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The world, as we know it, is increasingly digital. Research shows that people now spend an average of 400 minutes a day — nearly seven hours — online. In essence, people are on the internet, in some shape or form, almost a third of their lives. Billions of people around the world now own considerable forms of digital assets whether they be:
- Emails
- Online investment platforms or virtual currencies (crypto)
- Online businesses accounts / loyalty programs
- Social media accounts
- Artificial Intelligence (AI) tools accounts
- Software licenses
- Digital media (photos, videos, music) or files stored on online storage devices (e.g., iCloud)
As digital assets become more common, disputes may arise over who has the rights to access or control these assets after someone dies. Without some level of digital asset estate planning, access to these assets may be difficult.
While these digital assets frequently carry significant value, they often go unaccounted for in wills. This can lead to uncertainty and potentially to contentious and lengthy litigation that would have been entirely avoidable. Another risk is that, without clear administrators and beneficiaries, these digital assets may become susceptible to identity fraud, theft, or other illegal activity.
State of the law
Canadian law on digital assets in estate administration is fragmented across the country. Only a few provinces have laws that address digital assets in estate planning.
In Alberta, the Estate Administration Act includes a section that lists the tasks an executor (personal representative) can perform when managing a deceased person’s estate. The law was updated to give executors access to online accounts to help identify assets and debts. This means executors now have legal authority to manage digital assets as part of estate administration.
However, online service agreements often restrict third-party access, which can prevent executors from accessing some digital assets. Saskatchewan addressed this issue with the Fiduciaries Access to Digital Information Act, which automatically gives executors access to digital assets unless a will states otherwise.
However, the law in Alberta has yet to follow suit.
Digital assets with financial value
In today’s world, many people transact, invest or hold their funds online.
Running online businesses, retaining online investment portfolios, owning crypto assets, holding accounts in loyalty programs, or earning income from digital platforms (e.g. online influencers) are different forms of digital assets that carry financial value to the deceased and their beneficiaries.
The growing importance of digital assets in our world cements the need for comprehensive digital asset planning as a growing percentage of people’s financial assets are moving virtual.
Digital assets with sentimental or privacy value
Not all of the deceased’s digital assets carry a monetary value.
Social media accounts, emails, and media stored in an online system (iCloud), while unlikely to provide economic value in the will, can carry significant sentimental value — think family photos and videos — to the deceased and/or their beneficiaries.
Artificial intelligence
The recent rise of AI tools is also likely set to change the landscape of digital assets, particularly as they pertain to privacy concerns. For example, having access to a ChatGPT/OpenAI account provides a magnifying glass into someone’s entire search history and may disclose highly personal information about the deceased or near-and-dear third parties.
AI models are personalized and trainable, making them prone to privacy breaches and identity theft concerns. Testators should plan who will manage their accounts. AI regulation remains largely undefined and faces a regulatory vacuum.
Recommendation
When drafting a will, it is imperative to connect with an estate planner who will likely create an inventory of digital assets appended to the will, with detailed instructions on who and how they are to be managed after the testator’s passing.
The digital asset inventory should be periodically and regularly updated. The will should also include a clear process granting personal representatives the authority to access, manage, and distribute digital assets. The deceased’s intentions in the will on their digital assets must be plain and clear to streamline approvals from online service providers.
As the global digital footprint continues to grow, so does our need to plan for the management of digital assets on death or incapacity. Incorporating digital assets is now essential to provide comprehensive modern estate planning. The law is likely to, albeit slowly, catch up to the ever-growing prevalence of digital assets over time. In the meantime, addressing these concerns early in estate planning can prevent costly and emotional estate disputes in the future. To learn more about when you might need an estate litigator, check out our other articles about navigating probate, wills, powers of attorney, personal directives, personal representatives, avoiding sibling disputes, dying without a will, and more.
If you have any questions or concerns about your estate planning or litigation needs, reach out to our team at BD&P to learn more or complete the form below and BD&P will be in touch.
