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The Hidden Costs of Electronic Banking, Online Trading and Social Media

Elder law and estate planning attorneys are working with more tech-savvy clients than ever before.  I visited my parents recently, and my father proudly showed off their matching his-and-her iMac computers with 21" screens.  It dawned on me to ask why they needed two computers, but some things are better left unsaid.  I was just happy neither of them was using their iPads as chopping boards like the German guy in that viral video .

When the conversation turned to electronic banking and online trading, I asked whether the agents under their durable powers of attorney or their personal representatives (executors) knew their account numbers and passwords.  Their answers gave impetus to writing this article.

If you pay bills online or engage in online trading, you should share that information with the fiduciaries you have selected under your estate plan: the agent under your durable power of attorney, your personal representative, and your trustees.  Otherwise, those individuals will find it extremely difficult to manage your financial affairs when you are no longer able to do so.  Moreover, they would find it equally difficult to manage your social media accounts such a facebook, Google+, Twitter, LinkedIn, Yelp, YouTube, Instagram, and Foursquare without your user name and password.  In addition, what will happen to any of the family photos you have uploaded onto image hosting sites like flickr, snapfish, photobucket, Shutterfly, and Picasa?

Most websites require a certified death certificate and certified appointment from the Probate Court before they will allow a fiduciary to take control of an account, financial or social in nature.

The process can be even more challenging for the fiduciaries of an incapacitated person.  Often these individuals are barred from accessing electronic accounts until a specific court order is issued.  This situation creates unnecessary legal fees and filing fees for Probate Court, and it can takes hours to compile the necessary information to access websites.  All of this can be avoided.

The simple solution is to share the necessary information with the agent under your durable power of attorney, your personal representative, and your trustees.  However, this suggestion seems to fly in the face of the common wisdom espoused by the IT security folks: change your passwords every month and never share your passwords with anyone.

The people you have selected as your fiduciaries are the ones you trust implicitly.  That's why you selected them.  If you have any doubts, make the necessary changes.  Your fiduciaries cannot effectively execute their duties without having this vital information.

What, then, is the safest and most effective way to compile this information?  Considering recent online security breaches at companies such as TJX, Monster.com, AOL, and Fidelity National Information Services, the thought of uploading critical information into the “cloud” is daunting. IT expert and President of Trinity Consulting, George LaVenture, recommends that you avoid putting such vital information as user names, account numbers, and passwords on any electronic devices.  According to LaVenture, the security risk is simply unacceptable.

A hand written note stored in a safe deposit box or in a safe in your home works well, provided you update the list periodically, and that you give your fiduciaries the combination or let them know where you keep the key to the safe deposit box.  Also, be sure to place the names of anyone you want to have access to the safe deposit box on the bank’s access list.  Another solution is to send a copy of your list to your estate planning attorney, elder law attorney, or probate attorney to store along with your other estate planning documents: will, durable power of attorney, and health care proxy.

Recently, several highly secure password management companies have emerged.  While this solution allows for a compiling of passwords and accounts, it still requires that you give your fiduciaries the password and login information for the password management company's site.   For those of you, like my parents, who have embraced the brave new world and come to loath placing pencil to paper, open a Word file, type the information, print the document, and close the window without saving.

The list below shows some of the more prominent password management companies.

Keepass
1Password
LastPass
RoboForm

As testament to the necessity of writing this article and the urgency of the issues it raises, a company has formed that addresses this exact issue: Legacy Locker.  While performing virtually the same function as password management companies, Legacy Locker markets its product to consumers who are aware of their estate planning needs, with a few added features.

The company allows users to upload and store vital documents in addition to account and password information, and each account holder on Legacy Locker names a beneficiary who will receive the documents and information in case of incapacitation or death.  Where an account holder has died, Legacy Locker's verification process includes contacting two "verifiers" named by the account holder to confirm that the person is deceased.  Legacy Locker also requires a certified copy of the individual's death certificate.  Once this process is completed, the company passes on the information and documents to the named beneficiaries.

Interestingly, Legacy Locker's website is conspicuously silent on the verification process for incapacitated individuals.  As discussed above, this is a somewhat trickier situation given that no death certificate would be issued.

As of the date of this article, I have submitted the following questions to LegacyLocker and await a reply.  When/if they respond, I will draft and update.

1. How does the verification process work when the person is incapacitated?

2. How does the verification process works for incapacitated individuals who have executed a durable power of attorney that requires physician verification?

3. Assuming the durable power of attorney takes effect upon execution (the date it is signed), how does your company handle its verification process?

3. What do you do if the agent under a durable power of attorney is not the person named as the "beneficiary" of the account on your site?

The growing number of seniors who are taking advantage of the high-tech universe requires estate planning attorneys, elder law attorneys and probate attorneys to address with their clients exactly who will keep their vital account information and how that information will be transmitted and stored.

Estate planning and elder law attorney Matthew E. Jones practices law with offices in Marlborough and Boston, Massachusetts.  He is the author of numerous articles addressing complex legal topics in the areas of estate planning, tax law, and Medicaid planning.  You can reach Matt at [email-masked].

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