Nowadays, it feels like anything can happen online – even wealth accumulation. And as a result, more and more Canadians are considering adding digital assets clauses in their wills.
But what are digital assets – and how do you deal with them in your estate plan? Below, we’ll introduce the concept of digital assets (including examples) and explain how they can be addressed through estate planning.
What are Digital Assets?
A digital asset is a digital item that:
- Has value (whether sentimental or monetary);
- Is owned by an individual; and
- Can be located.
While digital assets such as images, videos, and written work have existed for decades, recent advancements have created an increased need for estate planning that handles digital assets. For example, the rise of cryptocurrency and non-fungible tokens (or NFTs) that hold monetary value and can significantly appreciate has translated to an increased need for planning around these types of assets.
Beyond “assets,” per se, technology has driven a new need for estate planning relating to online accounts. For example, most individuals have countless accounts ranging from social media profiles to rewards accounts and if their will lacks clear direction on accessing these accounts after they’re gone, they will fall by the wayside.
Digital Assets Examples
As the section above demonstrates, digital assets refer to a wide array of assets living in the technological world. To help make sense of what digital assets are, we’ve included a list below of common types of digital assets:
- Cryptocurrency: electronic currencies, such as Bitcoin and Ethereum.
- Non-fungible tokens: digital artwork that can be traded and exchanged for money.
- Virtual property: for example, purchasing real estate in the metaverse.
- Digital creations: including digital artwork, music, written work, and other entertainment.
- Personal assets: for example, family photographs that you’ve uploaded to your computer.
- Data: such as passwords to access your social media profiles.
How to Create a Digital Assets Clause in Your Will
Adding a digital assets clause in your will is easy with the help of an experienced estate lawyer. Below, we’ve included some information regarding considerations for individuals planning to deal with their digital assets in their estate planning documents.
Keep in mind that, in Canada, there are no laws explicitly directing how digital assets should be handled in an estate. And as both technology and the law evolve quickly, it’s best to consult with an experienced estate lawyer to confirm the current state of the law and strategies for addressing digital assets in your will.
Determine Whether You Have Digital Assets
As a starting point, you’ll want to determine whether you have digital assets that you wish to address in your estate planning documents. This can be a difficult process, as many different types of digital assets come with different methods of preservation.
For example, if you own cryptocurrency, you’ll want to include it in your will as an asset that can be passed on to a beneficiary. For digital assets such as digital photographs or social media passwords, which may not necessarily have financial value (but certainly sentimental), you may want to adopt a different strategy – such as determining what you want to do with your social profile after you pass away.
In any case, your first step will be identifying and documenting your digital assets to ensure they are addressed in your estate plan and can be located by the executor of your will.
Organize and Protect Your Digital Assets
Building off the point above, it’s important to identify your digital assets and take active steps to organize and protect them. After all, if your executor or beneficiaries cannot locate or access your digital assets (or aren’t aware of them, to begin with), you run the risk of leaving them in stasis.
If you aren’t already tracking your account passwords, you’ll want to come up with a safe, secure system for doing so. For example, you can track your passwords by writing them down in a book (like you would with an address book), creating an encrypted digital password file, or using a secure password management system.
Likewise, you’ll want to ensure that you have access information for cryptocurrency accounts, NFTs, and other digital assets safely recorded to ensure that, when the time comes, your executor can transfer the account or asset to your beneficiaries.
Determine How You Want Your Digital Assets to Be Handled
Like any asset, you’ll need to consider whether you want to leave digital assets to a particular beneficiary in your will. In some cases, you may leave all of your assets to one beneficiary (like a spouse or child); in others, you may choose to leave certain assets to specified beneficiaries.
With respect to assets like social media accounts, you likely won’t be “leaving” your accounts to a beneficiary like you would with other digital assets. However, social media websites like Facebook provide options to memorialize the account if they are made aware that an individual has passed away (and keeps the social media account secure by preventing others from accessing the account). This is an area where it’s important to think about your intentions and – perhaps most important of all – track your passwords in case you would like to provide family members with access after you have passed away.
The Executor’s Role Regarding Digital Assets
Executors are responsible for carrying out a will-maker’s wishes after they have passed away by following the instructions set out in a will. To that end, it’s important to include a digital assets clause or clauses in your will with:
- Instructions to your executor relating access, distribution, and disposition of your digital assets (including instructions on accessing, deleting, or modifying accounts); and
- A list of all digital assets, including passwords.
The instructions and information required will vary based on the digital assets, your instructions, and how you would like them handled.
What Happens if I Don’t Have a Digital Assets Clause in My Will?
If you don’t have a digital assets clause in your will, you run the risk of not having your assets handled in the manner you want and not being able to identify or access your digital assets. This issue arises because digital assets aren’t always easily identified – unlike a car, property, or other physical assets, digital assets can be difficult to ascertain or access.
That’s why, if you haven’t already considered adding a digital assets clause in your will, you should speak with an experienced estate lawyer. They will be able to advise you on handling your digital assets and set up strategies to ensure that your assets are properly addressed in your will and that the proper information is in place for your executor to locate and access them.
The Estate Lawyers at Tierney Stauffer LLP Provide Comprehensive Estate Planning Advice
At Tierney Stauffer LLP in Ottawa, we take a client-focused approach to our work, providing strategic guidance throughout the estate planning and administration process. If you are dealing with estate administration or require estate planning assistance, our trusted lawyers have extensive experience and will work to ensure that your estate needs are met. Call us at 1-888-799-8057 or contact us online to set up a consultation with an experienced wills and estates lawyer.