Duties and rights of attorneys and committees with respect to digital assets

Attorneys and committees will generally have greater legal rights for dealing with digital assets of the incapable adult for whom they act than will personal representatives of a deceased person. This is because all contractual rights of the incapable adult continue in full force and may generally be exercised by the attorney or committee on behalf of the incapable adult. However, if the adult has not kept up‐to‐date and accessible records of account information, the attorney or committee may still run into practical challenges in gaining access to assets or information.

While enduring powers of attorney may be limited to specific powers, most enduring powers of attorney grant general powers to the attorney. A general power of attorney authorizes the attorney to do anything that the adult may lawfully do by an agent in relation to the adult’s financial affairs.15 In addition, section 32 of the Power of Attorney Act provides that an attorney may request information and records relating to the adult who granted the power, if the information or records relate to the incapability of the adult, or to any area of authority granted to the attorney. The Act states that where the attorney has the power to request information or records, the attorney has the same right to those information and records as does the adult. These powers overlap with the powers granted to powers of attorney with respect to personal information under the PIPA Regulations, as discussed above in Part II.E “Privacy Legislation”.

A person appointed as committee of the estate of a patient is granted “all the rights, privileges and powers with regard to the estate of the patient as the patient would have if of full age and of sound and disposing mind.” Based on the foregoing, an attorney exercising authority under a general enduring power of attorney and an estate committee should have the right to access all digital information and services to the same extent the donor or patient had such rights. If the attorney or committee has not been left with passwords for any CADA, they should have the right to require the service provider to provide them with the password.

Attorneys and committees must manage the affairs of the adult in the manner that is in the adult’s best interests.

What is Digital Estate Planning and Why Do I Need it?

What are digital assets?

Estate planning and administration professionals cannot ignore the ubiquity of digital assets. 2012 saw global sales of digital music amount to $5.6 billion and in some markets, including the US, India, Norway and Sweden, digital music sales exceeded packaged music sales. Meanwhile, e‐book sales represented an estimated 16%, and growing, of all book sales in Canada in 2012.2 Almost 18 million Canadians, more than half of the population, has an active Facebook account. The Bitcoin virtual currency has been featured regularly in the news as its exchange value skyrocketed from approximately USD$100 to USD$1200 late in 2013, before falling off dramatically again.

The term “digital assets” is used in different ways by different people. In a narrow sense, a digital asset has been defined as “any item of text or media that has been formatted into a binary source that includes the right to use it.”  In a broader sense, digital assets include all of the electronic “possessions” an individual may have, including emails, digital photos, videos, tweets, texts, songs and e‐books, as well as online account information for websites or programs such as Facebook, LinkedIn, bank accounts, PayPal and others.5 In this broader sense, digital assets are sometimes referred to as a “digital estate” or “digital legacy”.

Digital assets have three distinct elements:

  1. A digital file or record. This is the data that constitutes the content of the asset.
  2. The right to use the file or record. It has been noted that if there is no right to use a file or record, then it should not be characterized as an asset.Rights of use may derive from authorship or other ownership of the content (for example, emails or original documents), or may be granted by a licence from the owner or a third party licensor (as with most digital music or e‐books).
  3. A method of access. Assets may be categorized into (a) physically controllable digital assets (PCDA) which are stored on hardware to which the owner has access, and (b) controlled access digital assets (CADA) stored “in the cloud” on servers belonging to third party service providers and accessible on‐line with the use of a username and password.

Because the law applicable to digital assets is still developing, digital present unique challenges to executors, administrators, attorneys and committees. In addition, planning strategies for digital assets are rapidly evolving as the law, the e‐service industry, and user awareness of estate planning issues all mature.

Property rights vs. contractual rights

To understand digital assets and their management in the estates context, it is necessary to consider the different categories of legal rights which may be applicable to the assets:

  1. Tangible personal property. Tangible personal property is property that can be physically manipulated and moved. Examples of tangible personal property are computers, mobile and tablet devices, and physical storage media including hard drives, memory sticks and flash cards.
  2. Intangible personal property. This is property in which an owner has rights but that generally does not have a tangible physical manifestation. Intangible personal property includes all manner of digital files and records over which an individual has rights of ownership, including the individual’s electronic documents, emails, and digital photos. It also includes domain names.
  3. Contractual rights. Whereas property rights relate to a particular thing and can theoretically be enforced against everyone in the world, contractual rights are personal and enforceable only by and against the parties to the contract, and only in accordance with its terms. In the context of digital assets, contracts govern rights of access to CADA, and in some cases, govern rights of use for particular files or data.

