We live in the digital age. Having online access to investments is a great convenience. But the downside is that they can create a very difficult situation for a surviving spouse or executor trying to find the deceased’s assets.
What is the first thing you are told about any password? Don’t write it down. This can create unintended consequences for an executor who needs access to each account in order to marshal the assets and eventually distribute those assets to the heirs or trustees based on the language contained in the will.
When the founder and CEO of a Canadian cryptocurrency exchange, QuadrigaCX, died unexpectedly, nobody else had the password to the exchange’s cold storage locker. That cut off access to investors’ $190 million in cryptocurrency. Those investors may never see their funds again. This is a an eye-opening example of how the security system designed to keep hackers out of an account can work against the owners of funds.
Estate administration in the digital age requires having a strategy to share passwords to your computer, email and online accounts. Without that, things quickly get complicated.
Option #1 Give your passwords to a trusted family member.
This is probably the easiest, but least secure way. They will need passwords to access your computer or smartphone. They will also need a password to access your email — which is where electronic financial statements are traditionally sent. This creates a potential security issue and also doesn’t provide the trusted person with access to each individual financial platform, which would require each of those passwords to be written down or somehow saved and communicated to the trusted person. Many computer operating systems now save passwords to frequently visited websites, so it is possible that if a trusted person had access to your computer, they may also be able to gain access to your financial accounts.
Option #2 Write down and place all passwords in a safe deposit box.
Your executor or guardian/attorney-in-fact through a power of attorney can access your safe deposit box and your passwords to access your computer, email and financial platforms. This option is somewhat safer than simply writing down and providing passwords to a trusted friend or spouse. But this means you have to be diligent about updating the password list. People rarely keep such printed out lists updated. But if you’re disciplined enough to do this, this might work.
Option #3 Use a digital wallet.
A digital wallet is the most secure and by far the most recommended way to safely and securely store passwords. Like a real wallet, a digital wallet keeps track of all your passwords across all your devices and does so in an encrypted file in the cloud. With this, the only hurdle is the password with which you access the digital wallet.
This would require that you keep a record of the master password somewhere, or perhaps you can agree with your spouse or trusted friend on a pattern of passwords. That could be anything that the two of you can easily remember, along with perhaps a few other characters. It will need to be something that can be remembered and not written down. Writing down and saving passwords should be avoided if at all possible.
This article is a service of attorney Myrna Serrano Setty. Myrna doesn’t just draft documents, she ensures you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why Myrna offers a Planning Session, during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. Call our office today to schedule a Planning Session. Mention this article to find out how to get this session at no charge.