Digital access drives nearly every activity in the world — from the way people manage money, to the way they keep in touch with family and friends. It's no wonder technology is impacting estate planning as well. Today, making arrangements for your digital legacy may be almost as essential as preparing a Will.
“For the past several years we've been talking with our clients about how, as executors, we can identify and take control of their digital assets," says Leanne Kaufman, president and CEO of RBC Royal Trust.
From a practical perspective, people are shifting from keeping their personal information in a file folder at home to storing everything digitally, says Carmela Guerriero, regional vice president, Eastern Canada, at RBC Royal Trust.
“They’re also living more of their lives online,” says Tracey Woo, vice-president, professional practice and tax, RBC Royal Trust, “Be it through shopping, social media, or other online accounts that leaves a trail of oftentimes valuable and confidential information about the person when they die.”
“We’re seeing the difficulty for executors if they're not aware of how things are stored and don't know how to access them," says Guerriero. “People are uploading documents to the cloud and storing things on a USB or an external hard drive."
“Executors are faced with a number of challenges when it comes to digital assets,” says Woo. “An executor may not know what digital assets were owned by the deceased at the time of death and even if the executor was aware of the existence of certain assets, oftentimes the executor has no ability to access it. As a result, there’s a risk that those assets are lost forever.”
Complications from digitalization are expected to grow over time as people create and store more valuable records online.
“Someone recently mentioned that the best gift his father-in-law left for his family was an accordion file with everything meticulously laid out for everyone," says Kaufman. “It's essential that people put everything together, store it securely and have it accessible to an executor. It doesn't matter whether that's on paper, a USB, an external hard drive or in the cloud. It just matters it's there and accessible."
Preparing a digital Will
One hot topic in many jurisdictions is the debate over what constitutes a Will, says Kaufman.
“For centuries, an essential requirement of a Will is that it be written," she says. “Now there's digital disruption in that definition, too."
“In Australia, a draft text message was recognized by a court as the last Will and testament of a man who left everything to his brother along with instructions for his cremation," says Kaufman. “The man died by suicide before he sent the text. Afterward, his wife contested the text message, but the judge allowed the Will to go forward."
Several provinces in Australia have also recently announced interim legislation to allow for the execution of electronic Wills to accommodate lawyers and clients during the COVID-19 pandemic.
In most provinces in Canada, a Will must be signed by hand and witnessed by two individuals in order to be valid. However, in response to the pandemic and requirements for physical distancing, the B.C. Legislature passed “electronic Wills” legislation that recognizes Wills that are digitally signed and virtually witnessed.* Interim legislation is also in place in several provinces to allow for the virtual witnessing of Wills using audio-visual technology.
New companies are beginning to offer services to help people write their own Wills and then upload them to the cloud for storage.
Types of digital assets
“Digital assets” refer to any record that is stored in digital form. “Your digital assets could include intellectual property stored only in digital form such as unpublished literature or photos that could have monetary value or sentimental value to your heirs," says Kaufman. “We need to understand what happens when someone passes away who owns bitcoin and find out how to take control of that account or transfer ownership."
“There's a virtual imprint of the deceased on sites like Facebook, Twitter, Instagram, LinkedIn and YouTube that could live on forever if a family member or executor does not take steps to close the deceased’s account,” says Woo. “Each site is governed by its own terms of service that sets out how you can give someone authority to close the deceased’s social media account. In most cases, the executor is able to close the account by notifying the digital service provider of the account holder’s death.
“Access to information in the accounts is another story. Currently most providers will not provide a family member or the executor with access to information, photos stored in a deceased account holder’s email or Facebook account, for example, without a court order and even with a court order there is no guarantee the information requested will be handed over.”
“Google has been marketing something they call an 'inactive account manager' that allows you to designate someone to be notified if your account is inactive for a specified amount of time," says Kaufman. “The question is who will have authority over that account: your executor or your designated account manager? If it's not the same person that could be an issue, especially if it's a monetized account."
Tips for planning your digital legacy
One of the first steps clients should take to get their digital affairs in order is to assess and take inventory of their digital assets. The average person today has over 100 online accounts. Are they all really necessary? Do you really need to be a member of three different photo sharing and storage sites or could that be streamlined to one account?
Woo recommends taking time to identify the digital assets you really need, that are valuable to you and that you would want transferred to loved ones and consider shutting down accounts that are no longer used or that could be streamlined. Following your review, identify the five to ten digital assets most important to you and look at if and how those assets can be transferred at death to ensure they are managed in accordance with your wishes.
Other helpful tips to consider when creating a digital plan:
- Back up digital assets stored in a cloud, such as photos, videos, important documents etc., onto a hard drive that you want shared with your loved ones, as most cloud services terminate access at death.
- Leverage online planning tools offered by digital account providers such as Facebook’s memorialization and legacy features.
- And above all, maintain open dialogue with your executor and family members and disclose what digital assets you have and where they are located.
“We tell our clients 'you need to inform your executor of what's out there and how to access it,'" says Guerriero.
There are companies that offer digital services to consolidate paperwork for estate planning. Guerriero says she doesn't advise people to choose any specific company or method to get organized.
“Just get everything together in one place, keep it safe and tell your executor where to find it," says Guerriero. Although digital assets create additional challenges, that message continues to resonate today.
*At the time of writing, the B.C. electronic Wills legislation has received royal assent but is not yet in force.
RBC Royal Trust and RBC Wealth Management are business segments of the Royal Bank of Canada. Please click the “Legal” link at the bottom of this page for further information on the entities that are member companies of RBC Wealth Management. The content in this publication is provided for general information only and is not intended to provide any advice or endorse/recommend the content contained in the publication. ®/TM Trademark(s) of Royal Bank of Canada. Used under licence. © Royal Bank of Canada 2018 to 2020. All rights reserved.
In Quebec, financial planning services are provided by RBC Wealth Management Financial Services Inc. which is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RBC Dominion Securities Inc.
Contact one of our skilled RBC Royal Trust professionals to find out more about the right services for you.