LastPass for years.
If you choose that option, merely leave the one "master" password with your executor.
Whatever method you choose, prioritize digital assets in your estate planning.
Reference: Kiplinger (April 19, 2019) “Your Estate Plan Isn't Complete Without Fixing the Password Problem”