Can Password Managers Aid with Digital Asset Management?

Several tools might make it easier for you to manage the access to your digital accounts and pass that information to your executor and heirs.

The standard tool for a few years has been the password manager. This is a software service that can manage and protect passwords or other access information for all your online accounts.

After installing software, you establish one master password for the password manager. This should be a long, unique phrase or sentence. The longer the better, say the security experts.

Then, you enter in the password manager the details of the online accounts you want protected by it. The software creates for each account a unique password that is extremely hard to guess or crack. Each account has its own access information created by the software. You usually don’t even know the passwords.

A good password manager changes a password when there are indications it might have been compromised, and some change the passwords regularly.

No one else, including the company that developed the software, knows the master password or can learn it. If you lose or forget the master password, it can’t be recovered. Most experts recommend putting the master password on paper and storing it in a secure place, such as in a fireproof home safe, a safe deposit box, or a lawyer’s office. You might want to securely store more than one copy.

There are free password managers, such as Apple’s iCloud Keychain and Google’s Password Manager. The disadvantages of these are that they tend to work best only with software and web browsers designed by the firms that created them.

The alternative is a full-featured, third-party password manager developed by independent companies. These work well with all or most available software and platforms. Each has an annual fee that typically is less than $50.

The disadvantage to these managers is that you have to enter into the software all your current account information and passwords. New accounts must be entered as you open them.

The most highly-regarded of the third-party password managers are 1Password, Dashlane and LastPass.

Unfortunately, LastPass was hacked in August 2022 and details of the hack were published in early 2023.

The good news is the hacker wasn’t able to obtain the master passwords. But the hacker may be able to guess the master passwords of customers who didn’t use long, complex passwords.

Security experts seem to agree that 1Password and Dashlane have better protections than LastPass. Bitwarden also is considered good and is free.

Password managers still are a good idea, but they should be combined with two-factor authentication, such as having the website send a one-time code by text to your smartphone after the password manager logs you into your account.

When you use a password manager, you might get away with leaving the executor only the master password instead of all your passwords. (You’ll still need to leave an inventory of all your accounts, so the executor and any key family members know all the electronic assets they need to access and manage.)

If you want the executor to have access only to some digital assets and other people to have access to other assets, you might need to establish a separate master password for each of the different types of accounts or use different password managers for them.

It is likely that passwords will be relics in a few years.

Passkeys are here in a limited way and are likely to become widespread.

A passkey has two components. One is on your device or something like a thumb drive that can be moved from device to device. This component is a record of one of your biometric features, such as fingerprint, retina, or face. Each time you try to log into an account, it verifies that you’re the authorized user.

The servers on the account providers have similar information and match that with what’s on your device each time you log in.

Limited versions of passkeys now are available on some Apple, Google and Microsoft products. Expect them to become common in the coming years.