More than ever, we are living our lives online – from multiple social media accounts to passwords and banking information. And as our digital footprints grow, so too does the importance of planning for the management of digital assets on death or incapacity.
What are digital assets?
What’s your first guess?
When we think of an “asset”, you may imagine a form of property, something that is owned, which can then be sold or gifted. But the term digital asset extends beyond traditional notions of property to include a wider range of electronic, thus more intangible, things, including:
- Social media accounts,
- Electronic communications (such as emails),
- Cloud storage,
- Accounts with retailers and
- Loyalty programs.
The value of digital assets can be financially significant in a traditional sense, but digital assets often have special sentimental value to the owner (photographs, emails and music) or are personally revealing (think search histories, location data and private messages…).
Essentially, digital assets provide clues about a deceased individual’s private life in a way that nothing before ever has been able to. Given the amount of digital information that is recorded about each of us, digital assets are unique in estate planning for their potential, for better or for worse, to expose how we lived.
With this significance, digital assets must now be included in any planning for death or incapacity in a way that balances the privacy of the deceased versus the formal transfer of intangible property and the decedent’s (digital) legacy.
But there are complications.
As there is with everything…
Who owns the rights to digital assets?
The rights of digital asset holders are often determined by the user agreements entered into at the time the digital asset is created.
For example, opening a Facebook or Instagram account usually requires the user to agree to a briefly displayed and, quite often, ignored user agreement. These agreements often restrict the rights of the user to access an online account in the case of death.
On top of that, it may also prohibit sharing password information and could require interpretation according to the laws of a foreign jurisdiction and that all claims against the company must be brought there… Fairly complicated…
On death, these agreements bind the estate and can force the executor into long battles to gain access to the account, often in the jurisdiction of the internet company with whom the user agreement was made.
There have been limited legislative reforms to address these issues. Saskatchewan is among the first provinces to enact legislation. Based on this model legislation accepted by the Uniform Law Conference of Canada, The Fiduciaries Access to Digital Information Act provides that by default, fiduciaries AKA the trustees or guardians (including executors) have access to digital assets, subject, in the case of a deceased person, to the terms of his or her will or court order.
However, even with this legislation, it’s not clear that companies controlling digital assets based outside of Canada will comply with demands made under it without further steps being taken in their own jurisdictions. And, admittedly, similar legislation has not been established elsewhere in Canada.
What, then, should you do?
As a minimum, each of us should:
- Review your estate plan with a professional to ensure that digital assets are specifically addressed and that the executor is given not only explicit authority to administer digital assets but also instructions on their transfer or destruction.
- An up-to-date list of digital assets should be maintained, including:
- Their location and the details necessary to identify them.
- If off-line back-ups are safe and appropriate, these should be considered.
- Finally, the terms of use regarding each asset should be reviewed.
Consideration of digital assets is now a necessary part of any comprehensive estate plan. With this being a rapidly evolving area of the law, and concern, with increasing importance each year, it has never been more important to check (and update, if need be) your current estate plan and will.