Interactive Investor

Digital banking revolution causing nightmares for inheritance

2nd September 2020 15:06

Stephanie Baxter from interactive investor


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Handling personal finances online means leaving fewer traces when we die, experts warn.

The rise in digital banking is causing increasing havoc when people pass away, as their loved ones struggle to track down assets, research shows.

It has become tougher for people to find the deceased’s digital financial accounts, according to 88% of probate lawyers in a survey by Direct Line Life Insurance. 

The research also found that executors of wills have struggled to detect all their loved one’s financial accounts in more than a quarter of cases in the past 12 months. 

Separate Direct Line research in February found 38% of 2,007 individuals did not know where a loved one held all their financial accounts such as their bank, savings account or ISA.

Digital banking and the rising popularity of apps to manage money means that people are less likely to have printed statements and debit cards, which makes it difficult to track down accounts and financial providers.

Lack of physical cards was named the biggest barrier to accessing financial accounts, followed by increased use of biometric security such as fingerprints and facial recognition for accessing phones or tablets. 

Almost half of lawyers said the higher number of providers will make access harder, as will accessing email accounts to trace correspondence from providers. 

Just over 40% said lack of discussion with loved ones was a factor, while 20% said the individuals themselves forgetting where they hold money was an issue.

Direct Line business manager Chloe Cooper said it is important to have difficult conversations with loved ones before the worst happens.

"People now have many different accounts across several financial providers. The most important thing is to tell person you have appointed as the executor of the will so that they know which online account you have. If the worst should happen, then having knowledge of where money is stored makes that process a lot easier.”

Individuals can leave details of online accounts in a sealed letter alongside their will and addressed to their executors, said Coop Legal Services head of legal practice probate Gavin Holt.

Holt says: “If you have an account with an online start-up bank and you access it via email and there's no paper whatsoever, the only way that anyone can know that existed is through your computer.

“But as long as the executor knows that little bit of information, they can find what address they need to write to, and send them a copy of the death certificate. You don’t need to give the executor your passwords and usernames.”

For those already faced with the situation where their loved one has passed away and they are struggling to trace online accounts, one option is to conduct speculative searches such as sending copies of the death certificate to several financial providers.

However, Holt says this is a lengthy process and may not always work.

Another increasingly popular alternative is for probate law firms to use a third-party search service which can electronically send copies of the death certificate to providers, he added.

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