Leaving Behind the Digital Keys to Financial Lives

At one time all of our important information arrived in the mail.  We received bills in the mail and sent payments in the mail.  We received paper statements from our financial institutions and sent checks or made deposits using paper checks.

No longer.

A lot of our communication is electronic.  Banks and investment firms encourage the use of electronic delivery of information because it saves them a lot of money and makes transactions much faster.  But what happens if you die or become incapacitated?   That’s becoming a big issue and it’s not being addressed by enough people.

From the NY Times:

BOB GINSBERG, a retired production manager for an educational publisher, is worried that he does not know any of the logins and passwords for online accounts belonging to his partner or brother and they do not know his.

At 72, he said his concern was not about Facebook or e-mail. It was for their financial lives, which have migrated online, making paper account statements anachronistic. Now, when people die without disclosing their financial affairs to anyone, there is often no paper trail for heirs to follow.

“You’d never know someone else’s financial arrangements, but if it was paperwork you’d have a clue,” Mr. Ginsberg said. “I’m entirely comfortable doing absolutely everything online. But if I have to take over for my brother or my partner, I don’t have any of their information.”

In its annual Wealth and Worth study, released this week, U.S. Trust said 45 percent of the high-net-worth people it polled had not organized passwords and account information for their digital lives in a place where heirs or an executor would find them. (By contrast, the bank said that 87 percent knew the location of important documents and most had a will.)

Much has been written about how family members struggle to get access to the e-mail and social network accounts of loved ones who have died. They have sentimental value much the way photo albums and personal letters do. But far less attention has been paid to the logins, passwords and answers to security questions that will give access to an online financial life.

In an era when far fewer records are kept on paper, spouses and children may not even know that some accounts exist. Think of savings accounts that are only online, or a rollover retirement account that hasn’t been touched in years.

“It’s not only something that needs to be addressed with an individual dying,” Chris Heilmann, chief fiduciary executive at U.S. Trust, said. “If an individual becomes incapacitated, people typically plan for someone to have a durable power of attorney so someone can step in and handle your affairs. But now you’re finding the attorney has to deal with your digital issues. They have to access your computer; they have to pay bills for you.”

Sharing the combination of letters or numbers that give access to a person’s most important financial details is turning out to be a lot harder than telling loved ones that everything they need to know is in a safe deposit box. What can people do?

We’re happy to say that we are ahead of the game.  We mailed all of our clients a copy of Before I Go and the Before I Go Workbook that covers this subject and many more.  If you want a copy, contact our firm at 757-638-5490, go to our website, or e-mail me at arie.korving@korvingco.com


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