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Digital assets, simply put, are anything stored digitally which has value, either financial, sentimental, or otherwise, as further described below. These days, keeping track of your digital assets (login emails and passwords) is an important part of estate planning. Keeping accurate records of your digital assets makes your estate and trust administration much easier for your executor, too.
Digital assets are hard to understand and harder to track. There are always new ones being created and the underlying technology can be next to impossible for the ordinary person to understand. A person’s digital assets also change over time as they acquire new ones and update the access (e.g., their passwords) to their existing ones.
It’s rare to find someone who doesn’t have an email account these days. They are used not only for communication, but also for authentication and access purposes for a number of different applications and for document storage. Messaging services such as WhatsApp and Signal are used the world over, and social media such as LinkedIn, Instagram, and more recently TikTok, are ubiquitous.
Users also often store vast amounts of communications and photos on social media sites. These services come with an individual user agreement typically allowing lifetime use. Users are generally restricted from allowing others access to their account. Some, like Facebook, have built-in options family can access after death, many do not.
These services give individual users licenses either for single items (a song, album, or movie) or offer subscriptions for access to all the content available on that service (e.g., Netflix, Spotify, Kindle Unlimited). Single items allow unlimited lifetime use; subscription services last for the duration of the subscription period.
All rights are personal to the user and non-transferrable, and users agree to restrictions on use of their accounts or items (as well as their rights being governed by intellectual property law generally).
Virtual payment services (e.g., PayPal) are linked to a user’s bank account or credit card. Users pay a fee depending on the service, or they may have free access with another purchase (e.g., Apple Pay is free for iPhone owners).
Online shopping accounts and other service accounts or applications (e.g., Uber) offer users convenience or access to services once an account is set up. These may or may not be linked to a bricks-and-mortar store, and some are linked to a pre-authorized payment method. Again, these are individual user services with accompanying agreements that typically restrict usage.
E-businesses can be a more traditional business with a website through which sales are also conducted or a virtual business conducted in an online environment. Influencers, for example, have e-businesses, earning income from monetization of online content and ad revenue sharing (such as on YouTube) or sponsored content (such as on Instagram). Online businesses are usually personality-driven, although some content may continue to generate income without its creator (e.g., e-books).
Business owners will have user agreements with the platform their content is published on, but the content itself will be their property, although accounts, and therefore access, may be personal to the user depending on the structure of their business and the user agreements they have with the platform in question.
Cryptocurrency (e.g., Bitcoin) is held in software (hot wallets), hardware (cold wallets), or on trade exchanges. Blockchain assets like non-fungible tokens (NFTs) are essentially a link to a one-of-a-kind underlying asset or may be an encrypted contract for an asset, typically stored in a digital wallet and accessed by private key.
Access often requires multiple layers of authentication, and loss of passwords or other authentication tools means the asset is lost to the owner permanently.
Some users now have dedicated devices and even dedicated email accounts and backup hardware kept in a safe deposit box for access to hot wallets or exchanges (does this remind anyone else of a James Bond movie? What about the Merrion vaults in Spectre?). Apparently, this is quite common in Switzerland’s “Crypto Valley” now (fun fact – Ethereum is legally a Swiss charitable foundation).
Photos are a typical example of this type of digital asset, but documents are also very commonly stored by individuals using online services. Usually these are accessed by password and subject to individual user agreements, with the same restrictions as other online services, although the content is owned by the user and not the storage service.
There are a variety of digital assets and the rights that come with them vary just as much. Further, since the assets reside in a number of different jurisdictions (depending on where the underlying service provider is based), different laws may govern the assets, and the rules regarding access by someone other than the user/owner are unfortunately not universal. Accessing a person’s digital assets after they become incapable or die can therefore be a complex and time-consuming process, even if their substitute decision-maker, executor or family has a complete list of these assets, which is often not the case.
In a scene from Casino Royale (2006), Dame Judi Dench’s character M has Daniel Craig’s James Bond injected with a tracker so that she can keep a closer watch on him.
While there are some useful tracker apps out there that you can use to locate lost digital devices, you can assist your executor and family enormously by simply making a complete inventory of your digital assets and devices and keeping it up-to-date. Then, discuss with your estate planning professional how best to provide access to these assets when you are no longer able to do so.
Thought should be given to how best to store passwords and other access information securely as part of this conversation.
And don’t worry. You won’t need a license to kill to keep your digital assets on track.
Susannah Roth is a partner at O’Sullivan Estate Lawyers, based in Toronto. Her practice focuses on estate administration, including cross-border and multijurisdictional administration, advising attorneys and guardians of property, executors, administrators and beneficiaries, real estate transfers and rectification, estate planning (including wills, powers of attorney, insurance and testamentary trusts), and estate litigation. This article originally appeared in the O’Sullivan Estate Lawyers blog. Used with permission.
Notes and Disclaimer
© 2023 by O’Sullivan Estate Lawyers LLP. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited. Used with permission.
The foregoing is for general information purposes only and is the opinion of the writer. Comments are limited to the law of Ontario, Canada. It is not intended to provide specific personalized advice on any individual situation, including, without limitation, investment, financial, legal, accounting or tax advice. Before taking any action involving your individual situation, you should seek legal advice to ensure it is appropriate to your particular circumstances.
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