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How To Create Your ‘Digital Estate Plan’

Published on: Apr 17 2022
estate planning

In last week’s edition of Retirement Watch Weekly, I explained why your estate plan should include digital assets. In part 2, below, I share some pro tips on how to go digital in your plan.

A surprise to many people is they don’t own most of the books, music, movies and more that were “purchased” online and downloaded.

You didn’t really buy the assets, after all.

You bought only a license to use them, and the license usually expires with your death. Most of the time, you can’t bequeath them to survivors.

But be sure the executor of your estate plan knows about them, so recurring charges can be avoided.

For other digital assets, a good inventory lists the name and web address of each account or asset, and any account number.

Include the full name that’s on the account, whether it is your name, your spouse’s name, both names, or a business name.

The inventory also should include all the information needed to gain online access, such as a username or personal ID and a password.

If two factor authentication is used, explain where the authentication is sent.

Many digital accounts also have you answer security questions. Include these in the inventory.

Add any other helpful information or comments to the inventory.

You can make everything easier on your survivors and on yourself by using a password manager.

A password manager is a software service that can manage and protect all the online accounts of the user.

The manager creates for each account a unique password that is extremely hard to guess or crack.

Each account has its own access information created by the software.

You usually don’t even know the passwords.

A good password manager changes a password when there are indications it might have been compromised, and some change the passwords regularly.

You establish one master password for the password manager. This should be a long, unique phrase or sentence.

The longer the better, say the security experts. Then, keep the master password secure.

The password manager is set up so that no one, including the company that developed the software, knows the master password or can learn it.

If you lose or forget the master password, it can’t be recovered.

Most experts recommend putting the master password on paper and storing it securely, such as in a fireproof home safe, a safe deposit box, or a lawyer’s office.

There are two types of password managers to consider.

There are free ones, such as Apple’s iCloud Keychain and Google’s Password Manager.

The disadvantages of these are they tend to work best only with software and web browsers designed by the firms that created them.

The alternative is a full featured, third-party password manager.

These are developed by independent companies and work well with all or most software and platforms available.

Each has an annual fee that typically is less than $50.

The disadvantage to these managers is that you have to go through a onetime process of entering all your current account information and passwords into the manager and enter the information for any new accounts you open.

The most highly regarded of the third-party password managers are 1Password, Dashlane and LastPass.

When you use a password manager, you might get away with leaving the executor only the master password instead of all your passwords.

(You’ll still need to leave an inventory of all your accounts, so the executor of your estate plan and family member know all the electronic assets they need to access and manage.)

If you want the executor to have access only to some digital assets and other people to have access to other assets, you might need to establish a separate master password for each of the different types of accounts… or use different password managers for them.

*For part 1 of this story – Digital Assets: Why They’re So Important for Your Estate Planfollow this link.

Editor’s Note: A crippling law – one that most Americans haven’t heard about – gives the government the green light to literally rob your retirement blind. Click here to learn my full findings… and, most importantly, what you can still do about it.



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