November is Make a Will Month in Canada. This event encourages Canadians to proactively plan for the management of their assets after their death. As technology rapidly evolves, this exercise requires will-makers to consider how their non-tangible and digital assets will be distributed upon their death.
Traditional estate law, built on the tangible concepts of land, bank accounts, and physical possessions, is struggling to keep up with the intangible world of data, code, and private keys. This gap between law and technology is a new frontier for estate litigation, giving rise to complex and emotionally charged disputes.
What Are Digital Assets?
Before diving into the disputes, it’s crucial to understand the broad scope of what constitutes a “digital asset.” These are not just for the tech-savvy; nearly everyone has them. Litigation can arise over any of the following:
- Cryptocurrency: Bitcoin, Ethereum, and thousands of other tokens held in “hot wallets” (online) or “cold wallets” (offline hardware).
- Non-Fungible Tokens (NFTs): Digital art, collectibles, or “utility” tokens that represent ownership of a unique item.
- Digital Financial Accounts: PayPal, Wise, or online brokerage accounts.
- Social Media Accounts: Facebook, Instagram, LinkedIn, X (formerly Twitter). These have sentimental value and, in the case of “influencers,” significant monetary value.
- Online Business Assets: Domain names, Shopify stores, websites, blogs, client lists, and associated intellectual property.
- Digital Content: Photo and video libraries (iCloud, Google Photos), email accounts, and digital music or book libraries.
- Loyalty and Reward Points: Air Miles, Aeroplan points, and credit card rewards, which can have substantial cash value.
- In-Game Assets: Items, “skins,” or currency held within online games, which can be worth thousands of dollars.
- Software and Licenses: Subscriptions or perpetual licenses for professional software (e.g., Adobe Creative Suite, design software) that may be critical to a business‘s value.
The “Digital Key”: Why Access is the First Point of Failure
The most common and immediate dispute arises from a single issue: access.
An estate trustee has a legal duty under Ontario’s Trustee Act to identify, secure, and value all assets of the deceased. But how can they do this when the assets are locked behind a password?
The Password Problem
If a deceased person was the only one who knew the password to their laptop, their email, or their cryptocurrency wallet, that asset is effectively sealed. This leads to immediate litigation:
- Applications for Access: The estate trustee may need to apply to the court for an order compelling a company (such as Google or Apple) to grant access. That application may need to be brought in a foreign jurisdiction depending on the situs of the asset.
- Digital “Breaking and Entering”: The trustee may need to hire digital forensic experts to attempt to bypass security on a device, an expensive and uncertain process.
- Lost Forever: In the case of cryptocurrency, the situation is dire. If the “private key” (a complex cryptographic password) is lost, the assets are not only inaccessible but also permanently and irretrievably lost. There is no “forgot password” link.
The Two-Factor Authentication (2FA) Trap
Even if a password is found (perhaps written in a notebook), most secure accounts are now protected by 2FA, which sends a code to the deceased’s personal phone. If the phone is locked or its service has been disconnected, the trustee is again locked out, forcing them to return to the courts.
“You Don’t Own It”: The Terms of Service Agreement vs. The Will
This is one of the most complex legal battlegrounds. A Terms of Service Agreement is the lengthy contract everyone agrees to (but rarely reads) when signing up for a service like iCloud, Facebook, or a software license.
A significant conflict arises when a person’s Will directly contradicts a company’s Terms of Service Agreement. For example:
- The Will: “I leave my entire digital music library and all my blog writings to my daughter.”
- The Terms and Service Agreement: “You are granted a non-transferable, non-exclusive license to use this service. This license terminates upon your death. All content is non-transferable.”
This sparks litigation. Which document takes precedence? Is a Terms of Services Agreement, a form of contract, capable of overriding a clear testamentary intention set out in a will? Beneficiaries who believe they are entitled to a valuable or sentimental digital asset will challenge a company’s refusal to transfer it, forcing the estate into a legal fight. The reality is that for many of our digital “possessions,” we are mere licensees, not owners.
Ontario’s Laws and the Digital Dilemma
Ontario’s estate statutes were not written with the Internet in mind, and this ambiguity is a rich source of litigation.
Is a Digital Asset “Property” at All?
Ontario’s Succession Law Reform Act (SLRA) defines “property” in very broad terms, including “property of any kind.” This almost certainly includes assets with a clear monetary value, such as Bitcoin or a domain name.
