Do you still get financial statements by mail or are most coming electronically? What would happen to that information if you were to die or became incapacitated? Would your loved ones be able to access your accounts or even know where your accounts are held? This year’s Insights on Wealth and Worth report (PDF), published by US Trust, said 45% of the high-net-worth people it polled had not organized passwords for electronic account information, yet 87% said they knew the location of important documents and most had a will. Why do so many people fail to organize their passwords?
It’s not because there is a lack of websites and tools for storing passwords in digital vaults. Many people claim constantly changing passwords is the reason they’ve done nothing. However, recording this information for your power-of-attorney (POA) or executor is just as important as updating your will. Your estate plan needs to have a digital component to assure everything goes smoothly. Maintain a list of your online accounts, along with the user names and passwords to access them. Be sure to include answers to your security questions, if applicable. Make sure your POA and executor know where this information is kept. Finally, update the information regularly.
This is time-consuming (to be sure) and can seem overwhelming to get started. However, once the list is created, it can be kept up-to-date easily by exercising some discipline as passwords are updated or new accounts established. Find a secure online vault where this information can be uploaded and stored. This avoids the chance of losing your information to a hard drive crash.
Taking the time to save this information can save your heirs time and money, and can avoid the chance of an account being overlooked because no one knew it existed. Otherwise, your executor may have to visit financial institutions with a death certificate and court appointment documents to prove they have authority to access your information.