Before the digital revolution, many individuals created paper wills, with detailed instructions on how assets would be distributed, and to whom. There was a paper trail that attorneys and heirs could follow to honor the wishes of deceased or incapacitated relatives.
Today many of us conduct much of our financial activity online. Online banking can simplify money management, bill paying, account access, electronic funds transfers, and other functions. Investment companies encourage clients to employ digital accounts. The days of paper quarterly statements, and tax information delivered by your local letter carrier, are coming to an end for those of us who enjoy the ease of digital trades, redemptions and investment account access.
The problem? Password-protected accounts may be all but inaccessible. Often relatives, and other heirs, don’t have access to online bank or investment accounts. In some cases, heirs may be unaware of long-held investments that have remained dormant, or of accounts that may be located in a bank different from the one you usually use.
To help prevent problems for your family and heirs, it’s essential to provide the keys to your “digital vault” – the assets you’ve accumulated through a lifetime of hard work and disciplined saving.
By taking some prudent, conservative steps, you can help ensure that your wishes are followed.
1. Start by creating a list of all accounts and assets. Create a list of your bank accounts with account numbers and contact information for the bank. List all investment accounts at your local bank, brokerage, or mutual fund, including account numbers and contact information. Don’t forget life insurance policies that will benefit your heirs. Be sure to include the name of the insurer with full contact information.
Don’t include password information on this list of assets – just the assets and account numbers.
2. Create a separate document of account passwords. To access online accounts, account holders must enter a password. Many people keep numerous accounts with different passwords for each account.
Further, to prevent online fraud, passwords should be changed frequently. By creating a separate document of account passwords only, you simplify the process of leaving an information trail for those who come after you.
3. Print out these two documents and leave them with a trusted advisor to ensure that no one accesses your digital accounts without your approval. This may be your attorney, your estate planner, your CPA, or other professional.
4. Notify trusted heirs about who holds your account information. It doesn’t do any good to develop a list of assets and passwords for your attorney if your heirs don’t know who your attorney is. Be sure to provide all contact information for the attorney, including telephone number, email address, and physical address.
5. Notify your trusted advisor each time you change passwords. This is why it’s recommended to create two documents – one listing your assets and their location, and a second document that lists passwords to online accounts. This way, you can update passwords often, providing a new list of passwords as necessary.
Times have changed – and quickly. Today it’s harder to leave a paper trail for your heirs to follow. You can no longer be sure that all assets are accessible unless you take steps now to help ensure that the right people can access your digital account information.
Take a few minutes now to plan ahead. Storing the account locations, account numbers and online passwords can help save time and reduce a lot of headaches for those entrusted to see that your wishes are followed.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.
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