Does Your Estate Planning Include Your Online Account Passwords?

Your estate plan should include a way to access your passwords
Your estate plan should include a way to access your passwords.

With most bank customers receiving financial statements electronically instead of on paper, there are some actions you need to take to be sure your online accounts are incorporated into your estate planning.

Kiplinger’s recent story, “Your Estate Plan Isn’t Complete Without Fixing the Password Problem,” says that having online access to investments is a great convenience for us. We can monitor bank balances, conduct stock trades, transfer funds and many other services that not long ago required the help of another person.

The bad thing about these advancements, is that they can make for a very difficult situation for a surviving spouse, the executor of your estate, or the successor trustee of your living trust,  attempting to determine where the assets of a deceased person are held.

This was in the news recently, when the founder and CEO of a cryptocurrency exchange died unexpectedly. Gerry Cotten didn’t share the password to the exchange’s cold storage locker—leaving $190 million in cryptocurrency belonging to his clients totally inaccessible. Investors may never see their funds again.

You can see how important it is that your estate plan provides a way for someone to access your online data, if you become incapacitated or die. This is also true for your other digital assets such as email and social media accounts. It can be a heart breaking situation for a family who wants to access photos and other online memories left behind by a deceased loved one if they are unable to do so because they don’t know the passwords.

The easiest, but least secure, answer is to just give your passwords to a trusted family member or the person you have appointed as executor of your estate or successor trustee of your living trust. Remember, they’ll need the passwords to access your online accounts. They’ll also need a password to access your email, where electronic financial statements are sent.

Another option is to write down and place all passwords in a safe deposit box. But you’ll need to let your agent under a power of attorney, the executor of your estate, or the successor trustee of your living trust, know that the passwords are in your safety deposit box so that they may take steps to access them in the event you are deceased or incapacitated.

But the problem with storing your passwords in a safety deposit box is that it requires diligence to keep the password list updated.

Another option to consider is a password manager, which is an app that keeps track of all your passwords across all your devices. With a password manager, you, or anyone who needs to have access to your passwords, will only need to know one password that, when used, will give access to all your other passwords. That one password may be kept in a safety deposit box, a safe at your home, a locked file drawer, or any other secure location. You should share the password, or the location of the password, with the trusted people who will handle your affairs if you should become incapacitated and after you die.

Finally, your estate planning documents should include provisions that authorize your agent under a power of attorney, the executor of your estate, or the successor trustee of your living trust, to access and manage your social media and online accounts.

Reference: Kiplinger (April 19, 2019) “Your Estate Plan Isn’t Complete Without Fixing the Password Problem”

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Living Wills and Medical Powers of Attorney – Why They Are Important

Medical Power of Attorney agent discussed health care decisions with family member
It is important to discuss medical preferences with your medical power of attorney agent.

Living Wills (referred to in Texas as “Directives to Physicians and Family Members”) and Medical Powers of Attorney are important if a person becomes incapacitated, whether that status is permanent or temporary. These are part of a comprehensive estate plan, and you’ll want to take care of this before a medical emergency arises. That’s the recommendation from the McPherson Sentinel article “Advance health care directives important to all adults.”

Documenting your wishes about future health care lets a cognitively healthy person express his or her wishes with a clear perspective. Unfortunately, only one in four American adults has their medical power of attorney and/or living will in place. Many wait to begin the planning process until they are in their 50s or 60s. The problem is, life doesn’t have a plan. Tragedy can strike at any time in life. A serious illness or an accident can occur leaving the family wondering what the person would have wanted.

You do not need to be in an “end of life” situation for a medical power of attorney to come into play. The agent you name in your medical power of attorney makes a health care decision for you any time you cannot communicate your wishes, yourself. This could happen during a routine medical procedure that is not life threatening.

The living will, on the other hand, sets out your wishes in the event you have a terminal condition, death is imminent, and you do no want your life to be prolonged by artificial means. Artificial means may include, among other things,  being placed on a ventilator or receiving artificial nutrition and hydration.

