More than ever, Canadians are living their lives online. As our digital footprints grow, so too does the importance of planning for the management of digital assets on death or incapacity.
What are digital assets? It’s an interesting question, and one that’s surprisingly elusive. When we think of an asset, most of us imagine a form of property, something that is owned and can therefore be sold or gifted. But the term digital asset extends beyond traditional notions of property to include a wider range of electronic, and therefore more intangible, things. Social media accounts, electronic communications (such as emails), cloud storage, accounts with retailers and loyalty programs are all examples of digital assets—some of which more clearly satisfy our notions of property than others.
The value of digital assets can be financially significant in a traditional sense, but digital assets often have special sentimental value (photographs, emails and music) or are personally revealing (search histories, location data and private messages). Critically, digital assets provide clues about a deceased individual’s private life in a way that nothing before ever has. Given the amount of digital information that is recorded about each of us, digital assets are unique in estate planning for their potential, for better or for worse, to reveal us as we lived. Given their importance, digital assets must now be included in any planning for death or incapacity—in a way, of course, that balances privacy against the orderly transfer of intangible property and the decedent’s digital legacy.
But there are complications.
The rights of digital asset holders are often determined by the user agreements entered into at the time the digital asset is created. Opening a social media account, for instance, usually requires the user to agree to a briefly displayed and easily ignored “clickwrap” user agreement. These agreements often restrict the rights of the user to access an online account on death. It may also prohibit sharing password information and could require interpretation according to the laws of a foreign jurisdiction and that all claims against the company must be brought there. On death, these agreements bind the estate and can force the executor into long battles to gain access to the account, often in the jurisdiction of the internet company with whom the user agreement was made.
There have been limited legislative reforms to address these issues. Saskatchewan is among the first provinces to enact legislation. Based on model legislation accepted by the Uniform Law Conference of Canada, The Fiduciaries Access to Digital Information Act, which entered into force in June, provides that by default, fiduciaries (including executors) have access to digital assets, subject, in the case of a deceased person, to the terms of his or her will or a court order.
However, even given this legislation, it’s not clear that companies controlling digital assets based outside of Canada will comply with demands made under it without further steps taken in their own jurisdictions. And, indeed, similar legislation has not been enacted elsewhere in Canada.
Consideration of digital assets is now a necessary part of a complete estate plan. This is a rapidly evolving area of the law, and one that is increasing in importance each year. But while it can be a complex and challenging issue, it also presents an excellent opportunity to reflect on the things that mean most in our lives.
If you’re interested to learn more, don’t hesitate to contact me.