August 31, 2016 — Consider this unpleasant scenario: You go to bed tonight and don’t wake up. Instead, you go on to your greater reward, leaving a saddened spouse, family, and friends. They, on the other hand, are about to find out how well you prepared for this event. While not fun to think about, this is not an “if” it happens situation, it is only “when”.
Not so long ago your heirs would face many unpleasant chores as a result of your untimely death, but at least the tasks were relatively straightforward. Assets could generally be traced by looking in file folders, safe deposit boxes, and various spots around the house. Statements would eventually come in the mail, alerting your survivors to the existence of various accounts. Now in the digital age, your executor or surviving spouse face the same tasks, only they tend to be much more difficult. That is mainly because so many of your assets and accounts only exist online. How will they find out what accounts exist, and then how on earth will they get access?
Let’s assume that your spouse and you had one or two banking accounts, some shared credit cards, and some investment and 401(k) accounts. The end of the month is approaching, and your spouse has $100 in cash in her purse and $1500 in the checking. He or she can probably get by with most purchases by using the credit cards. But what arrangements did you make (or not make) to pay impending bills like mortgages, credit card payments, utilities, HOA dues, taxes, etc.? If you had separate checking accounts, how will your spouse get access? If it is a joint account, how much is in there and what were you doing about transferring money into it? How much needed to come in and from which accounts? If she can’t get access to the accounts you were transferring money from, checks and automatic payments in your main checking account will start bouncing, and services will be cut off. Without meaning to, you will have caused a huge mess and worry.
Chances are the only way for him to find out is to go online to each account and look around. But there could be some serious obstacles to that – where are those accounts, and how many are there she doesn’t know about. It is highly possible you have assets that your heirs will never find out about. And even if you left a list of accounts, what are the user names and passwords? Even worse, what if your executor doesn’t know the password to: 1) your computer, and 2) your email? Important stuff is on your computer, not to mention photos and other records, and if she can’t access it life is going to be hard.
Although not as serious as the financial side of things, what will happen if your Facebook, LinkedIn, and Twitter accounts keep going along assuming you are living. Facebook has a “Memorial” status that keeps your page alive so it can viewed and memorial messages posted. How about your email account or cell phone – how many people or organizations will be trying to reach you for important (or not so critical) reasons – and she won’t know it.
What to do
Every person needs to have a detailed and up to date list of all your digital assets – along with user names and passwords. Those include:
– Bank accounts
– 401(k) and IRAs
– Online billing accounts (utilities, etc)
– Social media
– Cell phone
Many people keep a spreadsheet, either on paper or a computer with the info on all these accounts. Looseleaf notebooks can be a good option. The problem is much of the info is probably out of date, not updated for months or years at a time. Some accounts will have been closed, others too new to get added. A better way is to use one of the inexpensive password manager programs like Roboform, Lastpass, or Dashlane. These programs not only keep track and update along the way, they will generate strong passwords and help you avoid the unsafe habit same of using the same or similiar passwords everywhere.
Wherever you keep the data, on a thumb drive, looseleaf notebook, in a drawer, or password manager, you have to let your spouse and executor know where that info is – and if it needs one, what the password is!
Comments? How are you handling your digital legacy? What have you done to insure that your loved ones and executor don’t face an impenetrable thicket finding out what you own, and getting access to it to pay bills and expenses? Please share your thoughts and experiences in the Comments section below.