Why inheriting a password can be harder than inheriting a house

This article looks at why so few Canadians have a digital estate plan and why that's a problem.

When creating an estate plan, many people are careful to ensure their major assets, such as their home, vehicles, and investments, will be handled according to their wishes. One type of asset that often gets overlooked in estate planning, however, is digital assets, such as social media accounts and online financial accounts. These digital assets can often contain quite a lot of sentimental and monetary value. However, because of the lack of laws specifically addressing such assets, family members may have difficulty accessing them after a loved one's death.

Lack of preparedness

As Global News reports, only 16 percent of Canadian Baby Boomers have even thought about how they want their digital assets handled after they pass on. Even worse, just three percent have taken concrete steps to make sure their families are prepared for what to do with those digital assets.

That lack of preparedness is a major problem because access to those assets is largely governed by the terms and conditions of the various companies that control access to those assets rather than by provincial or federal law. Many companies reserve access to online accounts only to the account holder, even after they have died. As a result, if an estate plan does not include detailed instructions about who gets access to a certain account, then loved ones could find themselves locked out of those accounts. In some cases, family members have even had to get court orders in order to gain access to a deceased loved one's online accounts.

Why digital assets have value

Digital assets often have quite a bit of value, both financially and sentimentally. Photos and videos that are saved to Facebook, Instagram, and other social media accounts will likely be something that loved ones will want to hold onto. Online accounts can also have significant monetary value, such as PayPal, eBay, and Amazon accounts. Even rewards programs, such as Air Miles, can be worth thousands of dollars and need to be taken into consideration when creating an estate plan.

As the Globe and Mail reports, it is important to create a plan to deal with digital assets that includes instructions about who will own those assets and, just as importantly, who gets access (i.e., the passwords) to them. A separate document should be created with a list of online accounts along with their passwords. That document should be stored in a safe space and updated regularly to reflect whenever passwords are changed or new accounts added.

Creating a digital legacy

Estate planning isn't always easy, but creating a comprehensive estate plan, including one that effectively handles digital assets, is important in order to make sure loved ones will be provided for in the future. An estate planning lawyer can help clients draft an estate plan that will help ensure their wishes are respected after they pass on.

If you would like assistance with your estate planning, contact Ryan Kalleitner.