Have You Thought About Passwords as Part of Your Estate Planning?

When most people think about creating an estate plan, they consider tasks like drafting a will or signing a power of attorney. But here’s one critical step you probably would never associate with estate planning–keeping track of your passwords. And even more importantly, making sure your future personal representative or agent can access those passwords when the need arises.

Lost Password Keeping $190 Million Away from Cryptocurrency Exchange Users

A recent story from Canada highlights the potential “worst case scenario” for passwords lost due to an owner’s death. This case involves the estate of Gerald Cotten, a Canadian citizen who reportedly died while in India this past December. Cotten ran a “cryptocurrency exchange” based in the Canadian province of British Columbia.

Even if you have never dealt with cryptocurrencies yourself, you likely have read about them in the news. A cryptocurrency is basically a complex computer program that creates virtual units that can be bought, sold, and used in a manner similar to traditional money. But cryptocurrencies rely on a decentralized ledger, rather than banks, to record all transactions.

Cryptocurrency users typically store their account information in a “wallet,” which can be either a software program running on a computer or a piece of hardware. These wallets do not store the actual cryptocurrency–that is the function of the ledger–but rather contain the decryption keys necessary for the user to receive or send currency units. If the password to the wallet is lost, it is virtually impossible for anyone to access the cryptocurrency associated with it.

And that is what apparently what happened in the Cotten case.

According to an affidavit filed by Cotten’s widow in a Nova Scotia court, Cotten was the sole director and officer of QuadrigaCX, which holds approximately $190 million worth of cryptocurrencies on behalf of its customers. The widow said her husband kept most of the exchange’s keys in offline hardware wallets–and she does not know their passwords. This means the exchange’s customers cannot withdraw funds from their accounts. The exchange has subsequently filed for creditor protection, according to the Canadian Broadcasting Corporation.

Keeping Your Passwords Safe– But Accessible to Your Estate

Setting aside the question of whether it is wise to invest your money with cryptocurrencies in the first place, the Cot ten stor y raises a more general concern regarding the use of passwords. Most of us carry around laptops and smartphones that rely on encryption to keep our data secure. The problem is that if someone needs to access that data after we die, they may be unable to do so unless we leave some record of the passwords behind.

One way to mitigate this problem is to use a password manager. This is a program that allows users to store all of their passwords in a database. Many password managers are “cloud” based, so the database is actually stored on a third-party server. The user then only needs to remember a single “master” password to access the database and retrieve the individual passwords stored as needed.

For estate planning purposes, you should consider keeping a written copy of your master password in a safe place that your personal representative or family can access after your death. If you need advice on this, or any other estate planning subject, contact the Kuhn Law Firm, P.A., in Fort Myers today at 239-333-4529.

Kuhn Law Firm


6720 Winkler Road
Fort Myers, FL 33919