If only half of Canadians have a will and only about a third of them are up-to-date, according to a recent poll, it’s likely even fewer Canadians have accounted for the growing number of digital assets in their estate plans.
Many Canadians have trouble keeping track of all of their online assets – which includes everything from cryptocurrencies to eBay and PayPal accounts to loyalty reward programs and social-media sites – let alone figuring out how to distribute them among their beneficiaries when they die.
Wealth-management experts warn that overlooking digital assets in estate planning can create huge headaches down the road for executors, powers of attorney and beneficiaries, especially given Canadians’ expanding digital footprints.
“Too often, people don’t have these digital assets addressed in their will,” says Amy Dietz-Graham, a portfolio manager and investment adviser at BMO Nesbitt Burns based in Toronto. “The more planning you can do ahead of time, the easier it is for your family to move forward.”
Barry Corbin, an estate lawyer with Corbin Estates Law Professional Corp. in Toronto, says lawyers drawing up wills and powers of attorney should encourage clients to take stock of their digital assets and who they want to know about them, such as an executor if they die, or an attorney under a power of attorney if they become incapacitated owing to injury or illness.
People should also provide some direction about how to deal with those digital assets, “which may be different from the manner in which the rest of the client’s assets are to be dealt with,” Mr. Corbin says.
It’s not just about the money
While some digital content has a monetary value that can be passed on to beneficiaries, some may also have sentimental value, such as pictures on a Facebook or Instagram account.
Many Canadians haven't even considered giving direction on how they want those assets handled when they die or if they become incapacitated. For instance, Ms. Dietz-Graham says some loved ones may want a family member’s Facebook profile to remain active after they pass away, for remembrance; while others might want to delete the account, for closure. She encourages people to state their intention in their estate plans.
“Otherwise, you leave the executor with the daunting task of figuring out ... what to do with it,” Ms. Dietz-Graham says. “It can also avoid a lot of conflicts and potential litigation if you clearly spell out how the assets should be handled, just like any other assets you have.”
One type of digital asset that many people forget, which can have both monetary and sentimental value, is loyalty reward programs such as frequent-flyer miles or other types of points.
“For some clients, it’s a new-age world they don’t see the importance of,” says Melanie Johannink, an adviser at Sun Life Financial based in Bolton, Ont. She recommends designating certain reward programs to people in their will. “Even little things can add sentimental value.”
An example is with the estate of the late celebrity chef and TV host Anthony Bourdain, who reportedly left his estranged wife his frequent-flyer miles, which are believed to be considerable.
Canadians are sitting on about $16-billion in unredeemed loyalty points, according to Bond Brand Loyalty, which also notes it can be a challenge to transfer ownership of points and some brands don’t offer this option.
Ms. Johannink recommends her clients write down all of their digital assets, including passwords, and keep the list somewhere safe where only a trusted family member or executor can locate it. “There needs to be more of a whole outline, because life has gone very digital, very quickly," she says.
Out of your head and into a plan
There are also a growing number of businesses today that offer to help people organize their digital and physical assets. An example is Durham, N.C.-based Back Up Your Life, which founder Annette Adamska says was created to help people pull together the various financial and personal threads an executor, power of attorney or family members would need to access – everything from passwords, the location of documents and what to do with pets.
She also uses digital estate services, such as Everplan, which helps her clients by providing a digital archive of everything their loved ones need if they die or get into an accident and can't communicate with them.
“Everyone keeps this information in their heads,” Ms. Adamska says, which can be a problem for executors or powers of attorney when handling an estate plan. “You really want to create a roadmap where people can go and find this information.”