Can Password Protection Complicate Estate Planning?

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Password protection can cause complications for heirs and executors.

I am constantly amazed by the changes in technology.

I grew up when phones used to be wired to a wall (no, i am not kidding) and now they are essentially personal computers you can take anywhere.

Also, people can now pay others by transferring money from their bank accounts using apps.

As technology has progressed, people are accumulating digital assets.

According to a recent Barron article titled “How to Ensure Heirs Avoid a Password-Protected Nightmare,” digital assets require password protection to maintain security.

Password protection helps keep digital assets safe.
Proper estate planning can satisfy password protection of digital assets as well as provide access to the necessary parties.

Unfortunately, passwords can provide protection as well as frustration.

This is especially true with estate planning.

Prior to the digital age, executors would be able to simply sort through physical mail and paper files to gather information on the accounts, assets, and liabilities of the deceased individual.

Now this information is challenging to gather.

There is no paper trail and the digital accounts have password protection.

Often recovering these passwords requires more than simply knowing the account information.

Several require multifactor authentication, facial recognition, or fingerprints.

They are also further complicated by federal data privacy laws.

What can you do to minimize the negative impact of password protection on your executor and loved ones?

Begin by creating a list of all your digital assets.

These include social media accounts, traditional banking accounts, investment accounts, retirement accounts, money transfer accounts like PayPal or Venmo, Cryptocurrency wallets, nonfungible token assets, insurance polices and accounts, home and utility accounts, smartphone accounts, online storage accounts, video accounts, music accounts, photo accounts, subscription services, gaming accounts, and rewards or loyalty programs.


After you have compiled your list, include specific instructions for gaining access to these accounts.

Simply giving the username and password may be insufficient to grant your loved ones access.

After inventorying your accounts, provide instructions regarding what you would like to be done with each of them.

Do you want to transfer ownership?

Are you granting permission to retrieve and save data?

Do you want the account to simply be closed with no saved data?

The information and instructions should not be included in your last will and testament!

Because the last will and testament becomes a public document when it is filed with the court, including your information would undermine your password protection.

Instead, you would be giving everyone public access to your digital accounts.


Although certain platforms have processes in place for granting heirs access to assets, these typically include additional documents like a last will and testament, death certificate, a valid photo ID of the decedent, and signed letter from those named in the probated records outlining what is to be done with the assets.

Other platforms do not have processes in place for the transfer of the digital asset or accounts after the death of the owner.

This can complicate things further.

Although as compiling information regarding types of accounts and password protection information for digital assets and including them in your comprehensive estate planning is tedious, your loved ones will reap the benefits of your attention to detail.

Reference: Barron’s (Dec. 15, 2021) “How to Ensure Heirs Avoid a Password-Protected Nightmare”

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