In the Age of Access by Password, Are Post Death Asset Transfers Really THAT Important?

Today many people access most of their accounts – bank accounts, credit card accounts, investment accounts, mortgage accounts – and more online via password access. Many professionals advise that in planning for incapacity or death, that folks should keep a list of passwords to share with their loved ones or trusted agents who will need to access these accounts and make financial decisions in case of incapacity or death.

I am uncomfortable with advising on sharing passwords for many reasons, but one of the most important reasons is that, seemingly as a result of simplifying digital asset estate planning down to ‘share your passwords’, I see a trend in people neglecting the post death transfers of ownership for these accounts.

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This is what I see happening:

Someone who is grieving comes to me to get clarity on what they need to do given their loved one’s death – maybe a parent, child, or partner.

During my meeting with them, we review an inventory of what their family member owned or kept at the time of death.  I walk them through the various processes they need to follow to close accounts, transfer title of assets, dispose of things or pass them on.  People are pretty accepting of the fact that to transfer or clear title to real estate you follow the procedure of the county government; that ownership of vehicles need to be processed through the DMV. However, there is often disbelief or hesitance in following the advice that one needs to go through a formal procedure to transfer an account, be it credit card, bank or investment, when they have in their possession the “log-in” information to access that account online.

As an estate planner, you might assume that I advocate that post death transfers of ownership are important because they are my business. It is true, but generating business is not my concern.

What I find upsetting is a trend that people are unable to defend their assets, when they only take over the password access to the account, instead of taking the time to legally transfer ownership of the asset.

If my husband passes away and I just use his password to continue banking online the way he did while alive, without reporting his death to the bank, I might be ok for a while. It might even be a long while. However, when fraudulent transactions occur, or a credit card needs to be reported as lost or stolen; I will not have standing to make that claim. As the account is still owned by my deceased husband, he has standing to defend it. Though the financial institution’s customer service may work with me to get ownership at that point, it will be much harder than if I completed the transfer of ownership of the asset as close to time of death as possible. It’s worth noting also that I might not have standing to fight fraudulent charges if I wasn’t the owner of the account when they happened.

A post death transfer of asset, like a bank account, credit card or investment account involves some paperwork, usually submitting a death certificate, and maybe a phone call. I appreciate it’s not fun to call up strangers and talk about the death of a loved one, but it is an important part of protecting assets after someone passes away….. even if you have the password and can ‘just log-in’.

If the account is co-owned and you are using your own log-in to access a bank account that has both your and your deceased loved one’s name on it, clearing title, or taking a deceased person’s name off of an account is also an important step.  Pretending to be a deceased person for financial gain is an age-old fraud. We have many laws and procedures in place for traditional assets to make it harder to assume the identity of a deceased person. When it comes to digital assets, clearing title to assets we access primarily online, or closing online accounts should not be overlooked as an important part of fraud prevention.