Services like Legacy Locker help entrepreneurs with digital estate planning and password management.
After the birth of his first child, Sol Lipman, the 36-year-old CEO of 12seconds.tv, began contemplating what would become of his business if something were to happen to him. Lipman founded 12seconds.tv, an online video hosting service based in Santa Cruz, California, two years ago. Although he managed eight employees, he was the only one with access to much of the company's important digital information, such as passwords to the servers, employee payroll and benefits accounts, and the corporate bank account. "I do it all," says Lipman. Not only that, but his e-mail inbox contained a lot of crucial information. If he weren't around, he worried, how would anyone get access to this stuff?
These days, much of what makes a company tick is wrapped up in digital files that entrepreneurs go to great lengths to keep private. And at many small companies -- especially those, like Lipman's, that lack formal IT and HR departments -- the owner is the only one with access to important login information that is necessary to keep the business running. Without a plan to pass on those digital files and passwords, sorting through an entrepreneur's online estate after he or she is gone can be time consuming and frustrating for loved ones.
If you already have a will, your attorney can draft an addendum that spells out who should receive the keys to your various digital accounts. However, a will is not the place for usernames and passwords. "You don't want to file that information in a will, because it becomes a public document," says Colonel Betz, a partner who specializes in estate planning at the law firm Perkins Coie. Some estate planners have begun developing ways to pass on this sensitive information. At Perkins Coie, a client's login information can be filed in a separate document, called a data form, that will be given to the executor of the estate upon the client's death.
Visiting your estate planner every time you change a password or sign up for a new online service probably isn't feasible. But there's always pen and paper. You could even store the information on a USB flash drive and keep it in a safe-deposit box or a safe in your home. "At the very least, you want to write down a list of everything that you have passwords for," says Mark Gotlieb, an attorney at Gotlieb & Associates, a Miami law firm that specializes in estate planning. You should also include instructions so your successor knows, say, which e-mail folders contain sensitive company information and where to find certain files on your laptop.
It's important to update the document regularly, says Gotlieb, and to make sure someone you trust knows where to find it if the need arises. He advises telling more than one person how to find the data. "If something happens to you and your business partner, and your information is stored at work, your family might not know that," Gotlieb says.
There's also a new service that may help. For $30 a year or $300 for a lifetime membership, a website called Legacy Locker helps you pass on your digital files and accounts. You enter usernames and passwords and designate beneficiaries for each account. You can also upload digital files and leave instructions (and farewell notes if you are feeling sentimental) for your heirs. The service requires you to name someone responsible for confirming your death. (This individual must submit a death certificate to Legacy Locker.)
Lipman decided to try out the service after working with an estate planner to draft a traditional will. He gave his Legacy Locker password to his CTO and, because he and the CTO often travel together, named his software engineer beneficiary of 12seconds.tv's server passwords, administrative logins, and website source code. Lipman's wife is listed as the beneficiary of his personal accounts. "If something were to happen to me, I want to make sure someone has access to those things quickly," says Lipman, "without having to appear before a judge or check in with an executor of a will."