Digital assets, accounts should be included in estate planning
By AdvocateDaily.com Staff
Technology may have changed most Canadians’ day-to-day lives, but it’s also having an impact on how they should prepare for their declining years and even death, says Winnipeg wills and estates lawyer Cynthia Hiebert-Simkin.
“Many people are living most of their lives online and there’s no question that it can create complications when we’re dealing with issues like who’s looking after my stuff if I can’t look after it myself,” says Hiebert-Simkin, a partner with Tradition Law LLP, Estates and Trusts.
Powers of attorney and executors need to know about digital assets and accounts — and how to access them — when they’re managing someone’s affairs or overseeing their estate, she tells AdvocateDaily.com.
“We have to expand our idea of what an asset is. In this day and age, it’s no longer the thing that you can touch or that you have a statement for. There are all kinds of assets that will exist solely online,” Hiebert-Simkin says.
Digital assets include, for example, photographs on a hard drive, downloaded music from an online streaming service, and bitcoin, which only exists online. Digital accounts cover everything from email, PayPal and Facebook, to accounts with financial institutions, eBay and Amazon, she says.
“If the attorney or the executor can’t get access to the accounts or to the assets, it’s going to make it difficult to manage the person’s affairs if they’re alive, or to administer the estate if they’re dead. There may also be assets of which the attorney or the executor is unaware. That can be a challenge,” Hiebert-Simkin says.
“I’ve had cases where the biggest challenge right at the outset was that the deceased had all of their finances online but failed to give the executor the password to get into their computer.”
Hiebert-Simkin says she encourages her clients to draw up a list of their online accounts and assets, along with passwords, so the power of attorney and executor can gain access without difficulty.
“The challenge with the list of the accounts and passwords is that all of the security websites say you shouldn’t be keeping that information on your computer because it could be hacked. Instead, you should have a hard copy of it and ensure your attorney and executor know where it is. You should also keep that information secure so that it can’t be used against you,” she says.
It’s especially important for an executor to have the correct information because if assets of “significant value” are not identified and located, it’s possible that the beneficiaries could bring a claim against the executor, she says.
“That’s a really tough situation to be in.”
In a digital world with various terms of service, the days when someone can simply leave their record collection to a family member or friend upon death are becoming more uncommon, Hiebert-Simkin says.
Although terms of service must be acknowledged when an online account is opened, “nobody reads them,” she says. But for the power of attorney or the executor, “for each account that has been opened, they have to read the terms of service and determine what they’re permitted to do and what, in fact, is an asset.”
“There are some that specifically say the holder is not allowed to designate someone and that makes it very difficult for the power of attorney or executor,” Hiebert-Simkin says.
“It would be nice to think that my clients are creating a binder of all of the terms of service for all of their accounts, but that’s not happening.”
Wills and estates lawyers need to ask clients about their digital accounts and assets, Hiebert-Simkin says, “so that the documents can be prepared in order to address those issues. If a lawyer is not asking these questions, they may create a document that is not going to do the job it’s supposed to do.”
When drafting the power of attorney and the will, lawyers need to include “specific powers that allow the attorney and the executor to have access and control of the digital assets,” she says, noting that control extends to all devices, such as a computer or cellphone — “anywhere this information resides.”
Hiebert-Simkin says while she has many older clients with “very active online lives,” the population is aging and the digital issue is only going to become more pronounced for lawyers drafting estate documents.
“I have young clients who don’t know how to write a cheque,” she says. “Their entire banking life is online.”