We live in a digital world and it’s no surprise that many of us have acquired digital assets without realizing it or even considering them as such. And yet a recent report by Deloitte showed that on average Canadians own digital assets that range from $1 000 to $2 000. By the year 2020 on average each of us is expected to have accumulated digital assets valued at more than $10 000 over a lifetime. That’s a lot of assets.
What Are Digital Assets?
A digital asset can be defined as any digital materials or file that a person can claim ownership of . This file can be a spreadsheet a tweet a word document a photo or even a blog post. Whatever their form the main distinguishing factor of digital assets is that they can be accessed through a digital account. Digital accounts include:
- Accounts that contain information about currency belonging to you and can translate into real money . For example your PayPal account. Or those precious loyalty points you have diligently acquired over the years with the aim of going on that dream vacay. Other examples include your credit card accounts
- Accounts that contain personal information or information of commercial interest such as emails or social media accounts.
- Accounts containing virtual assets like iTunes where an individual possesses a license to use the digital asset even though they do not own it.
Note though that a digital account and a digital asset are not the same; a digital account can prevent a user from accessing the digital asset it contains. For example your Google Photos account is an account holding your digital assets – your photos but you may be locked out of it if you violate the service provider’s terms of service.
Digital Assets Can Be Lost
Turns out we’re all wealthier than we know. And yet interestingly enough despite the fact that digital assets are part of one’s wealth people never address them in their wills or estate plans.
But it’s essential to account for these things in order not to lose any sentimental or monetary value they hold for us. For example personal blogs and websites can generate income and many online games create rewards that can be traded for real money. Bitcoin a digital currency that is created and transferred electronically is a perfect example of a digital asset that has a monetary value – lot’s of monetary value. One Bitcoin is worth over $5000USD! If it’s not included in a will or the PIN is not disclosed to a relative prior to the death of the owner that money will be lost forever unclaimed by the family or next of kin.
Or take the case of small businesses. Often a small business owner’s email account is used when undertaking commercial transactions or when communicating with suppliers. In the event of the passing of the business owner day-to-day operations will be halted if no one has access to his or her account. This goes to show how important it is to include such information in wills and estate planning.
Legal obstacles associated with Digital Assets
Because there is no clear legislation governing the disposal of digital assets the trustee of an estate may find that because of the service terms and conditions governing digital accounts there really isn’t much they can do to access the assets of the deceased owner. Without vivid instructions in a will it is assumed that the deceased had no intention of transferring digital assets. This is not because of meanness on the part of the digital service provider. In most cases they have the right to prevent access to non-account holders out of fear of breaching privacy laws which are in effect before and after death.
Estate Planning for Your Digital Assets
So how do you plan for the property disposal of your digital assets? By including them items in your will. Here are a few things to bear in mind:
- Inventory – Include an inventory of all digital assets for the appointed trustee who is mandated to manage the digital accounts.
- A password – the protected list of digital assets can only be accessed by the trustee. Thus a password should be provided to this person so that they can gain access and affect the wishes of the deceased detailed instructions in the will the manner in which the digital assets are to be distributed among the heirs.
• Legislation – The final step is to ensure that any provincial legislation is actually considered when the estate plan is first drafted and even in the last copy. Digital assets are governed by provincial law and the rules may differ from province to province so familiarize yourself with your provincial requirement. The best way to do this is to speak to a professional who has expertise in this area.