Don't take your passwords to the grave

Don't take your passwords to the grave

Your survivors will have enough on their minds when you die, so take steps now to ensure it won't be a major trauma to access the financial accounts you keep online.
By Liz Pulliam Weston

There's no question that online banking, electronic bill payment and personal-finance software make our lives easier.

But could we be creating a digital mess for our heirs when we die?

One poster on the Your Money message board shared her family's trauma when her father died without divulging the passwords to his computer or online accounts.

"I am the co-executor of the trust and the most financially savvy of my siblings, so it was up to me to help mom. But what do you do without passwords?" poster Tuppermom asked. "And most companies don't just give you access -- it is a process that can take weeks and months (if they don't just say 'Oh -- he's deceased? OK, we'll close the account' and then NO ONE has access!!)."

Tuppermom's family got lucky when it stumbled upon a folder that contained passwords for some of her father's work-related accounts and one of his online banks. That provided enough clues to find and gain entry to most of his other accounts. The family's lawyers helped them get access to the rest, although the process took time.

The experience was so traumatic that Tuppermom and her family revised their own estate plans to include complete lists of online IDs and passwords for each of their accounts. Concern about identity theft and security, she wrote, shouldn't go so far that family members are left in the dark.

The family "learned that ID protection is not JUST about nobody knowing the passwords," Tuppermom wrote. "It is also about protecting the asset behind the password -- and making sure that if you can't access it, someone you trust can."
Who would take over for you?
Your family could lose access to other potentially important digital files, too, if it doesn't have your passwords, including:

* Photo and music collections.
* Calendars and address books.
* E-mail accounts.
* Security and wireless-networking software.

But getting access to your financial accounts will likely be the most critical issue if you die or become incapacitated.

If you're not sure how important an issue this might be, try to imagine who would take over the functions of your financial life if you were lying in a coma. Then ask yourself:

* Could this person find and access bank and brokerage accounts?
* Would he or she know what bills should be paid and when?
* Are any of your accounts paperless and thus likely to be overlooked?

I'm a big fan of receiving most bills and statements solely by e-mail, as I wrote in "Go paperless for safer banking." But without a paper bill or statement, the person handling your affairs might never discover the account.

Any delays in accessing your accounts and paying your bills could cause serious financial repercussions. Unpaid bills could devastate your credit scores and wind up in collections. Insurance coverage could lapse. Bounced checks could result in your bank accounts being closed. Neglected investment accounts could suffer losses. The list goes on.

Now imagine that both you and the person you've designated to handle your affairs have died. (This isn't much of a stretch, if the other person happens to be your spouse and you ever travel in the same car. One accident could wipe out both of you.) Figure out who would take over in that case, and ask the same questions again.
Spare them the distress
You might be tempted to let your heirs figure it out on their own. After all, they eventually should be able to access accounts -- those they know about, anyway -- using your death certificate and will, trust or court document showing their right to settle your estate.

But you may be causing them unnecessary trauma and significant financial distress, particularly if they have to cover the bills for your funeral and then wait months to be reimbursed, or they wind up supporting your family and their own.

Your Money poster T-Bird_Money has thought this through:

"In my case, I'm a single parent, with bills needing to be paid. My brother, who would be the executor, has his own login on my computer as administrator, so he could go in and change the password on my user in case he needed access," T-Bird_Money wrote. "I have an Excel sheet listing all accounts, usernames, and passwords with semi-current amounts. Also listed (are) all life insurance policies with face amounts and contact info. Until such time that the life insurance proceeds come through, he may need to go on to Scottrade and sell some stock to keep paying the mortgage and expenses for things."

The issue of passing on passwords is so important in this increasingly digital world that Los Angeles estate-planning attorney Jon Gallo, the co-author of "The Financially Intelligent Parent," requires his clients to fill out a "game plan" that includes their account numbers, online IDs and passwords.

This document is placed in a sealed envelope in Gallo's office along with the client's other estate-planning documents. Because account details can and frequently do change, Gallo asks clients to update the document annually. The system creates piece of mind for his clients and, eventually, for their heirs, he said.

"Their family members are not going to be firing on all cylinders anyway," Gallo said. "This can really help."
Your game plan
A lawyer's office is a good repository for such sensitive information, but it probably shouldn't be the only one. As Hurricane Katrina and numerous other recent disasters have shown us, one catastrophe can wipe out an entire area, so having copies of the document in more than one place makes sense.

Marty Kuritz, the author of the estate-planning organizer "The Beneficiary Book," recommends making several copies of the document, storing one each in:

* Your home safe or other secret, secure, water- and fire-resistant location in your home.

* A secure off-site location such as a safe-deposit box.

* An out-of-state location, such as with a trusted relative.

Kuritz also suggests writing down the answers to common security questions, including your mother's maiden name, the street where you were raised and the name of your first pet. Finally, you need to tell your trusted someone(s) where to find the documents. "Secret passwords, combinations, etc., are truly for no one's eyes but a privileged few," Kuritz cautioned. "Verbally communicate (the documents' whereabouts) to your most trusted people who have an absolute need to know."

Both the print and online versions of Kuritz's book include fill-in-the-blank forms to organize this information. You can also create a simple spreadsheet that lists accounts, account numbers, contact phone numbers, online IDs and passwords. (I've included on my list due dates for any bills, as well as how those bills are received, online or by mail, and how they're paid, by automatic debit or online bill pay.)

To get you started on your list, consider including:

* Your computers and laptops.
* Bank accounts.
* Online bill-payment systems.
* ATM cards.
* Credit cards.
* Brokerage accounts.
* Retail or seller accounts (eBay, Amazon.com, etc.).
* Voice-mail accounts.
* E-mail accounts.
* Home-security systems.
* Computer-security systems.
* Entry gate at gated communities or storage facilities.
* Keyless-entry locks.
* Cell-phone locks.
* Safe combinations and the location of any keys.

Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money. She also answers reader questions in the Your Money message board.
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