Your will is drafted up, your executor has been appointed, and all of your powers of attorney are accounted for should any decision about health or finances occur. But perhaps, there’s something you may have overlooked in your estate planning.
Do you own a social media or loyalty program account? How about any cryptocurrency? These are examples of digital assets that have real world value and may be unaccounted for in your will. It’s something most people don’t think about, especially when it comes to estate planning.
Perhaps you may think, “Why would I care about my Facebook account?” But the reality is, you should. Imagine what would happen if it was left unattended after your demise? Surely, the last thing you’d want is for it to fall into the wrong hands.
Looking at estate planning through a digital asset lens
If there’s anything that the past year has taught us, it’s that the world is increasingly moving online. We can all agree that whether it’s online shopping, storing things in the cloud, or investing, our digital footprint is becoming bigger and bigger.
Over the course of our lives, we have begun accumulating more digital assets. These may include things that you don’t even think twice about, such as domain names, online music and blogs, electronic storefronts, and more. If you take inventory of these assets, it will surprise you just how many you own. Besides having a lot of sentimental value, digital assets could also have potential financial value. And if they are not dealt with properly, they may be susceptible to fraud or hacking.
The bottom line is that if you haven’t accounted for these types of digital assets in your will, they may be lost forever.
Digital assets with sentimental value
You may wonder why your family may need access to your Facebook or Twitter accounts. There are various reasons for this. For one, you may want others to know about your passing and have someone post a message on your behalf. This means, that they would have to know your login credentials.
Remember family relationships can be complex. While some members may want to preserve social media profiles as part of your legacy, others may not see the point of keeping them. Don’t you think that you should have a say in what happens to your accounts? Keep in mind, that companies like Google or Facebook are prohibited by law from turning over the contents of your electronic communications to anyone.
It just makes sense to include digital assets in your estate planning. But, it’s not enough to simply put this information in a will. Your loved ones may not know what to do, or how to navigate the digital realm like you do. Neither will your appointed executor.
The role of digital executor
What you need is to appoint a designated digital executor. This person will specifically manage your digital property after your passing. A digital executor can be the same as your main executor or you can select someone different. The most important qualification is that they need to be digitally savvy, and capable of handling the responsibility of sorting through all your digital media and accounts. In some jurisdictions the executor of your will doesn’t automatically get access to your digital assets after you die. Which makes it even more crucial that you name a digital executor who already has all the login information on hand.
Melanie McDonald, VP and Regional Director, BMO Trust Company, echoes these sentiments. She provides some clarity on who has the final say in disputes between family members on things like personal journals and love letters. “It’s up to the executor. The executor has all the power, so you really want to be careful that you pick the right executor and give them clear instructions.”
Other things of sentimental value to take note of in your estate planning, include things like photo collections stored in the cloud. You cannot underestimate its value for your loved ones. In most cases, these online collections have a default privacy setting that keep the account private. Unless you provide explicit instructions to your digital executor, your loved ones may never even know they exist. It would be a shame to have a lifetime of precious memories lost in the cloud.
Digital assets with financial value
The bottom line is that many aspects of our lives that once required the physical exchange of documents or money, have now been digitized and exist in a tangible form online. As such, emails contain a wealth of information about these transactions. Unless your loved ones know your account and/or cellphone passwords, that information is off limits to them. Having access to emails and cellphone data is essential in a world where two-factor authentication is becoming the norm. Understandably, it’s something to flag for inclusion in your will. “We need to remember that devices change over time. You need to think about what’s on each one, and when you are updating your technology, is there something on your old laptop or phone that you want to keep,” suggests Melanie McDonald.
You may also overlook the value of other digital assets you own. These may include things like loyalty and rewards. While there are sometimes strict rules for transferring these points, it’s important to do your due diligence and review each company’s policy. Upon request, some companies do permit points to be transferred to loved ones for free, while others may require a document such as a death certificate and a specific bequest in the will.
Other digital accounts with financial value that need consideration are crypto wallets and credit card accounts with cash back. Typically, people have cryptocurrencies stored and they require codes to access the wallets and convert the crypto currency to a fiat currency like the Canadian dollar. If you don’t explicitly let your digital executor know about these accounts, they may be lost forever. “You need a really solid plan around your private key, wallet and public key. Keeping that piece of paper in a safe place is important. People move and the most secure place in the physical world is probably still the old school safety deposit box,” says Melanie McDonald. Something to also keep in mind, is cryptocurrency investments are taxable and some individuals prefer to have their crypto stored in physical wallets. These devices still require passwords for access.
While we talked about social media accounts having sentimental value, they can also have financial value. Content creators and social media influencers who monetize these platforms have earnings that can be substantial. If this is the case in your situation, you may want to add that asset to your existing will, and ensure that your loved ones will be able to enjoy the fruits of your labour. Because social media accounts have privacy issues associated with them, it’s vital that you not only have clear instructions in your will, but you need to convey that to your appointed digital executor beforehand.
Getting started
1. Make a list and check it twice
So where do you begin? First, you have to know exactly what digital assets you own. If you haven’t already, begin with a comprehensive list that has everything you can possibly think of.
To make it easy, split up your assets into one of two categories. Those with “social value” include Facebook, Twitter and LinkedIn. Ones with financial value, include things like PayPal and online shopping accounts. Write down the login and passwords for all these accounts. We all know how sensitive passwords are so it’s never a bad idea to double and triple check that you have the correct information. This will make it so much easier for both your digital executor and your loved ones.
2. Appoint a digital executor
We can’t stress how important this is. However insignificant you perceive them to be, any digital assets that are unaccounted for in an estate plan, could pose a huge challenge for executors. It is strongly recommended that you name an executor who will be able to clearly identify your digital assets and take the appropriate measures to deal with them, as per your wishes. This digital executor will be in charge of taking care of everything related to your digital assets, including things like managing or deleting social media profiles, and downloading files.
3. Put it in writing
During the probate process, once your will is filed with the court, it becomes public. As a result, it is pertinent that you do not include any sensitive information like passwords in your will. If we were to give you one piece of advice, it would be to leave your digital executor a side letter of instructions about your digital assets. Your digital executor should not have to second guess anything. Ensure that all the logins and passwords are correct. You will have to periodically revisit the will to ensure that this information is always up-to-date.
Be clear of the value of each asset, so there is no confusion later on. You have taken great care over your life to accumulate these digital assets, and how unfortunate it would be if they were mismanaged and fell into the wrong hands.
So, don’t let your digital asset planning be an afterthought. Be proactive, and start by thinking about who would be best to appoint as a digital executor. Remember, this person should be digitally savvy. Also, make sure that you have dotted all those extra i’s and clearly spelled out how your digital assets should be dealt with.
BMO Private Wealth provides this publication for informational purposes only and it is not and should not be construed as professional advice to any individual. The information contained in this publication is based on material believed to be reliable at the time of publication, but BMO Private Wealth cannot guarantee the information is accurate or complete. Individuals should contact their BMO financial professional for advice regarding their personal circumstances and/or financial position. The comments included in this publication are not intended to be a definitive analysis of tax applicability or trust and estates law. The comments are general in nature and professional advice regarding an individual’s particular tax position should be obtained in respect of any person’s specific circumstances.
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