What happened to the P2P sharing
Today it should be about a more serious topic. The question: "What actually happens to your P2P accounts when you die?" The reason for this article were some reader questions and also the last seminar on the subject of high dividend values by Luis Pazos, at which I was a guest. There, too, there was a lot about investments abroad and at the end I asked the question of how assets are protected in the event of death. There was no helpful reaction from any of the participants, but there were some serious faces, which makes it clear that this is a great risk to your assets. This topic is essential, as you will see for yourself later in the article. So I'm pretty sure that almost everyone will end up taking something for themselves.
Why is this question so important?
Right, because nothing ever happens to us anyway, does it? I usually think so too. A nasty fever (presumably dengue fever) on the Indonesian island of Lombok changed my opinion in 2016. I felt pretty bad there for weeks. I had an extremely high fever, we couldn't do anything with us and on a few days moving around on my own was almost impossible. In addition, I was (as always) far from any medical care. At that point in time I had never addressed the subject, which I became painfully aware of when I did not know when my condition would improve again. If it had gotten me there, almost nobody would know anything about my investments abroad. And even those who knew would not have known how to get it or how to deal with it.
Source: Sunrise in Gerupuk Bay on Lombok. Far from any civilization
Of course, we often talk about passive income, increasing financial freedom, etc. But if we're honest with ourselves, who are we saving and investing for? Most of us will (hopefully) not consume what we have invested until the time we die, and so it is also our descendants and relatives for whom we co-invest. The wealth we save until death can make a blatant difference in the lives of our loved ones and it would be absolutely negligent to just throw them away. Because that's exactly what we do if we don't prepare someone to deal with the situation and don't take action that covers the case.
So in summer 2016 I decided to build a process that ensures that my relatives know how to deal with my investments and P2P loans in particular. And I would like to share this process with you today.
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But will the platforms notice my death or not?
Some investors naturally seem to succumb to this misconception, since it is the case in Germany (even if it can take years). In fact, however, this is not the case, since foreign bank accounts are linked to the respective virtual accounts for the platforms themselves. I asked some platforms and here are two examples of how they deal with the death of an investor:
"According to the Civil Law of the Republic of Latvia (where VIAINVEST is headed), if a person does not have any inheritors or no inheritors apply for the inheritance within one year, the property of this person automatically is being transferred to the state of this person's citizenship. VIAINVEST is obliged to hold on to investor account and funds until the state reaches out to us, with an official confirmation of the death and the confirmation of inheritance, to transfer the funds. Please keep in mind that this is extracted from Latvian legislation and procedure may vary in different countries, as inheritance cases are mostly managed in accordance with a country of investors citizenship. "
“In such cases we look at the circumstances. We hold on to the funds until court appointed representative or heir informs us about fund release. "
Translated, the whole thing means that the platforms do nothing as long as nobody claims the accounts. Because there is a reporting obligation like ours in the Baltic States, but not for foreign accounts. The problem here is, with 10-20 P2P platforms, your relatives will have a lot of fun here. In addition to this, there may be other virtual accounts, crypto wallets and the vulture knows what. Think carefully about whether you want to burden your relatives, who have no idea of what you do there every day, to do this.
My workaround for this case
To me the answer was straightforward. In this situation, the people around me certainly have other things to do than deal with countless platforms. So I thought about the following things you can do for yourself without any problems.
1. Pick 1-2 trusted people and prepare them
First of all, you have to see who the people are who will manage your assets in the event of your death. In many cases this will be the spouse or life partner (but better yet an additional person). These people need to know what to expect. So you can't avoid giving them a crash course on how to deal with the individual investments. At the very least, you should explain to them how they can continue to manage and pay out the assets.
I am very fond of processes, so I wrote guides. So if the person I trust changes, the new one (if there is one) only needs the instructions. Conveniently, I also have a blog about P2P loans 🙂
2. Granting power of attorney
The linchpin for your bereaved are your German bank accounts and custody accounts. Enter powers of attorney for your relatives here. There are different variants here, but I'll show you the way to my house bank, the DKB. A distinction is made here between 2 different types of power of attorney.
