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6 min read

Don't deprive them of the digital - incorporating digital assets into your estate plan

Digital assets are a part of our daily lives. For most, it would be unthinkable to function without the photos, video, email, social media and financial accounts we store on our computers, smartphones or cloud platforms. Whether your own digital assets hold sentimental or monetary value, they’re worth protecting. 

Having come to Canada from Vietnam when he was 13 years old, Chau fully understands the power of financial literacy to help families reach their goals. As Senior Manager & Client Lead, Financial Education & Employer Services, he helps people learn how to use money as a tool to attain safety, flexibility, and security.
Digital assets are now an integral part of our lives. We manage and store photos, video, email, social media and bank accounts on our computers, smartphones or a cloud platform. These assets are projected to grow over time as acceptance and demand for digital experiences and media drives the creation of new digital products, services, software and devices. If you’re not protecting these assets for yourself and your future benefactors, you could lose everything.

Defining digital

Digital assets can be defined as anything that exists in a digital format. NASDAQ refers to them as media formats that were traditionally physical items, such as photos, video, and documents that are created, stored, and shared in a digital environment.

They can have financial value, such as a Paypal account, cryptocurrency, Non-fungible tokens (NFTs), online business, web sites, and domain names or bank accounts. Or sentimental value, like family photos or handwritten letters which have been digitized and stored on a smartphone, tablet, online photo sharing website, or a cloud.

What happens to these assets when you die or become incapacitated and haven’t properly stated how you’d like your wishes to be carried out?

Legal ownership

Currently, there’s no law in Canada that specifically deals with ownership, access, and control of digital assets after a person dies or becomes incapacitated. There’s no automatic Right of Survivorship for digital accounts and, therefore, no right to access the accounts of a deceased person.

Many people don’t understand that their rights depend on the Terms of Service agreement they signed with online service providers. Activities we conduct on these sites don’t belong entirely to us, but in part to companies like Apple, Meta (Facebook) and Google that store the information.

In Canada, privacy rights aren’t extinguished at death and the federal government’s Personal Information Protection and Electronic Documents Act (PIPEDA) can impose limitations on custodians regarding disclosure of personal information without the individual’s consent. PIPEDA only allows for the release of the deceased’s information 20 years or more after their death. No executor would be willing to wait 20 years to settle an estate.

British Columbia, Alberta and Quebec have enacted privacy legislation which regulates the disclosure of personal information to the fiduciaries of a deceased person. PIPEDA is, therefore, not applicable in these provinces. But if you live in any of these areas, don’t breathe a sigh of relief just yet. The issues of Terms of Services agreement and No-Right of Survivorship still apply!

Addressing the digital gap in Canadian estate law

The federal government recently proposed the Digital Charter Implementation Act (DCIA) to address some of the current gaps in Canadian estate administration. DCIA’s goal is to “significantly increase protections to Canadians’ personal information by giving Canadians more control and greater transparency when companies handle their personal information.” This applies to social media platforms, cryptocurrency exchanges and online service providers.

DCIA (or Bill C-27) has received second reading in the House of Commons and, when enacted, will provide executors, trustees, and attorneys the legal authority to manage digital assets for a deceased or incapacitated person. Currently, there’s no projected timeline estimating when DCIA would be passed.

Digital dollars – crypto and digital wallets

From an estate perspective, your fiduciary cannot simply provide a copy of the will and death certificate or Power of Attorney (POA) to a financial institution to gain access to your cryptocurrency assets, as they’re built on a decentralized structure. There’s no one to assist the fiduciary. The keys are stored in a digital wallet (software, known as a ‘hot wallet’), or a physical wallet (hardware, known as a ‘cold wallet’). It could also be stored on a piece of paper, USB drive, or even engraved onto a piece of metal so that it’s fire/waterproof.

With sophisticated users implementing multi-layer authentication, locating the crypto assets can be difficult even if mentioned in the will or POA. Ensure that the storage and location of your crypto asset keys are documented for the fiduciary.

Digital asset protection checklist

Your loved ones and executor should know which digital assets you own, and where to find and access them. To ensure this, create a list of your assets and stay on top of any evolving laws. Also, consider updating your will every couple of years.

Here are some specific actions you can take to help secure your digital assets:

  • Engage your family in conversation about digital assets. Discuss an access plan and think about what you’d want to pass on in the event of death or incapacity. Who should access this information? Also, know which digital accounts the legal representative should close or memorialize.
  • Update your will and POA to include digital assets. Ensure the information is clear and gives specific details for the management and access of these assets.
  • Activate the legacy feature offered by service providers like Apple, Google, Microsoft, Meta (Facebook) and Twitter. This option lets you decide how your family, executor, or attorney can access accounts should you die or become incapacitated. Note that most Terms of Service agreements don’t authorize the creator of the account to share their passwords. This means accessing those accounts could pose a legal liability.
  • Securely store and manage passwords with a password management service such as 1Password. Another digital asset management service that offers online solutions is Legacy Concierge. It lets you build a “Legacy Vault” to store your asset information securely on the cloud, with the ability to provide co-access to selected delegates. When selecting a provider, consider the longevity of services, service record and terms of services.
  • Work with your legal professional on a distribution plan for digital assets, which includes precise instructions for each asset. The plan should state how you’d like your fiduciaries to dispose of, distribute or sell these assets. Update this list over time.
  • Since a will’s content may be made public when an estate goes through the probate process, consider separating your password and inventory list.

Digital assets are now just as important as physical assets and should be a part of your estate plan. Having an access and distribution plan that gives fiduciaries an understanding of your digital assets and accounts will help ensure that your beneficiaries can enjoy the financial and sentimental fruits of your hard-earned labour for years to come.

Sources: Society of Trust and Estate Practitioners (STEP), Uniform Law Conference of Canada, Government of Canada, Office of the Privacy Commissioner of Canada, NASDAQ, Demetre Vasilounis (Estates Law and Privacy Law: An incomplete Intersection), Daniel A. Nelson (The Challenge of Digital Estate Administration for Executors).

This document is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice and such information should not be relied upon as advice. Please contact your lawyer, accountant or other advisor for relevant advice. CWB Group takes reasonable steps to provide up-to-date, accurate and reliable information but is not responsible for any errors or omissions contained herein. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by CWB Group or any other person as to its accuracy, completeness or correctness. CWB Group reserves the right at any time and without notice to change, amend or cease publication of the information. Visit cwbwealth.com for the full disclaimer.


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