Under Texas law, your agent under a medical power of attorney may make the decision to withhold or withdraw life support, unless you have limited that power in the document. That is why a living will or a directive to physicians may not be legally necessary, if you have named an agent in a medical power of attorney. But many people opt to have a living will in addition to a medical power of attorney. They would like to give their own instructions for end of life decisions as opposed to putting the burden on the agent named in the medical power of attorney.

One thing to keep in mind is that a medical power of attorney is different from a financial durable power of attorney (in Texas – the Statutory Durable Power of Attorney), which gives a person the right to act as another person’s agent and conduct business and financial matters on his or her behalf.

It’s very important that the people you designate as agents in a medical power of attorney or living will are told that they have been named. You should designate an initial agent and then one or more successor agents in case the first person named is unable to act. Your agents need to fully understand what your wishes are and what kinds of treatments are acceptable to you. Communication is the key and you need to make sure that you and your agent have discussed your preferences.

The people you select as agents under your medical power of attorney should also understand that health care decisions for you need to be made according to your wishes and not their wishes or the wishes of other family members.

These documents should be prepared for you as part of your overall estate plan, with the guidance of an estate planning attorney. Be aware that the laws vary from state to state, so you’ll want to work with an attorney who knows your state’s laws. If you relocate to another state, you should update your medical power of attorney and living will to conform with that state’s laws.

Finally, make sure that your medical power of attorney and living will are located in a place where they can be easily found in an emergency.  Your agents should each have a copy they can bring to the hospital, if necessary. The important thing is that the medical power of attorney and living will can be found and used in a time of crisis.

Reference: McPherson Sentinel (April 17, 2019) “Advance health care directives important to all adults”

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Social Security Benefits – What Happens When a Spouse Dies?

Social Security benefits can change after the death of a spouse.
What happens to Social Security on the death of a spouse?

Imagine both spouses are receiving Social Security when one spouse dies. What will happen with their Social Security checks?  How does the survivor obtain death certificates? How complicated will it be to obtain survivor benefits?

First, what happens to the Social Security monthly benefits? Social Security benefits are always one month behind. The check you receive in May, for example, is the benefit payment for April.

Second, Social Security benefits are not prorated. If you took benefits at age 66, and then turned 66 on September 28, you would get a check for the whole month of September, even though you were only 66 for three days of the month.

If your spouse dies on January 28, you would not be due the proceeds of that January Social Security check, even though he or she was alive for 28 days of the month.

So, when a spouse dies, the monies for that month may have to be returned. The computer-matching systems linking the government agencies and banks may make this unnecessary, if the benefits are not issued. Or, if the benefits were issued, the Treasury Department may simply interrupt the payment and return it to the government, before it reaches a bank account.

There may be a twist, depending upon the date of the decedent’s passing. Let’s say that a spouse dies on April 3. Because he or she lived throughout the entire month of March, that means the benefits for March are due, even though they are paid in April. If a check was not issued or sent back because of the date, it should eventually be reissued.

Obtaining death certificates is usually handled by the funeral director, or the city, county or state bureaus of vital statistics. You will need more than one original death certificate for use with banks, investments, etc. The Social Security office may or may not need one, as they may receive proof of death from other sources, including the funeral home.

If you were already receiving spousal benefits on the deceased spouse’s work record, Social Security will in most cases switch you automatically to survivor benefits when the death is reported.  Otherwise, you will need to apply for survivor benefits by phone at the 800 number for Social Security or in person at your local Social Security office.

If you had only received a spousal benefit as a non-working spouse and you are over full retirement age, then you receive whatever your spouse was receiving at the time of his or her death. If you were getting your own retirement benefits, keep in mind that you will not receive a survivor benefit in addition to your own retirement benefits. Social Security will pay the higher of the two amounts.

Survivor benefits will begin effective on the month of your spouse’s death. If your spouse dies on June 28, then you will be due survivor benefits for the entire month of June, even if you were only a widow or widower for three days of the month. No matter what type of claim you file, you will also receive a one-time $255 death benefit.

Reference: Tuscon.com (March 13, 2019) “Social Security and You: What to do when a loved one dies”

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