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Making a Will is one of the most important tasks you will complete during your lifetime. A Will is a document that, amongst other things, provides for the orderly distribution of your property after your death and appoints an executor to carry out this distribution.  A Will is essential in order to simplify matters following your death and to ensure that your property passes to those whom you wish to benefit.  If you die without a Will, the administration of your estate (everything you own when you pass away) will be more expensive and complicated by the fact that an executor has not been appointed.  If you do not prepare a Will, your property may pass to individuals whom you did not want to share in your estate, and those whom you would have wanted to inherit your property, may receive nothing at all or less than you intended.

When most people have their Wills prepared, they often only consider their tangible property, but little, if any, consideration is given to their intangible assets, i.e. intellectual property or digital assets.  For example, you may want to consider granting someone access to your Facebook account after you pass away in order to close out your Facebook account or carry out other specific instructions.  Many documents and photographs that used to only be available in hardcopy are now, increasingly, only available in digital format.  The transition from paper to paperless will make our disposition of digital assets even more vital.  So much personal information is now stored in digital format.  In this context, the most salient question is, what happens to our digital assets, and the associated accounts and personal information, once we pass.

Digital Assets
A Will allows you to plan a sensible, cost effective and satisfying transfer of your property and wealth to your family and selected beneficiaries.  Property, in this context, includes all of a person’s assets, including digital assets.  The digital assets that one might transfer in their Will might include email accounts, digital music, digital photographs, digital videos, social networking accounts, file sharing accounts, financial accounts, banking accounts, domain registrations, and any other type of digital assets.

There are several issues that are relevant to the disposition of digital assets.  Two of the most important such issues are:

  • Ownership
  • Access and Control

Ownership of Digital Assets
An important issue related to digital assets is the ownership of digital assets.  For example, if one purchases a digital copy of a movie, does that grant the purchaser actual ownership over a copy of the media, similar to analog media purchases, or alternatively, mere permission to watch/read/listen to the media whenever the purchaser wants?  We’ll have to leave this question for the courts to decide.  Either way, such digital media, which may include movies, books and music, may have great monetary value and its distribution will have to be considered carefully.

Also important in answering the ownership question is the Use Agreement entered into between the deceased and the service provider.  Depending on the content of the Use Agreement, it might very well be the case that the deceased does not have ownership rights over these assets.  If this is the case, the deceased would not have the right to transfer ownership of the digital assets.  The Terms of Service for many internet account service providers, such as Facebook, claim that the service provider own the rights to virtually everything its users post on the service providers website.

Ownership of digital assets is only practical where those who are to have ownership and control also have the ability to access these digital assets.

Access to and Control of Digital Assets
In addition to dealing with the transfer of digital assets, when preparing a Will, you should consider the issue of access to digital assets and the right to manipulate such assets.  This issue is even more important if the deceased was only receiving e-copies of bills or financial statements, or if the deceased was managing other household affairs electronically.  It is likely the case that creditors/banks will delay providing hard copies of bills/statements if you do not have the proper passwords or usernames.  This delay may have unintended consequences such as cancellation of crucial services or delinquent fees.

Your executor might require access to your digital records in order deal with various accounts you may have including bank, credit cards or mortgage accounts.  However, your executor might not even be aware of the existence of these various digital assets if there is no hard copy of them.  Indeed there is a need to keep user names and passwords confidential but, just as certainly, some of these user names and passwords need to be provided to your executors or beneficiaries so that they may be able to deal with these digital assets.

Not only is it important for you to consider to whom you would like to transfer ownership and control of digital assets, you should also consider granting limited access and control rights to the executor of your estate.  An estate usually takes about a year to administer but can take much longer.  During this period, you’ll need to ensure that your executors are able to deal with your digital assets.

Discussion
Some U.S. jurisdictions have already enacted, or are considering enacting, laws in respect of digital assets and Wills, specifically, an executor’s rights to control a deceased’s digital assets. No jurisdiction in Canada has enacted legislation which specifically deals with digital assets.  Consequently, specific rules related to digital assets don’t really exist.  There was a case recently in the U.S. where the parents of a soldier who was killed in Iraq wanted access to their deceased son’s email account.  However, the email service provider refused access to the deceased’s parents on the basis of their privacy policy and service contract which restricted access and use rights to the account-holder, namely the deceased soldier.  This case highlights the need for people to start to seriously consider issues related to their digital assets.

Digital assets are an important part of your estate and need to be considered carefully when having your Will prepared or considering your estate plan.  Otherwise, not only will you stand to lose financial digital assets, but also digital assets that carry sentimental value; in both cases, digital assets have value.  During the estate planning process clients take account of their tangible assets and turn their minds to whom they would like their tangible assets to be passed; the same attention and consideration ought to be paid to intangible assets as well.

During the estate planning process, the first step should be taking an inventory of your online presence and listing all of your digital assets including your online accounts, usernames and passwords.  Next, you should consider and provide instruction on what your wishes are with respect to what should happen to your digital assets after you pass away.  The benefits, to be sure, of providing specific instructions expressing your wishes regarding your digital assets to your legal advisor during the estate planning process is that, not only will your digital assets pass on to those persons you want, but the orderly transfer will avoid any burdens for your loved ones.  Consider how difficult it would be for your loved ones to discover or manage your online presence without the necessary information and direction from you.  How many times have you forgotten a password or username?  How difficult and time-consuming was it for you to either remember or reset your username or password?  Now consider how much more difficult and time-consuming an exercise this would be for your executors.

When reflecting on your digital estate (all of your digital assets are, collectively, your digital estate), one option to consider is appointing a digital executor.  Most clients expect to appoint an executor when they are preparing their Wills.  However, appointing a digital executor whose role includes dealing with all of your digital assets may make sense for you as well.  Your digital executor may be responsible for deleting any files that you do not want to exist after you pass, deleting confidential information stored digitally such as emails, or transferring access to certain digital assets to persons that you have chosen.

Conclusion
We are all living in the digital age.  Estate planning must keep pace and evolve into the digital age.  These days, estate planning involves much more than simply deciding who gets our house and our bank accounts.  It’s a fact that most of us have a significant online presence and that this presence is growing.  It’s also a fact that our online presence plays an important role in our lives.  Indeed, our online presence will be part of our legacy as well once we pass.  Much of our financial, personal and professional information is found online.  Further, much of this information online is not found anyplace else.  For these reasons, amongst others, it’s prudent to reflect on, and provide specific instructions in respect of, these issues during the estate planning process.

The risks associated with neglecting to consider and properly make decisions related to your digital assets are myriad.  If you do not appoint someone to deal with your digital assets once you pass, you expose yourself to post-mortem identity or content theft.  Consider your digital assets, especially those which include your personal information, forever floating around in cyberspace.  At Siskinds, we have had experience addressing the issue of digital assets in the context of estate planning, specifically how to properly pass digital assets after death.  Feel free to contact us with any questions you might have in regards to your digital estate.

Adnan practices in Siskinds’ Business Law Group and also assists clients with Estate Planning.  If you have any questions or would like more information about Estate Planning, please contact Adnan Chahbar at adnan.chahbar@siskinds.com or call 519-672-2121.

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