The legal fight is over the grey areas. Is a Facebook account “property”? Does a lifetime of photos in a cloud account count? A beneficiary who is cut off from these memories may litigate to have them declared part of the estate’s property so they can be preserved and distributed.
The Executor’s Catch-22: Privacy vs. Duty
An estate trustee has a duty to find all assets. The best place to look is the deceased’s email account, which typically contains statements, receipts, and account information.
However, federal privacy law, the Personal Information Protection and Electronic Documents Act (PIPEDA), often prevents a corporation like Google from simply handing over access. PIPEDA protects the personal information of the deceased. An executor may be the “personal representative” of the deceased, but tech companies are often unwilling to take that risk without a specific court order.
This forces the estate to spend time and money seeking a court order, all while beneficiaries may be accusing the trustee of failing in their duties.
While there are jurisdictions in Canada that have passed legislation allowing a fiduciary, which includes an executor under a Will, to access a deceased person’s digital information, Ontario is not one of them. Only Saskatchewan, New Brunswick, PEI and the Yukon have enacted such legislation to date.
The “Password on a Napkin” Problem: Ontario’s New Will Validation Powers
What if the deceased left their intentions for their digital assets in an unusual format? For example:
- An email to a friend: “If I die, my brother gets my crypto”;
- A spreadsheet on their desktop titled “My Will” listing assets and beneficiaries, but which is not printed or signed; or
- A text message.
Historically, these would not be considered a valid will. However, amendments to the SLRA (specifically, Section 21.1) that came into force in 2021 gave Ontario courts a new power. A judge can now rule that a document (or even a digital record) that does not meet the formal requirements of a will is nonetheless valid if the court is satisfied that it represents the “fixed and final” testamentary intentions of the deceased.
This “substantial compliance” rule has opened a floodgate for litigation. Now, a disappointed family member can find an old email or a note in a phone and try to convince a court that it is the “real” will, superseding a formally signed will. These disputes are fact-driven, complex, and incredibly stressful for all involved.
Cryptocurrency and NFTs: A Special Case for Litigation
Crypto and NFTs present unique and volatile challenges for estate trustees.
The Duty to Secure and Volatility
An estate trustee has a duty to act prudently. What does “prudent” mean for an asset that can gain or lose 50% of its value in a single day?
- If the trustee sells immediately: Beneficiaries who wanted to “HODL” (hold) may sue, claiming the trustee sold at the bottom of the market and cost them a fortune.
- If the trustee waits: The asset may crash. Beneficiaries will then sue the trustee for failing to protect the estate’s value by not selling the “speculative” asset immediately.
There is no easy answer, and trustees are sometimes sued, regardless of their actions.
Hiding Assets
The anonymous or pseudonymous nature of crypto makes it a vehicle for hiding assets, particularly in contentious family situations or spousal disputes. A surviving spouse or child may suspect the deceased had a hidden cold wallet but have no proof. This can lead to costly litigation, including forensic searches and applications for disclosure from exchanges, to try to trace assets that were designed to be untraceable.
Valuation for Probate
An estate trustee must declare the value of all estate assets as of the date of death to calculate the Estate Administration Tax (probate fees). How do you value a one-of-a-kind NFT? Or a collection of thousands of small “alt-coins”? Valuation disputes can tie up an estate for years, pitting the trustee against beneficiaries and the Ontario Ministry of Finance.
Planning Is the Only Antidote
The law is slowly adapting, but litigation over digital assets is already a reality. The core of these disputes is almost always a failure to plan.
A will that is silent on digital assets, or a person who keeps all access information in their head, is creating a recipe for conflict. The ambiguity surrounding ownership, the technical barriers to access, and the volatility of these new asset classes often leave trustees and beneficiaries with no choice but to turn to the courts for a resolution. This area of law underscores that a modern estate plan must be as comprehensive about your digital life as it is about your physical one.
Contact Tierney Stauffer LLP for Estate Law Services in Ottawa, Cornwall, Kingston, and North Bay
Digital assets are now central to modern life and modern estate disputes. Whether you’re an executor struggling to access digital accounts or a beneficiary navigating complex online holdings, early legal advice can make all the difference. The estate law team at Tierney Stauffer LLP helps clients resolve disputes involving cryptocurrency, NFTs, online businesses, and other virtual assets. To discuss how to protect your interests and ensure your loved one’s digital legacy is handled properly, please contact us online or call 1-888-799-8057.
