So you have a will and a trust and are generally doing a great job planning for the eventual distribution of your estate. You are diligent about keeping these and other important papers in a place where your family can find them in the event you would die or become incapacitated. But what about your banking information or records from everyday transactions?
The internet has changed the game of estate planning and estate administration. If you are reading this blog I would venture to guess that you are well versed in using a computer and the internet and, like me, do an awful lot of everyday things online. Despite making the handling of finances easier, electronic records have spawned a number of new problems for people trying to handle the affairs of loved ones who are suddenly incapacitated or have died. Some legal, others technical, the problems are all headache inducing because lurking behind simple solutions are potential pitfalls which can have devastating effects.
Maybe your daughter happens to know that you use your sister’s address as your password or you gave your son your login information to handle your financial affairs just in case you lapse into a coma following a car accident. These informal solutions may actually do more harm than good because, without specific authorization or a court order, accessing personal records is illegal and could lead to some pretty harsh penalties. A trusted son or daughter can still run into legal trouble after another sibling or beneficiary accuses them of mishandling your funds. Even if these legal issues are avoided, an informal representative is still unable to do certain things like sign a tax return.
An excellent solution to prevent many of these problems is a durable power of attorney. Assigning an agent the responsibility of your affairs, combined with providing a complete list of the accounts, usernames, passwords and the answers to security questions, will allow your representative to handle everything in a streamlined fashion. Leaving this personal security information around or giving it out to another does increase your possibility of identity theft but taking some basic precautions will keep this exposure to a minimum. Some simple solutions like not keeping the information with your computer, maintaining it in an encrypted format, or giving it to your agent without your actual name on it will help. There are even a few electronic solutions, such as using a password storage application or an online service like legacylocker.com, which can keep your information secure, yet accessible to your agent.
There is no perfect solution and your approach will vary based upon how much you use electronic services to handle your affairs as well as the computer savvy of your agent. Just taking a few minutes to plan for the possibility that another may have to take over your matters will save your heirs a lot of time and aggravation. Now if you can just remember to clear your internet history on a regular basis so there will be no posthumous jokes about your daily addiction to TMZ you’ll be able to rest in peace.
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