Estate planning 2.0

The days of rooting through deceased parents’ basements for old photos, videos and heirlooms are fast disappearing.

That’s because older Canadians are becoming increasingly active online. A 2010 Statistics Canada study found 60% of people between 65 and 74 go online regularly, as well as 29% of those over 75.

And when they go online, they’re storing photos and documents within locked online accounts and password-protected devices — meaning executors will need more than house keys to gain access to the complete legacies of relatives.

Whether you’re doing your own estate planning, or are involved with the plans of a parent, you shouldn’t overlook so-called online assets.

Private property

Many online account providers have inflexible privacy policies, making it difficult to get at what you need.

Take PayPal. Though it’s obliged to transfer existing account balances to estates after users die, it won’t do so for those who become incapacitated. If you want someone to log in and manage your account, you need to grant that person power of attorney.

This is a crucial step if you’re a successful seller on eBay or Amazon, and have large account balances.

Similarly stringent policies apply to non-monetary accounts. Thanks to privacy laws and user policies, relatives and executors must go through the courts if an account owner hasn’t made data-sharing arrangements with companies like Yahoo.

As of July 15, 2013, Yahoo gives relatives or executors only one year to deal with inactive accounts before an ID is freed up for another user to adopt.

Digital asset protection “is such an emerging area of estate planning, so we are really still in the what-if stage,” says Erin Cowling, a Toronto-based lawyer.

Listing online assets

When named as an executor or when doing your own estate planning, create a list of online accounts and assets you (or your trustee) have.

These should include any that have monetary value like web URLs or PayPal accounts, as well as any with providers offering multiple services where sentimental records may be stored. For instance, Google offers email, video, file storage and payment solution platforms.

Even if you think your digital footprint isn’t important, “there’s the risk of identity theft after death if [you]…leave accounts unattended,” says Marlena Pospiech, private wealth advisor at BMO Harris Private Banking.

That’s because most accounts remain open if the online providers aren’t alerted of a user’s death. She’s seen cases where people have received emails from dead relatives because abandoned accounts have been breached, and identities were stolen.

Planning tips

Anita Fineberg, a Toronto privacy lawyer, says your list should include:

• online accounts, along with the user names and IDs for those accounts;
• all mobile devices, computers and flash drives; and
• websites

Next, you need to decide how each account or item should be dealt with. Facebook accounts, for instance, can either be memorialized or closed. And you may have certain emails you only want one person to see.

Just like a list of physical assets, you should update your online asset list regularly.

Because the list will change often, Fineberg suggests keeping the details out of the main will. “[You] don’t want to spend extra time and money changing [your will], so [you] can create digital schedules or appendices that are also considered upon death.”

Plus, if they’re in the main will they’ll become public record — which could be a privacy concern, says Toronto wills and trusts lawyer Daniel Nelson.

Any hard copies of these documents should be locked away, and digital copies must be stored on encrypted devices.

Choosing who should handle these sensitive files and devices can be challenging. Not only should that person be tech-savvy, but you must also trust him with the data, says Nelson.

He suggests you choose only one digital executor. This person can be separate from the executors of your main wills or the same person.

You may also want to strike up agreements with your digital executors that clearly set out expectations and obligations. Have them spell out any privacy boundaries. For instance, you could ask an executor to close accounts you want kept private, says Nelson.