[Htsthbjig]

"What if the heirs need that data or third parties, lawfully?"

Law states that banks have to give a notice to heirs when the original owner dies.

"What about discovery in court cases? What if someone comes up with malware which encrypts your data and you have no backup?"

Then you lose all your data. How is that a problem? You ask the bank-government for new credentials. And you learn to make copies for the next time. Not the end of the world.

It's not really that different from loosing your keys, maybe you will have to destroy your old lock and buy a new one.