Each year, clients create and acquire new digital assets, which include emails, digital photos, videos, music, reward points and customer lists, as well as account information for programs and websites such as bank accounts, Amazon, LinkedIn, Facebook, and iTunes. Clients are also becoming more dependent on these assets.
Further, digital assets have real value. A 2011 McAfee survey finds the average person has more than $50,000 worth of digital assets.
Despite their increasing importance and value, there are no specific laws in Canada providing executors with the authority to access, manage, distribute, copy or delete digital assets on death. Instead, an executor’s ability to deal with a deceased person’s digital assets depends on each service provider’s terms and conditions, and whether the deceased’s usernames and passwords are known.
In contrast, several U.S. states have introduced or enacted legislation authorizing executors to deal with digital assets on death. The extent of those laws varies by each state. For instance, Delaware’s legislation applies to every type of digital asset imaginable, while Connecticut’s legislation only applies to email accounts.
Due to the underdeveloped nature of Canadian laws, advisors should give greater consideration to digital assets as part of the estate planning process. Here are a few tips.
How to help
As a starting point, clients should prepare inventories of all digital assets, which could be stored with copies of their wills.
For email and social media accounts, clients should leave instructions with executors outlining what should be done with those accounts on death, including whether they should be deleted. Other digital assets can specifically be dealt with in a will, just like any other asset. To assist the executor in carrying out the terms of the will, a broad, specific power to deal with digital assets should be provided to the executor.
On death, executors will have to determine whether any gifts are unenforceable due to the terms and conditions of the particular service provider—some only allow transfers among designated family members, or require that transfers occur within a certain period. With Air Miles, for example, a deceased’s account can be merged with another member’s account, but only if the other member is a family member or part of the deceased’s household. Meanwhile, iTunes’ terms and conditions do not deal with death, but effectively provide that a client may not transfer his music library to another person. The same applies to a Kindle book library.
Executors should also be aware that even though they may have a deceased’s username and password, the terms and conditions of a given program or website may prohibit their access. In those cases, legal advice may be required, as it can be a criminal offence to access an electronic service without authorization.
Digital assets are an increasingly important part of clients’ lives and have real value. As part of the estate planning process, thought should be given to how your client’s digital legacy will be dealt with and distributed on death. Without proper planning, an executor may not be able to access digital assets on death, and those assets may be lost or destroyed.