Your Digital Legacy: Estate Planning In The Digital Age
We live in a digital age. Since the advent of the World Wide Web about 30 years ago, much of our lives have moved online—from how we communicate to where we save our photos to how we shop for groceries. In 2020, people spent an average of 144 minutes a day on social media, with some countries topping 240 minutes per day!
So much of what we do hinges on online channels and platforms, but are you protecting these important digital assets? Probably not. You may even be hearing the term ‘digital asset’ for the first time.
In this post, I’ll break down exactly what digital assets are, how they differ from physical assets, and why it’s important to have measures in place to protect them.
What is a digital asset?
Simply put, a digital asset is an electronic record. I like to think of them as our memories, money, and records, just in digital format instead of paper.
Digital assets are anything that leaves a digital footprint and includes things like:
- Social media accounts
- Digital accounts associated with managing our households (e.g., heat, hydro)
- Loyalty or reward points
- Cloud accounts
- Online gaming accounts
- Blogs or web domains
- Ad or click revenue
- Email accounts
- E-books or audiobooks
- Forums and chat rooms
- Dating apps
- Crypto Assets and non-fungible tokens
Estate planning in the digital age
The only way to legally document your wishes for your physical assets and property rights is in a Will. And around two-thirds of Canadians either don’t have a Will or have a Will that’s not up-to-date.
Considering less than half the country isn’t thinking about their physical estates–homes, bank accounts, money, etc.–it’s no surprise a vast majority aren’t thinking about their digital estates, digital footprint, and digital assets.
One reason for this is we often don’t think of our digital assets as having any financial value. However, digital assets can be worth quite a lot. According to a recent report, the average Canadian has already accumulated over $10,000 worth of digital assets.
Another thing to consider is the sentimental value of digital assets. For example, what will happen to your online photo albums after you’re no longer here.
It’s time for a mental shift and to start thinking about how we want these assets documented, protected, and managed when we aren’t here to manage them ourselves. Like your physical estate, you must include your wishes for your digital estates and powers for the Executor in your Will.
The digital executor
When you complete your Will and estate planning documents, one of the important roles you’ll appoint is executor. The executor has many duties and is responsible for carrying out your final wishes. An executor is more broadly referred to as a fiduciary. A fiduciary’s title and role will depend on jurisdictional rules, and the duties you assign (e.g., executor or estate trustee for a will, trustee for a trust deed, attorney for a power of attorney.)
In the digital age, you’ll need to make time to prepare your fiduciary or executor on how you want them to deal with your digital assets. This can include pre-planning, instructions, tax planning, legal advice, and access to qualified technical support.
Today’s executor is a digital executor. What I mean by this is the executor of your Will now has to deal with your digital assets, not just your physical assets and property rights. Plus, most physical assets come with a digital paper trail these days. So, make sure your fiduciary or executor has the information and means to carry out your digital legacy as well as your estate planning.
Importance of planning for your digital assets
By their very nature, digital assets are challenging to locate and access because they are…well… digital. Unlike some physical assets, there is likely no paper trail for your executor to follow. And just like physical assets, digital assets require pre-planning to be transferred successfully during estate administration.
Not planning for your digital estate also increases the risk to your physical estate. Think about it: a lot of physical assets are managed digitally by systems that are password protected.
Traditionally, an executor would know which assets a deceased person owned based on a paper trail. Much of what would be documented physically on paper is likely password-locked in a mobile phone, tablet, laptop, or computer in today’s digital age.
Risks of not securing your digital legacy
With cybercrime and identity theft on the rise, you leave your entire estate vulnerable if your executor can’t address your digital assets appropriately after you pass away. The same way you expect your executor to deal with your physical assets upon your death, you should expect the same for your digital assets.
The first step to doing this is with a Will. When there is no Will, the court must appoint an executor, which can take time, leaving a deceased person’s estate exposed to a potential hack.
The problem is that most Wills don’t fully account for your digital assets. So, it’s essential to take further measures for your digital assets (more on this later.)
Let’s talk social media
Social media, let me count the platforms! How many social media accounts are you on? Whether it’s Facebook, Instagram, Twitter, Snap, Reddit, Medium, or TikTok, they act as an extension of yourself, filled with personal images, conversations, and memories that will live on much longer than you will. And for some of you, they also represent a revenue stream.
So, how do you want these assets handled after you die? This isn’t a question most of us have had to face. According to a recent Google Survey run by Epilogue and Your Digital Undertaker, over 83% of respondents who use social media have no idea what happens to their accounts after they are no longer here.
Source: Google Surveys
Social media platforms have only been around for a generation. By 2130, there will be more dead people on Facebook than live ones. The time to pre-plan your social media legacy is now.
Legacy planning for your social media accounts
Some (but not all) social media platforms have legacy planning features that allow you to name a legacy contact and/or choose how you want your accounts handled after you die.
For the ones with pre-planning, you just have a couple of options when it comes to your social media accounts:
- You can turn them into a memorial; or,
- You can have them shut down.
Since these features are relatively new, they haven’t been widely adopted yet. According to the same survey mentioned above, only 8.2% of social media users have actually used any of the legacy planning features available.
Source: Google Surveys
Like any other asset, it’s crucial to include your intentions for handling your social media accounts in your estate plan. And just as important as documenting your wishes, you need to note where your executor can find your accounts and how they can access them.
If you don’t specify your social media wishes, it might lead to an undesirable digital afterlife. After all, the internet is forever, but humans are not.
Sharing your passwords is not the solution
I can’t stress this enough: Simply writing your accounts’ passwords down is not an acceptable approach. The best way to pre-plan for significant digital assets is to assume that passwords will not be available for whatever reason: legal, technical, or otherwise. Here are a couple of reasons why:
- What governs most of our online accounts is the Terms of Service, which puts the provider in the driver’s seat about what happens on death. Most service providers do not allow you to share your passwords. The implication is that your executor may not have the right to use them and expose themselves to unintended liabilities.
- Practically speaking, passwords are unreliable. They can get written down incorrectly or expire. Plus, sometimes, they might require secondary authentication steps for access.
In my opinion, relying on passwords is insufficient estate planning for significant digital assets.
This is where pre-planning documentation, steps, tools, and other service provider options come in. Without proper pre-planning, your executor will experience the same barriers to avoid identity theft and fraud, making it extremely difficult to access your accounts and carry out your wishes.
How to protect your digital legacy
Every adult has at least a few digital accounts and should prepare estate planning documentation for them. It’s important to consider what you want to happen with your digital footprint after you’re gone and save it in a safe place so your executor is clear on your wishes.
It’s also essential to take advantage of the legacy planning features of specific digital platforms, like Facebook and Google, to reduce any barriers your executor might face while trying to carry out your wishes.
When preparing to put together your estate plan for your digital assets, ask yourself questions like:
- Do you want your social media life to live on?
- Do you want your executor or family to be able to read your emails?
- Do you have content or a browsing history you’d rather just disappear upon your death?
- Do you know who will get your loyalty points?
- Do you have an unregulated cryptocurrency where the executor will need special technical instruction on how to access (note: there is no central authority for password resets with cryptocurrencies.)
- Will you have an inventory of digital assets accessible to your executor at the appropriate time?
As you can imagine, there is a lot to consider, given we’ll be the first generation to transfer our digital assets as part of estate planning. An excellent first step to healthy IT hygiene is to update security/privacy settings and delete accounts you no longer use.
Generally, most of us have yet to become fully aware of the extent and complexity of our digital assets. That’s why it’s essential to start thinking about it and having these conversations now so you can take control of your digital afterlife.