- Power of attorney in the event of death
- General power of attorney
Source: Types of power of attorney at the DKB
Power of attorney in the event of death:
In the event of your death, the authorized representative can access the bank account here on presentation of an official death certificate. This is good if you are married or live in a large family group.
General power of attorney:
In the case of the general account authorization, the proxy receives his own access, his own cards, etc. during your lifetime if you want. This variant is well suited for people who only live in a normal partnership. Because here it is not so easy with the death certificate (as far as I know). Since this is the case with me, I also went this way.
3. Access and SPoC
Now your relatives already have access to your bank accounts and custody accounts. But how do you get to the P2P platforms and all the access points? Here you need a so-called SPoC, a “single point of contact”. So just one place your loved ones have to turn to for access. I chose the keyword safe LastPass for this, because all my personal access data are stored here and the basic version (which is completely sufficient) is free of charge.
LastPass now has a great feature called “Emergency Access”. Here you specify one or more people who may apply for this. The emergency access ensures that your entire safe is released to the specified persons if you do not object to the requested emergency access. I have been configured to grant emergency access if I don't answer after 48 hours.
Source: Screenshot from the emergency access function from LastPass
I've grown quite fond of LastPass over the last few years, because it not only ensures security with this unsightly topic, but also makes my everyday life much easier with its integration on mobile phones, notebooks and tablets. I'll show you alternatives to LastPass right away.
4. The emergency document
Over 500 accounts are now stored in my LastPass vault. Someone who does not find their way there will perish. However, LastPass offers a full-text search. Here you can give an element a unique name, which your relatives only have to enter and they get directly to the central point. In turn, I have linked this to a document in which ALL the important things are. For me it's a document in Evernote, but it can be put anywhere else. It is only important that the link from LastPass to the document works.
Source: The way to the emergency document. One word, one result
Keep your data up to date
So that was first a lot of material that needs to be recreated and which will require a lot of brainpower. Now comes good news and bad news. As always, the bad one first: Once put on, it doesn't mean that the work has to stop, because the emergency document must always be kept up to date. Your relatives won't benefit if you created a manual 10 years ago, of which 80% of the content is out of date. So make it a habit to check this data quarterly (or whenever). Just do it!
But now there is good news too. Through this process you have created automation, which enables your relatives in the event of your death to log into the P2P platforms independently with your data and to pay out to the normally connected accounts, as if you were still alive. So you don't have to spend weeks struggling with the platforms' legal departments. Because I suspect it won't work that smoothly anywhere.
Alternatives to LastPass
If you don't trust LastPass for whatever reason, here are some tools you can use:
I used KeePass for a long time myself, but switched to LastPass for ease of use and convenience. But that was several years ago, maybe KeePass has changed in the meantime. SecureSafe was recommended to me by Daniel Korth, the financial rocker. This software costs money from 50 accesses (so it wouldn't be for me), but it has the great advantage that the security level should be very high (at least they advertise it). If you can't decide, just test all 3 variants and choose the best one for you at the end. But choose carefully! Because switching to a different system is associated with an enormous amount of effort. Unfortunately, I know that from my own experience.
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Conclusion on this mostly neglected P2P lending risk
They say two things are safe in life: death and taxes 🙂 With the second, there are more and more opportunities to change that, but with the first, things will soon look poor. So it's an important topic that everyone should prepare for. With my system shown, your bereaved will have access to your accounts after your death, can request access to your passwords, and have instructions on how to use all of this. You are welcome to take my approach here and if you have any questions (and you probably have), write them in the comments and I'll be happy to expand the article at the appropriate places.
But now I am very curious to see how you solved the topic for yourself and whether you solved it at all. Be sure to write it in the comments!
Post picture: pixabay.com @ niekverlaan (Creative Commons CCO)
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