On death, all of a person’s property, including tangible and intangible personal property, vests in the personal representative of the deceased.Personal contractual rights of the deceased, however, generally do not pass to the personal representative unless the terms of the contract specifically provide for enurement of benefits to personal representatives, or specific legislation applies.

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Privacy Legislation for electronic estate

Personal representatives should also be aware of their rights to personal information of the deceased under privacy legislation. Privacy legislation may be raised by providers of electronic services as a reason they are not able to provide a personal representative with access to the account of a deceased. In addition, a personal representative may have need to access or correct personal information on behalf of the deceased. The Personal Information Protection Act (British Columbia) (PIPA) governs the collection, use and disclosure of personal information by private organizations in British Columbia.

Other provinces are governed either by similar provincial legislation or by similar provisions in the federal Personal Information Protection and Electronic Documents Act (PIPEDA). PIPA requires that private organizations obtain the informed consent of individuals for the collection, use and disclosure of personal information. Under section 23 of PIPA, an individual may require an organization to provide him or her with the individual’s personal information under the organization’s control, information about how that personal information is and has been used, and the names of persons to whom the information has been disclosed. The requesting individual then has the right under section 24 to correct any information held by the organization that is incorrect. The Personal Information Protection Regulations made under PIPA specify who may act on behalf of deceased persons and other individuals.

Under section 3 of the Regulations, a personal representative of a deceased person may exercise the rights of the deceased individual under the Act, and give or refuse consent with respect to personal information of the deceased under the Act. If there is no personal representative appointed, then the “nearest relative” of the deceased has the same rights. The Regulations contain a prioritized list to define “nearest relative”.

Under section 2 of the Regulations, a committee, attorney acting under an enduring power of attorney, a litigation guardian, or a representative under the Representation Agreement Act are also given full power to exercise the privacy rights of the individual whom they represent. Because no priority is granted as between these roles, one adult patient may have two or more representatives authorized to exercise their privacy rights under PIPA.

Don't Let Your Digital Assets Die With You

Duties of personal representatives with respect to digital assets

Personal representatives (estate executors and administrators) have an overarching fiduciary duty to conduct themselve and the affairs of the estate for the benefit of the beneficiaries. In the context of digital assets, the general duties and obligations of the personal representative include the following:

  1. Identify. Ascertain and list all digital assets of the deceased.
  2. Gain access to PCDA. Secure any PCDA and restrict access. Because the physical property and all the rights to it vest in you as personal representative, you are within your rights to circumvent passwords and security measures if necessary in order to gain access.
  3. Gain access to CADA. Where the deceased has left passwords for CADA, ensure that you can gain access. Where you do not have a username/password for CADA, consider whether there is another way to request the information.
  4. Back Up. Where possible and appropriate, make local backups of assets (whether PCDA or CADA) that may have financial or sentimental value. For example, some online digital photo services provide the option of downloading a backup of all files as one compressed file.
  5. Inventory. List all digital assets located, for the purpose of accounting to beneficiaries.
  6. Digital assets having determinable value. Digital assets having realizable present or future financial value should be secured and their value ascertained for probate and accounting purposes. Determine whether the asset is to be transferred in kind to a beneficiary or if it should be prepared for sale.
  7. Personal and sentimental items. For personal and sentimental digital assets without determinable value, arrange for their transfer to the beneficiaries in accordance with the will or law. If these assets are of a personal nature, they may fall within the “articles” provisions employed in many wills. Articles are typically defined to include “items of personal, domestic and household use or ornament”.
  8. Personal information.  Subject to instructions or wishes for dealing with personal information, the personal representative should protect the privacy of the deceased to the greatest degree possible.
  9. Liabilities. Determine any liabilities relating to digital accounts and pay them together with other estate liabilities.
  10. Close accounts. Attend to the orderly closing of accounts where all useful assets have been retrieved and the account is of no further use.