Planning is key to securing digital assets

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digital assets
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Technology has changed the way we go about our lives — and the way we go about planning for death. And as our digital footprints continue to grow, so does the importance of managing our digital assets after our demise.

“Now we have this massive digital imprint that is going to have an implication on our will and estate planning,” said Sharon Hartung, author of the books Your Digital Undertaker and Digital Executor.

When a client dies, they leave behind a plethora of digital assets, which are essentially any type of record in digital form — such as documents, accounts, photographs, emails and social media posts. If the deceased client had a will, then it is the executor’s responsibility to secure that person’s digital assets as well as their physical assets.

“It is now becoming clearer that, yes, if an executor is responsible for all the property of a deceased person, then that includes digital property,” said Tom Junkin, senior vice-president, personal trust services, with Fiduciary Trust Co. of Canada.

In terms of securing digital assets, there are a few categories to keep in mind. The more obvious ones are financial accounts — including bank accounts and online payment services, such as PayPal — as well as any cryptocurrencies the deceased may have owned. Online rewards points, such as Air Miles, also will need to be transferred to the estate. Digital collections, such as photos, videos and music files, may not have financial value, but are likely to carry sentimental value and are worth including in an estate plan.

Securing an asset also may mean terminating or “memorializing” a social media profile such as a Facebook or LinkedIn account. Memorializing means the account is locked but viewable, with an indication that the owner has died.

Also important to note is the difference between digital “property,” such as purchased music or a manuscript stored online, versus accounts with streaming services, such as Spotify or Netflix, where a client doesn’t own any rights. The latter types of accounts need to be properly administered, but are not “assets.”

Digital assets unaccounted for in an estate plan can present a challenge for executors. Uncovering the extent of a person’s life online, and securing those assets, can be more challenging than working with physical assets. For example, many clients have accounts online for which there is no physical record to alert executors of their existence.

“I liken it to a storage locker,” Hartung said. “In the same way you would never know that a client had a storage box somewhere, you wouldn’t know what digital assets there are and the value they may have if they didn’t tell you.”

Junkin said the way to avoid such roadblocks is proper planning.

“A big problem is that people procrastinate estate planning generally,” Junkin said, “and that is just compounded with digital assets.”

Junkin noted that most people are unaware of the extent of their digital assets. He recommends that clients take inventory of all digital assets and keep the list in a place where it can be found easily, such as a desk drawer. Junkin said an email account is usually the gateway into a person’s online life, and therefore the most important online platform for which to provide access.

“It’s important that someone can access your [client’s] email, so they can access [the online] accounts … or at least learn of their existence,” Junkin said.

Certain tech giants, such as Alphabet Inc. (Google’s parent), Facebook Inc. and Apple Inc., have introduced options that enable users to select what happens to their accounts when the user dies. However, according to Hartung, the vast majority of people have yet to take advantage of this feature.

There also is the question of the costs versus benefits of acquiring someone’s digital assets. In some cases, recovering the asset may not be worthwhile, as some types of digital assets hold little or no value — financial or sentimental.

“Factoring in the cost is going to be the Achilles heel of estate administration,” Hartung said.

According to Hartung, the average person now has approximately 100 online accounts. Once a year, she conducts an exercise in which she opens and closes several of her own accounts to see how long the process takes. Most recently, each account took about an hour to close — and that did not include transferring any files or information prior to terminating the account.

That time can jump significantly if the executor also has to spend time identifying what digital assets exist before they can attempt to close accounts or transfer them.

“The return on investment for going after all these accounts is going to be a balancing act for the [executor],” Hartung added.

Hartung also stressed the value in a person cleaning up their digital life while they are alive, such as deleting accounts that are no longer in use.

“Our hygiene in life is our hygiene in death,” Hartung said. “Much like you would downsize your physical life — you should do it online as well.”

If a client has done absolutely no planning, there still are steps that can be taken to secure their digital assets after death or incapacity, said Sayuri Kagami, senior trust specialist with RBC Royal Trust, a division of Royal Bank of Canada, in Toronto.

The first step is to look for electronic devices, as they are “your access point to discover what digital assets might be out there,” Kagami said.

An executor can also speak with family members and loved ones to determine what accounts or devices the deceased owned. However, even if an executor knows that an online account exists and has its current username and password, the service agreement governing that account may not allow an unauthorized person to access it.

Many online organizations have increased their security and authentication requirements in recent years to protect users’ identities, creating yet another hurdle for executors. If a client hasn’t provided clear instructions — or logged those instructions with the organization — the executor may be forced to close all accounts to avoid identity theft.

“If you want [an account] memorialized, you have to document that decision and tell someone,” Hartung said.