What Are Digital Assets?
Digital assets encompass a wide range of online and electronic properties. These include:
- Financial Accounts: Online banking, PayPal, investment accounts, and cryptocurrency wallets.
- Social Media: Facebook, Instagram, Twitter, LinkedIn, and other social profiles.
- Digital Purchases: eBooks, music, movies, and other digital content bought from platforms like Amazon, iTunes, or Google Play.
- Cloud Storage: Files stored on Google Drive, Dropbox, or other cloud services.
- Domain Names and Websites: Personal blogs, business websites, or monetized YouTube channels.
- Loyalty Points and Rewards: Airline miles, credit card rewards, and other digital loyalty programs.
- Intellectual Property: Online courses, eBooks, designs, and other digital creations.
Why Include Digital Assets in Your Estate Plan?
Digital assets can hold both sentimental and monetary value to yourself and your loved ones. Without a plan for these, your heirs might face:
- Inaccessibility: Passwords and two-factor authentication can make accounts inaccessible.
- Loss of Value: Cryptocurrencies, domain names, and online businesses can lose value if not managed properly.
- Emotional Distress: Social media accounts left active can be distressing for loved ones.
- Identity Theft and Security Risks: Unmonitored accounts are vulnerable to hacking and fraud.
Steps to Protect Digital Assets
1. Inventory Your Digital Assets
The first step is to create a comprehensive inventory of all digital assets. This inventory would include:
- Account names, usernames, and email addresses associated with each account.
- Access details such as passwords, PINs, and security questions.
- Two-factor authentication methods and backup codes, if applicable.
- Specific instructions on how to access, manage, or close the accounts.
Consider using a password manager to securely store and share this information with a trusted person.
2. Ensure your Executor is Authorized to Manage Digital Assets
Your executor or administrator may run into issues gaining control of your digital assets. Explicitly giving them the authority to manage your digital assets in your will can help smooth this process after you pass away. Some considerations include:
- Naming the executor in your will, along with clear instructions.
- Ensuring the person is tech-savvy and trustworthy.
3. Include Digital Assets in Your Will
Clearly outline how your digital assets should be handled in your will, such as:
- Social Media Accounts: Indicate whether you want them memorialized, deleted, or transferred. Some platforms, like Facebook and Instagram, allow you to designate a legacy contact or request account deletion.
- Financial and Cryptocurrency Accounts: Provide access instructions in an accessible format outside of the will and specify who will inherit the funds. Ensure your executor knows how to access digital wallets and private keys.
- Digital Purchases and Content: Specify who will receive digital books, music, photos, or videos or allow them to fall into the residue of your estate. Note that some digital purchases are licensed, not owned, and may not be transferable.
Never include passwords or sensitive security details directly in your will, as it becomes a public document during probate. Instead, reference a secure location where this information is stored.
4. Review Platform Policies and Legal Considerations
Digital platforms have different rules for account access after death, influenced by privacy laws and terms of service. Some examples include:
- Google’s Inactive Account Manager allows you to decide what happens to your account after a period of inactivity.
- Apple requires a court order to access a deceased person’s account.
- Cryptocurrency platforms have unique security measures; without private keys, assets can be permanently lost.
Familiarize yourself with the terms of service for each platform and include relevant instructions in your estate plan.
5. Keep Your Plan Updated
Technology and digital assets evolve rapidly. Regularly update your digital inventory, passwords, and estate plan to reflect new accounts, changes in ownership, or modifications in legal requirements.
Challenges and Considerations
- Privacy Laws and Access Restrictions: In Canada, privacy laws and terms of service agreements may limit access to digital accounts. Work with an estate lawyer to navigate these restrictions.
- Security Risks: Sharing passwords or private keys improperly can compromise security. Always use secure methods for storage and transmission.
- Tax Implications: Certain digital assets, like cryptocurrencies, may have tax implications. Consult with a financial advisor or accountant to ensure compliance.
Conclusion
Digital estate planning is complex and constantly evolving. By inventorying your digital assets, appointing an executor, and including detailed instructions in your will, you can ensure that your online presence and valuable digital properties are protected and managed according to your wishes. Consult with an experienced estate planning lawyer to help you navigate legal complexities, draft a legally sound will and ensure your digital asset plan complies with provincial laws and reflects your wishes.
Find out more about our estate planning services and book a consultation here.
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Disclaimer: This blog post is for informational purposes only and should not be construed as financial or legal advice. Consult with qualified professionals to create a personalized estate plan suitable for your specific circumstances.
