What Will Happen to Your Digital Assets Upon Your Death or Incapacity?

Digital assets have become an essential part of most Canadians’ assets and can be quite valuable, from a monetary and/or sentimental perspective. In this article, I offer an introduction to digital assets and a summary of the current Canadian legal landscape on this issue. I introduce you to some of the hurdles that your estate trustee, executor, administrator, attorney acting under Power of Attorney, trustee under a trust, or court-appointed committee or guardian of property (any of these being referred to herein as a “Fiduciary”) may face.  This is one of a series of articles on this important topic, which will touch on how to develop a digital estate plan and why you need to, accessing social media accounts and other digital assets after death or incapacity, and digital business assets.

Some digital assets are very common, such as the information associated with your email accounts, online banking, loyalty points or social media accounts. Assets such as cryptocurrencies are also digital assets regularly used and stored by individuals and businesses across Canada. Regardless of whether you collect non-fungible tokens or just have travel points, the management and preservation of your digital assets must be considered when planning for your death or incapacity. Without proper planning, the person you want to act on your behalf in those situations may, in fact, have no power at all to obtain access to or deal with those assets.

Nearly everyone has digital assets in one form or another, yet in speaking with clients about their Will and Power of Attorney, when asked if they have any digital assets, the majority of my clients still say “no”.  I always dig deeper, and clients are surprised to discover the digital assets they have.

Digital assets generally fall under three categories: (1) Personal digital property, (2) those personal digital assets having monetary value, and (3) Digital business property.  Within each of those categories, there will be tangible items such as desktop computers, laptops, cell phones, iPads or other tablets, external hard drives, e-readers and USB (thumb) drives. There will also be intangible items such as online banking or shopping accounts, rewards points, digital photos, videos or music, crypto or other virtual currency held in a digital wallet, domain names and intellectual property (including trademarks, patents, copyright, industrial designs).

Personal digital property includes the tangible and intangible assets you personally own or have stored for you electronically.  Those with monetary value will include the tangible items referred to above, as well as blog posts or other online forums from which you generate income, artworks, music, E-books, intellectual property, and any online accounts such as bank accounts, PayPal and loyalty rewards programs with funds held to your credit.  Digital business property consists of any digital assets owned or stored by or on behalf of a corporation, partnership, sole proprietor or other business organization.

Without a digital estate plan, which I will expand upon later in this series, some of these assets may be lost or inaccessible upon your death or incapacity. Your attorney or executor/estate trustee may be unable to access these assets without a court order, and in some cases a U.S. or other foreign court order.

The Current Legal Landscape in Canada

In Canada, there is an overwhelming gap in the law with respect to one’s ability to access information about another person’s digital assets. The law has not kept up with technology. Despite the rising significance of digital assets, there is no federal legislation in Canada dealing with this issue, and most provinces and territories, including Ontario and Manitoba, have yet to enact such legislation. At the time of preparing this article, of all Canadian provinces and territories, only Saskatchewan and Prince Edward Island have enacted legislation pertaining to accessing the digital assets of another person.

Saskatchewan’s The Fiduciaries Access to Digital Information Act[1], which came into force on June 29, 2020, defines a digital asset as a “record that is created, recorded, transmitted or stored in digital or other intangible form by electronic, magnetic or optical means or by any other similar means.” Prince Edward Island’s Access to Digital Assets Act[2], proclaimed into force January 1, 2022, contains an identical definition.

Both Acts grant a Fiduciary the right to access the digital assets of an “account holder” (you) who has a service agreement with a “custodian” of the digital assets (such as the bank, rewards program, or social media provider).  Both statutes contain an exception for an employer’s digital assets used by an employee in the ordinary course of the employer’s business.[3] In other words, a Fiduciary cannot demand access to the employer’s digital assets. Note as well that these Acts apply to personal digital property, and not to digital business property.

The Fiduciary’s right to access your digital assets is subject to any instructions given in your Will or POA. So, if there are assets you do not want the Fiduciary to be able to access, you should specify those instructions in your Will and POA, either by remaining silent on the right to do so or specifically prohibiting their right to such access.

In Saskatchewan, if the custodian’s service agreement limits a Fiduciary’s access to a digital asset it is unenforceable. In PEI, it is void unless you assented to such restrictions on or after January 1, 2022, and did so by a separate affirmative act. Presumably a “click” on the applicable icon on the custodian’s site when opening the account would constitute a separate affirmative act, but that has not (to my knowledge) yet been confirmed.

In all cases, but particularly in those jurisdictions such as Manitoba and Ontario where there is no legislation yet in force, one is well-advised to include provisions in your Will and POA granting the right to access your digital assets and information to the attorney or executor/estate trustee, IF that is what you want. Again, if there are assets you do not want the Fiduciary (and your family) to be able to access, you should specify those instructions in your Will and POA. While the Fiduciary will still be met with jumping through the hoops set up by the custodian under its service agreement and policies, at least they will have a chance of accessing them if your legal documents contain authority to do so.

It is noteworthy that Alberta’s Estate Administration Act has been amended to make specific reference to “online accounts” within the context of an estate trustee’s duty to identify estate assets and liabilities.  Interesting that there is no corresponding right granted to enable them to access that information as a matter of right.

Federally, Bill C-27[4] proposes to replace Part 1 of the Personal Information protection and Electronic Documents Act (PIPEDA) with the Consumer Privacy Protection Act, which would grant you expanded rights to control of your data held by commercial entities and, if passed, would enable your Fiduciary to demand all information they have about you[5].  Your Fiduciary could also request that the information be disposed of.[6] This would apply to all information collected, used or disclosed by any organization over the course of commercial activities in Canada.

Why is all this important? These assets are worth something!  Digital assets have value, whether monetary, sentimental, or both. Inability to access rewards points, PayPal account balances, cryptocurrency, intellectual property rights, business or personal branding and social media followers means lost assets. And what about lost photos, videos, posts, and other personal data – priceless?

[1] The Fiduciaries Access to Digital Information Act, SS 2020, c 6 https://publications.saskatchewan.ca/#/products/105180

[2] Access to Digital Assets Act, 2021 c. 27,R.S.P.E.I. 1988, A-1.

[3] The Fiduciaries Access to Digital Information Act (Saskatchewan), section 3(2)

and Access to Digital Assets Act (PEI), section 2(2)

[4] Proposed Digital Charter Implementation Act, 2022

https://www.parl.ca/legisinfo/en/bill/44-1/c-27

[5] Bill C-27, section 63

[6] Bill C-27, section 55