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How To Deal With Digital Assets In Estate Planning

03/17/2016 03:04 EDT | Updated 03/18/2017 05:12 EDT
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Due to recent technological advancements, one's digital presence has become an important part of every day life.  As a result, it is increasingly important to consider how this may impact traditional estate planning. With increasing frequency, individuals are creating complex lives online, which may include a social media presence, electronic banking, reward point balances, online investments, and many other possibilities.

Many people also now store digital assets that can have strong sentimental value, such as family photos or favourite playlists, online. As the types of assets that we store in digital formats continues to expand, important issues, such as how they will be accessed post-death, should be a consideration during estate planning involving our more traditional assets.

It is important to note that the issue of digital assets and estate planning does not concern only the younger generation. The conveniences and increased accessibility of technology have also attracted a large portion of the older population, including many who may already have estate plans in place. As it is always recommended that an estate plan be periodically revisited, especially when there are any significant life changes, the organization and implementation of digital assets should also be considered at these junctures.

Unfortunately, it is all too common to see these types of assets overlooked in a will. First and foremost, it is essential for advisers to be asking the right questions about the nature of a testator's assets. This may require probing beyond the consideration of traditional assets, such as real property and bank accounts. In many cases, a digital asset may have no monetary value and it may be overlooked for this exact reason. Asking pointed questions regarding digital assets and having the testator prepare a list of information he or she stores online can help determine how these assets should be distributed or managed.

Another important aspect to address is how digital assets will be accessed after death. Digital assets and accounts are typically accessed by way of a username and password. If the executors of an estate are not provided with this information, they may encounter difficulties when trying to determine what these assets encompass and in obtaining access in order to effectively administer them.

The rules surrounding executor access to online accounts following the death of an account holder vary significantly. It is prudent to provide your executors with a list of online accounts and the corresponding access information rather than risk future inaccessibility as a result of different access requirements. Many sites are based outside of Canada, which means that the executor may encounter conflict of laws issues in the event that the executor’s authority is not recognized in the relevant jurisdiction. This can result in unexpected costs and delays in the administration of the estate.

In order to address this, it is highly recommended that testators give careful consideration to providing a detailed list of any virtual accounts and to an appropriate method of storage for the  username and passwords, to be used after death. There are multiple ways in which this can be accomplished. For instance, it could be in as simple a format as a list that is given to your executors prior to death or attached as a memorandum to the will itself. It is not recommended that the password list form part of the will itself, as it may be made public if the will is probated. However, it is important to bear in mind that this list should be updated periodically. Passwords are sometimes changed (voluntarily or mandatorily) and accounts may be added or deleted. A static list that is created at one point in time will not necessarily be an accurate reflection of the virtual accounts and access information at the time of death.

Another storage method is to make use of online password storage services. There are multiple sites that have been established to provide this service. They are designed to store usernames and passwords to all virtual accounts in a safe and secure format which can be accessed by one master password. In this way, the list can be updated easily and an executor only needs to be provided with one password in order to access all of the necessary information.

As for social media, special concerns may arise with respect to personal preferences surrounding how these accounts should be dealt with post-death. Some may prefer to have these accounts shut down altogether, whereas others opt to have them memorialized in such a way that friends and family have a place to share memories of the deceased. Given these different approaches, it can be useful to provide some direction to your executors regarding your specific preference on the issue. Leaving a social media account open without any planning may seem harmless, but can inadvertently cause unnecessary pain to loved ones. For instance, if the account is not memorialized or deleted, photos of the loved one may appear in Facebook’s “Year in Review” and friends and family will continue to receive annual reminders and prompts to wish the deceased a happy birthday.

In 2016 and beyond, it is impossible to ignore the fact that technology has changed the way we live. Our lives are increasingly intertwined with the virtual world and, accordingly, plans should be made so that assets and information stored digitally are appropriately dealt with at death. 

Ian Hull and Suzana Popovic-Montag are partners at Hull & Hull LLP, an innovative law firm that practices exclusively in estate, trust and capacity litigation. To watch more Hull & Hull TV episodes, please visit our Hull & Hull TV page.

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