Approxiamately 57% of Canadians do not have any provisions for digitals assets in their estate plan. This can cause many problems when it is time to administer an estate -- where do they go? Who can access them? Ultimately, what happens to them?
What are Digital Assets?
Simply put, Digital Assets can be anything stored on a physical device, the device itself, and any files stored on the cloud. Anything from an online account to a digital camera may be considered a digital asset.
More often than not, an executor can access the deceased's sentimental belongings such as old photographs by following the estate plan. Usually this entails looking in the deceased’s home to find albums and keepsakes of sentimental value (and sometimes monetary). With the emergence of digital photography, online file sharing, and online storage, there are now more steps involved as opposed to going into someone's basement and finding old albums and belongings. Now an executor might have to locate a hard drive, an account, and password to access these documents.
In fact, oftentimes an executor and/or family members may not even be aware of what a family member possesess because their assets are predominantly digital. Therefore it is very important that we include these assets when drafting a will.
Types of Digital Assets
There are two kinds of digital assets to consider; the sentimentl digital assets and the monetary digital assets.
- Sentimental Digital Assets
- Sentimental assets are files that contain family photos, personal music collections, social media accounts, email accounts, and other digital files that may not provide monetary value but they mean something to your loved ones.
- Monetary Digital Assets
- It is important to consider intellectual property and the issues your executors might deal with and look into after your death. If your digital assets are not considered after your death, there are currently no laws that will protect them.
- Financial digital assets may include: your websites or accounts that generate any kind of revenue, accounts that manage your funds (banking apps, PayPal account). Even things that we often forget are accumulating such as frequent flyer points and loyalty memberships.
Without a real plan for these assets, they may go unnoticed in your estate plans. It is exceedingly important to address what you want to happen with all of your assets, even the ones in the cloud.
Some Helpful Tips
- Staying organized is key. Keeping your documents, passwords, and files organized helps to ensure that everything is easy to find when it is time to administer one's estate. Helpful password management tools like LastPass or Dashlane can help to keep passwords and access codes in one place.
- Make a plan. What do you want to happen with your digital assets? When your files are in order it is much easier to make a cohesive plan for your digital assets. Having a plan also makes it infinitely easier for your executor and your loved ones -- it helps to avoid unnecessary conflict and difficult decisions amongst family members.
- Designate a digital executor. What is a digital executor? A digital exectuor is someone designated to deal with your digital assets (they can also be your executor, but some choose to separate the two).
As the population ages and assets continue to be stored digitally, it is crucial to organize your assets and create a feasible estate plan. So keep track of your digital assets, keep them oranized, and decide where you want them to go!
BMO Wealth Institute ↩︎