Legal: Leaving Things Behind

Are you a digital person? Well, more and more people are. There's no question that online banking and electronic bill payments make our lives a lot easier. But could your modern-world habits be creating a digital mess for your heirs when you die? If so, then consider revising your estate plans to include complete lists of online IDs and passwords for each of your accounts.

Concern about identity theft and security shouldn't go so far that family members are left in the dark once you're no longer there to guide them. And the problem isn't limited to your financial affairs. Your family could lose access to other potentially important digital files, too, including:

Photo collections
Calendars and address books
Email accounts
Security and wireless-networking software

What happens when you die? But getting access to your financial accounts will likely be the most critical issue if you die or become incapacitated. And delays in accessing your accounts and paying your bills can have financial repercussions. Unpaid bills could harm your credit rating. Insurance coverage could lapse. Bounced checks could result in unnecessary fees or even your bank accounts being closed.

You might be tempted to let your heirs figure things out on their own. And they certainly will eventually be able to access accounts - those they know about, anyway - using your death certificate and will, trust or court document proving their right to settle your estate.

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

Make a detailed list. The issue of passing on passwords is so important in this increasingly digital world that some estate planners are now asking clients to provide them with a backgrounder that includes their account numbers, online IDs and passwords. This document, which is updated annually, would then be placed in a sealed envelope in their office along with other estate-planning documents.

Of course, the problem with keeping anything at your lawyers is that they can move, retire or die like the rest of us. Make sure your executor is made aware of which lawyer you use to hold things on your behalf.

A lawyer's office is a good repository for such sensitive information, but it probably shouldn't be the only one. As numerous recent disasters have shown, one catastrophe can wipe out an entire area, so having copies of the document in more than one place makes sense.

Estate-planning organizer Marty Kuritz, the author of The Beneficiary Book, recommends making several copies of this electronic access document, storing one each in:

Your home safe
A secure, water-and fire-resistant source like an old ice chest
A secure off-site location such as a bank safe deposit box
An out-of-town location, such as with a trusted relative

Don't forget paper records. While you're at it, don't forget to include such non-digital items like wills, trusts, health-care directives, and powers of attorney. You should also make copies of passports, birth and marriage certificates, military discharge papers, naturalization papers, loan documents, deeds, insurance policies, warranty information, love letters, kids' artwork, and whatever else you deem important.

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.

You can also create a simple spreadsheet that lists accounts, account numbers, contact phone numbers, online IDs and passwords, he suggests. These might include:

Your computers and laptops
Bank accounts
Online bill-payment systems
ATM cards
Credit cards
Email accounts
Home-security systems
Keyless-entry locks
Cell-phone locks

Velma Carroll
Ten Star Financial Services
Burlington, Ontario
905.634.8834

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