Adding a Password Manager to Your Estate Plan
Estate planning clients are routinely instructed to provide a panoramic view of their various accounts to next of kin so they will know where funds are located and where they need to go, rather than scrambling in the wake of your passing. Some clients may opt to proactively provide copies of keys, safe combinations, etc. to their loved ones, so they’re able to step in and gain access to important documents and account info without issue. However, providing a simple list of accounts and a set of keys may no longer be enough nowadays to allow our loved ones to step in and assist. Why? Because we live in a digital world and many people’s assets, including financial accounts, are accessed through online methods. This creates an issue if your loved one is attempting to access a bank account with a stale, paper list of account information. For example, what happens if your loved one attempts to log into your online bank account and encounters a security question? What happens if they confront multi-factor authentication where they need access to your cell phone to accept a verification code?
An Excel Spreadsheet is Not Enough
While dealing with digital accounts may seem fairly straightforward and addressed by simply creating an Excel spreadsheet of accounts and corresponding passwords, reality is oftentimes more complicated. Many websites, particularly banking sites, require people to update passwords, either after a set amount of time or if forgotten. This means that Excel spreadsheet of passwords will need to be constantly updated and managed, which can become a big hassle. In addition, maintaining such a spreadsheet on your home computer presents a significant security risk.
Access Via Court Order is Inefficient
In the event a loved one gets locked out of your online account, it may be possible to obtain a court order to gain access. However, doing so can be inefficient and expensive, especially given that it’s an entirely foreseeable situation you can take steps now to address and avoid.
Integrating a Password Manager in Your Estate Plan
There is a relatively simple solution to the issue of accessing a deceased loved one’s digital accounts – the use of a password manager. Basically, a password manager is a piece of software that enables someone to gain access to multiple online accounts with a single “master” password. That “master” password is a proverbial vessel for all your other passwords. This means someone can have different passwords for different accounts, but the “master” password supersedes them all and provides universal access. Many password managers offer support features such as auto-filling passwords when you log in to an account on your computer or phone and automatically generates and stores passwords when you’re prompted to change one, or when you’re signing up for a new service.
Password managers have been found to generally increase security by entrusting the information to a company whose primary concern and expertise is security, and by preventing the use of a single password across multiple sites. For example, Google Cloud’s recent Threat Horizons Report found that 86 percent of data breaches involve stolen usernames and passwords. In addition, password issues were identified as accounting for over 60 percent of compromise factors.
When you have a password manager in place and provide your loved one(s) access to the manager via the “master” password, it is possible to ensure they will have safe, secure and straightforward access to your accounts, should the need arise.
Some password managers offer a feature called “Emergency Access” where the owner can designate specific individuals, such as close family members, as “People I Trust.” If something happens to owner, an individual on the designation list, is authorized to submit a request via the password manager website for access the owner’s passwords. The owner of the password management account can add people (e.g., a child as they grow into adulthood) or remove people (e.g., an estranged family member or divorced spouse) at will. In addition, you don’t need to send out a new “master” password, in the event you ever change it.
It is also crucial to be cognizant of the proper procedures and terms and conditions for your various online accounts. At your death, it’ll be important that your loved ones are following the appropriate protocols to avoid certain legal pitfalls (e.g., fraudulent transactions).
There are many reasons for ensuring that your loved ones have the keys to your digital kingdom if and when something happens to you, and many ways to go about it. Using a password manager has the potential to provide a quick, relatively simple, and cost-effective solution that can go hand in hand with the objectives of your estate plan.
Although we cannot recommend a particular product, we highly encourage you to research the various options available for password management based on the considerations outlined above. If you are looking for additional guidance on a plan for your digital assets, contact InSight Law today to schedule a meeting with one of our legal professionals.