It’s bigger than you think and overlooking it can create headaches for your executor – or attorney if you become incapacitated. We do so much online now. Receive a cheque? Upload a picture in your bank app and it’s deposited. Pay your taxes? Click there. Book a Maui getaway on points? Scroll here.
But only after you login, of course. Plus with two step authentications now you’ll need that temporary code that pops up on your phone.
And remembering all those passwords can be tricky. For executors or those acting with a POA – or even family members – navigating someone else’s digital world can be daunting. Especially if you don’t know what accounts exist or the usernames and passwords for them.
Contingency planning for this isn’t new, but surprisingly few of us do it. Or if we do it’s a bit here and a bit there. Yet the effort to do it properly is minimal compared to the potential problems it can prevent.
Creating a Digital Inventory
One of the most practical steps you can take is to create a digital inventory listing the key online services you use and how to access them. You don’t need to record every minor account you’ve ever opened, but it should include your most important platforms.
Start by listing:
Alongside the account names, include instructions on how access is managed, whether through a password manager, a secure document, or another method.
For security reasons, many people choose not to list passwords directly in a document. Instead, they provide instructions on how the executor or POA can get into a password manager or secure vault.
The Smartphone Problem
One emerging challenge in digital estate or POA planning is how much information now lives only on our phones. Many of us rely on our phones for:
If no one can unlock your phone, accessing this information may be extremely difficult. Executors or POA holders may find themselves locked out of accounts simply because the necessary authentication apps or recovery emails are tied to a device they cannot open.
And income often arrives now as a direct deposit: pay cheques, pensions, or dividends credited to investment accounts. On the other side are automatic debits: mortgage or rent payments, insurance premiums, car payments, condo fees, etc. Without a digital legacy plan managing (attorney) or winding up (executor) these flows can become very time consuming and even involve applications for court orders and legal expenses.
Solutions: High tech, low tech
One solution is a digital password vault which stores your encrypted usernames and passwords. It can automatically fill them in when you arrive at a sign on screen. Many Apple and Android devices have built in options for this. You only need to remember one “master password” or use biometrics (finger print or retina scans) to decrypt and access your credentials.
But they can also become a single point of failure if an executor or attorney doesn’t know that master password, let alone the biometric part. The good news is some vault providers and apps offer emergency contact features to address that.
The old school option is simply a list kept in a safe location known to a trusted contact. But, and this is critical, if you reset any passwords, you must update your list.
Worst case scenario: no POA
If incapacity strikes and no POA exists and user names and passwords are unknown, family or close friends may have to apply for a court authorized temporary or longer-term financial trusteeship. Without access the potential for damaging financial complications can grow rapidly. If you have not granted a POA it is critically important that, at minimum, you create a list of your digital details to prevent major problems.
Executor duties include digital
The administrative responsibilities of settling an estate today routinely include online activity. Some examples: paperless bank accounts, assets held in self-directed, online brokerages and paying bills (paperless again). And if you bought some Dogecoin back in 2013…where are they now? Other requirements include
A Task Worth Doing
Creating your digital inventory may reveal more than you expected. As the extent of your digital profile becomes clear think about how confusing it could be for someone else to manage without your help.
Preparing a digital legacy plan doesn’t need complicated technology or legal structures. It can be as simple as creating a list and updating it periodically. Doing so can spare your executor or POA holder hours of frustration and ensure your finances remain sound and your online presence is handled respectfully and securely.
In the end, this small act of organization is really about the same thing as all estate planning: making life a little easier for the people you care about.
Any view or opinion expressed in this piece are solely those of the Representative and do not necessarily represent those of Harbourfront Wealth Management Inc. The information contained herein was obtained from sources believed to be reliable, however accuracy is not guaranteed. The information transmitted is intended to provide general guidance on matters of interest for the personal use of the viewer, who accepts full responsibility for its use, and is not to be considered a definitive analysis of the law or factual situations of any individual or entity. Any asset classes featured in this piece are for illustration purposes only and should not be viewed as a solicitation to buy or sell. Past performance does not necessarily predict future performance, and each asset class has its own risks. As such, this content should not be used as a substitute for consultation with a professional tax or legal expert, or professional advisors. Prior to making any decision or taking any action, you should consult with a licensed professional advisor.