How To: Estate planning for digital assets
When we think of wills and estate planning we tend to think of our investments, properties, distribution of assets etc. But with this ever-changing world also comes another item to consider: digital assets. What does this mean exactly? The technical definition is a file over which a person claims ownership. This could take various forms such as a photo, spreadsheet, word document, tweet or blog post. A digital account, however, would be the “portal” used to access a digital asset. There are essentially three types of digital accounts as follows:
- Accounts with currency information that translate to real money such as Paypal, loyalty programs and credit cards with cash back and/or loyalty programs.
- Account containing information of personal or commercial interest, such as email and social media accounts.
- Accounts containing virtual property, such as Kindle, iTunes, whereby users have a license to use digital assets such as a song.
With digital assets becoming more and more common, it’s crucial that these be considered when accounting for such property in one’s estate. If not, in some cases it could be a significant loss in monetary and/or sentimental value. Such examples would include personal blogs or websites that generate income, online games create rewards that can be traded, redeemed, etc. Bitcoin would be a prime example of a digital asset that contains monetary value that in certain circumstances may be very significant.
The legal community however hasn’t yet caught up with our digital age and leaves us with a lack of legislation. The trustee of the estate may therefore be left to contend with the service terms of each digital account provider. Without specific instructions in a will, the companies assume the deceased had no intention of transferring or sharing digital information; all the more reason to account for this in one’s will/estate plan. Below are some helpful guidelines on what to include as part of accounting for digital assets:
- An inventory of all digital assets
- Appointed trustee specifically authorized to manage the client’s digital accounts (can be the executor or separate named person)
- A password-protected list of digital assets accessible by the trustee
- Detailed instructions in the estate plan of how the assets are to be distributed among beneficiaries
Lastly, be sure to consider any provincial legislation when adding this to the will/estate plan. Digital assets are governed by provincial, as opposed to Federal, law and may therefore differ from region to region.