How to prevent commercial online accounts from languishing after death

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This is the first article in a series about managing digital assets in estates. Look for the second article next week.
As our digital presence expands, a lack of attention paid to online accounts in estate plans is leading to digital assets being neglected and lost.
Based on conversations with clients and beneficiaries, Carol Willes, director of estate planning with BMO Private Wealth in Ottawa, estimates that 80 to 85 per cent of digital assets aren’t dealt with properly on incapacity or death.
That could be because there was no authorization in a will or power of attorney document, or because the terms of service for an online account changed since sign-up. In some cases, she says, the heirs simply gave up because it all seemed too complex and time-consuming.
“So many assets that have value, whether that’s financial value or family value, languish,” Ms. Willes says. “Opportunities are lost.”
The terms of service for online platforms that every user agrees to – often without reading – govern whether there’s a right to access and transfer digital assets on death. Interestingly, some service providers, including eBay Inc. and PayPal Holdings, Inc., don’t contemplate incapacity and the rights of attorneys for property, Ms. Willes says.
Participants in a survey from password manager NordPass conducted earlier this year said they were using an average of 168 passwords for personal purposes, a number that’s up 70 per cent in the past three years. That can create a minefield for those seeking to access the online accounts of the deceased or incapacitated.
“Everyone’s power of attorney and will should address the fact they grant authority to the person they’ve appointed to administer the digital assets in their online accounts,” says Andrew Higdon, a trusts and estates lawyer with KPMG Law LLP in Ottawa.
That’s an essential first step, particularly because, to date, only some provinces and territories (Saskatchewan, Prince Edward Island, New Brunswick and Yukon) have legislation in place that gives fiduciaries access to online accounts automatically. Those who want certain digital assets to go to specific beneficiaries should include those instructions either in a will or in a memorandum outside the will that’s easier to update but isn’t binding.
Mr. Higdon recommends taking an inventory of online accounts and shutting down ones that aren’t used anymore.
A handful may warrant extra attention. These include accounts with monetary value such as cryptocurrency, non-fungible tokens (NFTs), intellectual property and assets for which someone receives licensing fees. But there are also more commonplace commercial accounts: digital payment services; gaming accounts; betting accounts; accounts that facilitate buying, selling, collecting or trading; and rewards and points programs.
Users don’t generally own (with the right to sell) the content they watch on streaming services, read on an e-reader, or play on a gaming platform. Dealing with these accounts may be as simple as closing them down.
Digital assets are generally subject to probate (where applicable) and any appreciation in value or income earned in an online space is considered taxable by the Canada Revenue Agency, Ms. Willes says. When digital assets don’t have a clear dollar value (for example, airline points), it may be possible to establish value based on the basket of services or goods that could be purchased with the account balance, she adds.
A further difficulty is digital assets with financial value may not be obvious at first glance, says Lee Poskanzer, founder and president of The Digital Death Clinic, a digital property succession management consulting firm in Toronto. A domain name may be worth thousands of dollars but the value disappears if it isn’t renewed. A subscription-based service may delete priceless data if payments stop.
And then there’s a different kind of value that might be stored in an online account.
“If you’re a caregiver for an elderly person, you may be purchasing items for that elderly person on Amazon,” Mr. Poskanzer says. “But if you die and you don’t take care of that account, making sure someone has access to the purchasing records and data, then the new person stepping in to take care of that individual isn’t aware of the needed items, product numbers, or the frequency of the needed purchases. Missing this information may unintentionally bring them harm.”
He emphasizes that estate planning for digital assets must take into account four elements: the terms of service, all applicable legislation, the account holder’s wishes and, as an ancillary consideration, the interests of loved ones and business partners who have a stake in the information disclosed or actions taken.
Sayuri Kagami, senior trust specialist with RBC Royal Trust in Toronto, has seen situations in which family members have a vague notion that a deceased loved one may have had crypto – maybe they mentioned an investment in passing – but they don’t know what type or where it’s stored.
“There are clues people can look for, but it’s hard and it’s a very daunting task for executors,” she says.
The sleuthing required may include searching for hints on computers, tablets and phones (which, unlike online accounts, aren’t subject to terms of service that usually prohibit password sharing), looking for printed or handwritten lists, and scanning credit card statements for relevant payments.
One source of information may be e-mail, but there’s a cautionary note there, too. Many online accounts are subject to U.S. laws, and the rules there are different.
In the U.S., Ms. Kagami says, “access to the contents of electronic communications such as e-mail requires the user’s express consent or a court order, and service providers are entitled to require confirmation that access is reasonably necessary for the administration of the estate.”
She recommends that, along with the clause that grants an executor or attorney for property access to digital assets, it’s also important to grant express permission to access the content of electronic communications. She notes, however, that this may not entirely smooth the way, since custodians still have the right to require a court order to grant access to electronic communications.
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