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Communicating Financial Information to Your Family and Heirs

I recently revised and update my plan for communicating information about my finances and online life to my three sons. I did this to make it easier on them when I die and to make it easier on me if, before I die, I become ill to the point that I cannot handle my own affairs.

Creating and implementing a plan to pass financial information to your family in case of death or disability is different from having a will and related estate planning documents but is almost as important.

First, consider that if you have taken the steps to establish certain of your heirs as immediate “payable on death” beneficiaries of your various investment assets and financial accounts, these assets can pass directly to those beneficiaries without probate and with very little delay and red tape. The problem is that these beneficiaries (my sons in this case) need to know what accounts exist and how to obtain the information needed to access these accounts.

Second, if you are alive but even temporarily unable to manage your own finances, someone has to pay your bills, etc. My sons need to know how, where, when, and by what means these bills are to be paid.  Even if they have to take the step of establishing a formal guardianship, the financial information has to be readily available to them.

When one of my banks recently offered me a free Safe Deposit Box, I knew it was time to improve and enhance the transfer of financial information from me to my sons when the time comes.

First, I created a two-page “death or disability” document that: (a) reveals my “master password”; (b) provides instructions on how to use the master password to access detailed information about my financial life that is stored or accessed in the cloud; and (c) expresses my wishes about what to do immediately after I die as well as my wishes for them in the future.  I placed this “death or disability” document in an envelope marked “Open if I am dead or disabled.”  The “death or disability” envelope was then placed in the safe Deposit Box.

Second, I had a meeting with my sons to explain what I had done and to confirm that one of them would have custody of a key to the Safe Deposit box and be recognized at the bank as an authorized user of the box.

Third, I updated two documents stored in the cloud.  One of the documents lists all of my investment and other financial accounts and states what their respective purposes are.  The second document explains how to access the accounts online (in person or otherwise) as well as identifying the beneficiaries of each account.  I wanted to store this information in the cloud so that if I needed to update any of the information, it would not require another visit to my safe deposit box. These documents do not contain online access credentials, however.  That is where the “master password” comes into play.

For a number of years, I have used a secure password manager to store and manage all of my online access credentials, of which there are dozens. With one small exception, I do not have any investment accounts, retirement accounts, or bank accounts that cannot be managed online. Therefore, I maintain all of our user names and passwords in an encrypted password vault using LastPass, which is available as a browser extension and as a smartphone app. This allows me to use very strong passwords for all of my online accounts because I don’t have to remember them. I only have to remember the “master password” for LastPass. The encrypted master password would take years to crack. Every account has its own separate password. I do not use the same password on different accounts. Thus, my sons only need to know the master password to access everything in my online life, including my personal email and cloud storage accounts.

I feel much better about things after having taken these steps.  If things head south for me and/or when my time here is up, I do not want my lack of preparation to add stress to those I leave behind.

So, in summary, this is what I recommend to others who may be similarly situated:

  • Create a detailed record that identifies all of your financial and investment accounts by account location and account number.  If possible, keep these records in the cloud so that you can regularly update them.
  • Create a secure location where information necessary to access your accounts (e.g., login credentials) is recorded. So that you can add accounts and/or change credentials easily, preferably your login credentials will be stored in an online password manager (like LastPass) that requires two-factor authentication to access.  Your password manager should also store login information for your email and social media accounts.
  • Place an “In case of death or disability” document in a secure location (e.g., a safe deposit box).  In this document, explain what you have done and provide the master password to your password manager.
  • Give a trusted relative (or estate planning attorney) a key and access authorization to your safe deposit box.  Alternatively, depending on how much you can rely on your relative to keep your information safe and secure in his or her home, give that relative the “In case of death or disability” document directly.
  • Regularly update the cloud documents with current account information so that nothing is missed when the need for help arises.

I am confident that you will sleep easier having done this.



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The post Communicating Financial Information to Your Family and Heirs was written by MJP and appeared first on Go To Retirement.

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Communicating Financial Information to Your Family and Heirs


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