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.
“Our conversations with clients around planning for their future often include making sure there‘s a plan in place for their digital assets as well,” says Dean Moore, managing director & head of Wealth Planning at RBC Wealth Management in the UK.
The pandemic may have been a last push for those who shied away from online retail, social media or other virtual activities. This also means there is more valuable and confidential data available online about people 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 Carmela Guerriero, regional vice president, Eastern Canada, RBC Royal Trust. “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 Tracey Woo, vice president, professional practice and tax at RBC Royal Trust. “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 digitalisation are expected to grow over time as people create and store more valuable records online.
Paper files may have been kept in a safe place with access being granted when someone died. However, online files aren‘t that easily accessible without a plan in place. Regardless of which secure method is used to store your data, make sure it‘s accessible by an executor when needed.
Preparing a digital will
One hot topic in many jurisdictions is the debate over what constitutes a will, says Leanne Kaufman, CEO, RBC Royal Trust.
“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 recognised 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.”
In the UK, increased demand for making wills during the COVID-19 pandemic has proven challenging. One challenge was having two witnesses appear in person. As a result, the government announced amendments to The Wills Act 1837 allowing the presence of the witnesses to include virtual presence such as via video link.
New legislation which also includes ‘distanced witnessing’ allows witnesses to understand and acknowledge the signing of a will as long as they have a ‘clear line of sight.’ For example, witnessing through a window or open door of a house or vehicle to maintain physical distancing.
New companies are beginning to offer services to help people write their own wills and upload them to the cloud for storage.
Types of digital assets
“Digital assets” refer to any record that‘s 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,” 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 executor with access to information, photos stored in a deceased account holder‘s email or Facebook account 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 monetised account.”
Getting started with your digital legacy planning
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 photo sharing and storage sites or could that be streamlined to one account?
Moore recommends taking time to identify the digital assets you really need, that are valuable to you and that you would want to be transferred to loved ones. Then consider shutting down accounts that are no longer needed. Following a review, identify five to ten digital assets most important to you and look at if those assets can be transferred upon death—and how—to ensure they‘re managed in accordance with your wishes.
Other helpful tips to consider when creating a digital plan:
- Back up digital assets stored to the cloud, such as photos, videos, important documents, etc., onto a hard drive you want shared with your loved ones. Most cloud services terminate access at death.
- Leverage online planning tools offered by digital account providers, such as Facebook‘s memorialisation and legacy features.
- Above all, maintain an open dialogue with your executor and family members and disclose what digital assets you have and where they‘re located.
“Our general advice to clients is to inform your executor of what accounts and data exist and how they can access it,” says Moore. ”As long as you keep everything together and safe, with a plan for how your executor will get to it, you‘re already on the right track.”