Don’t Dismiss Digital Assets in your Estate Plan

With more of our lives revolving around our digital devices and accounts, it is important to include digital assets in your estate plan. You don’t want their financial and sentimental value overlooked on your death. Emails and texts have replaced the handwritten letter, blogs have replaced the diary, and while we may take hundreds of photos, most of them are stored online rather than printed. Even cash has been replaced in many instances by electronic transactions.

There might be gold in your digital assets, but if your executor has to sort through all your online clutter, something valuable or important might never be found.

Huge gaps in Canadian estate planning legislation make it challenging for your executor to deal with your digital assets unless your will—and the person named in your power of attorney document for financial matters—specifically authorizes them to do so as part of your estate plan. Even though part of the role of the executor and attorney is to find, secure, and manage liabilities and assets that have a current or future monetary value, the wording of digital user or service agreements, as well as privacy legislation, could actually prohibit these people from accessing information they need to carry out your wishes.

WHAT DIGITAL ASSETS?

Digital assets or accounts normally include your email accounts, photos, social media accounts, as well as those that might earn money, such as

  • social media accounts, such as uploaded videos and blogs
  • virtual currency, such as Bitcoin
  • a highly developed character created for an online role-playing game that might be worth millions—or nothing
  • other intellectual property stored online
  • accounts that hold a cash balance such as PayPal
  • balances in a loyalty program.

These assets do not include digital ebooks and music that is held under a non-transferrable agreement or license, which gives you personal use rights only—with no rights to leave the content to your beneficiaries.

But how would someone looking at your computer and other digital devices know which assets have value, and gain the authority to access those assets? While some service agreements allow you to assign an alternate person on your account and indicate what you want done with that account, these agreement do not cover most digital assets. Other service providers will delete a digital account and its contents after a period of non-use.

There are three main steps when considering your digital assets.

  1. Update your will so your executor has the authority to deal with your digital assets and digital accounts, and the power to hire and pay a computer expert, if needed
  2. Update your financial power of attorney so your attorney has the authority to deal with your digital assets and accounts, and the power to hire and pay a computer expert if needed, in the event of your mental incapacity
  3. Prepare a personal digital inventory that lists all your digital accounts, including those that have a financial value, and provides handling guidance to your representatives so they know where to find your digital assets and accounts that have financial or personal value

The Personal Digital Inventory

Develop a personal digital inventory that lists your digital assets and digital accounts that will provide a roadmap of your digital life to your executor. Store this personal digital inventory with your important papers so your representative will know what you have and what you would like done with them.

Your digital inventory could indicate:

  • each physical device and its access information
  • each digital account or asset and its purpose or use
  • access information, including username (userid), and any secret questions (with answers), as well as any other information required to access the account
  • renewal due dates, where applicable
  • whether or not the digital asset makes or receives automatic deposits or withdrawals, and the related financial account
  • instructions or special handling

Access Information

You have been rightfully told not to share or write down your passwords but this information will be required by your representatives to access your computer and other devices and digital assets. You never want to compromise any accounts or legal obligations. Your lawyer may provide an appropriate solution for your situation when you update your legal documents. One possible solution might be to encode and encrypt the passwords or the file and store separately from the master digital inventory.

Instructions and Special Handling

While the instructions in the will or power of attorney document govern, your  instructions in the digital inventory can  provide your  executor or representative with information that will  help them identify which digital assets have value , might be sold or  transferred to a beneficiary, or indicate that arrangements have  been made with the service provider. Secure your own important files, contacts, photographs, movies, blogs and other information by making regular backups. 

Authorize Your Representatives

Update your will and power of attorney document for finances with specific language—to give your representatives the authority to access, control, manage, dispose, and distribute your digital assets and accounts.

The following is part of an excerpt from a power of attorney for financial matters related to digital assets in one province. Obtain legal advice for the current wording to use where you live.

“I authorize my attorneys to:

  • access, use and control my digital devices, including but not limited to, desktops, tablets, peripherals, storage devices, mobile phones, smartphones and any similar digital device which currently exists or may exist as technology develops for the purpose of accessing, modifying deleting, controlling or transferring my digital assets
  • access, modify, delete, control and transfer my digital assets, including but not limited to my emails received, email accounts, digital music, digital photographs, digital videos, software licenses, social network accounts, file sharing accounts, financial accounts, banking accounts, domain registrations, DNS service accounts, web hosting accounts, tax preparation service accounts, online stores, affiliate programs, other online accounts, and similar digital items which exist or may exist as technology develops
  • obtain, access, modify, delete and control my passwords and other electronic credentials associated with my digital devices and digital assets described above”

Summary

It is up to you to include your digital assets in your estate plan. Help your representatives navigate through your digital life by giving them the authority and a roadmap to save your estate time and money. Consider curating a digital family album and closing old online accounts.

There might be gold in your digital assets, but if your executor has to sort through all your online clutter, something valuable or important might never be found.

© 2017 Sandra Foster. The above is  adapted from the new 6th edition of You Can’t Take It With You:                         Common-Sense Estate Planning for Canadians.

Buy your personal copy of You Can’t Take It With You from amazon.ca here

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