How can you protect your digital assets?

Your financial life is probably worth more than you realize once you account for your digital assets — so, how can you protect these belongings?

These days, your entire financial life is likely stored online. If you tried to make a list of every account you’ve signed up for in the past, could you? Think about every loyalty rewards program you use, every username and password. If you’re struggling to jot down all of these logins, you’re not the only one. According to research conducted by HYPR, 78% of people forget their passwords every 90-day cycle.

If that’s the case, how do you expect your loved ones to access this laundry list of accounts once you die? If you know that you don’t have any of this information readily available, now might be the time to get organized. 

A 2018 Angus Reid Institute study found that 51% of Canadians have no last will in place. Of those Canadians, 23% stated their main reasoning was because they don’t have any assets. We beg to differ.

Additional Reading for Smart Estate Planning

What are digital assets and do you have any?

For those of you questioning, “what are digital assets?” — don’t panic. Digital assets are binary sources of text or media. In simple terms, they are content that is stored digitally, including email accounts, social media accounts, photos and media. 

You might not realize how many digital assets you own, but when you think of all of the possibilities, you might be surprised. While some of these assets have no monetary value, others are considered financial assets. YouTube revenue, domains, gaming tokens, cryptocurrency, loyalty and rewards points such as Airmiles or President’s Choice points are all digital assets. Are your wheels suddenly turning?

Duncan Stewart, Director of Research for Deloitte Canada, says that, on average, Canadians own upwards of $10,000 in digital assets. 

“Not everybody, but about 5% of Canadians own bitcoin or other cryptocurrencies,” says Stewart. When it comes to these assets, they’re non-traditional in the sense that they’re not in a bank account, and you can’t go to a safety deposit box to get them. Stewart says this is all the more reason to focus on protecting those assets before it’s too late.

“If you don’t have the password, you can’t get the asset – ever,” says Stewart. 

In fact, this exact scenario happened in February 2019. Gerry Cotten, the founder of Quadriga, Canada’s largest cryptocurrency exchange passed away at the age of 30. All that was left was his $250 million worth of cryptocurrency on an encrypted laptop that no one has the password for. His wife, Jennifer Robertson, would be left with nothing.

Permissions for digital assets aren’t quite the same as your traditional financial assets that require a bank branch or wallet. One of the most significant barriers to obtaining access to digital assets is the terms of service. Most online platforms won’t let you share passwords or transfer assets – regardless of your relation to the deceased. 

Some companies, such as Google and Facebook, are starting to bring forth pre-planning and inactive management tools to prevent the loss of these assets. But, most companies are not quite there yet.

There are four things you can do to protect your digital assets in case of death.

#1. Choose an executor and keep them in the loop

When you make a will, you will choose an executor to act on your behalf. An executor is responsible for carrying out the terms you’ve outlined in your will. They will manage the distribution of your assets, repayment of your debts, and all other wishes you have placed in your legal documents.

Sharon Hartung, the author of Your Digital Undertaker, says that in the past, your executor would go to your home office and sort through your documents. Nowadays, people don’t keep their livelihood in an office, but instead online and across multiple accounts. This can be worrisome for a few reasons, including the loss of financial or sentimental assets. 

“You may never encounter the law while you’re living, but rules and law cover everything that happens on death,” says Hartung. As of now, the law is new and emerging in this space. Therefore, you have to protect your digital assets as best as you can before you lose that opportunity. 

“It’s paramount to sit down with your executor,” says Hartung. You should share any information they may need. Include where they can find all of your documents and assure them you have given them all the required information. Not only will this ensure your digital assets are protected, but this will also create a painless process for the person you leave responsible for your digital afterlife. 

#2. Be aware of your digital liabilities

If digital assets are a large part of your financial wealth, don’t forget to consider liabilities. Stewart says that these days, while many people are cord-cutting, or getting rid of cable and costly household expenses, many people are cord-stacking as well. Those of us with multiple subscriptions, such as Netflix or Spotify, need to consider how they pay for these monthly fees.

“If it’s just coming out of my credit card and I die, the credit card is cancelled, and money just stops,” says Stewart. “Problem solved.”

However, if the payments come out of your PayPal account or day-to-day checking account, those memberships will need to be manually cancelled. Remember to be aware of your digital liabilities upon death, too.

#3. Put together an estate binder

When you put together a traditional will package that includes assets and liabilities, you should take stock of all assets and keep them in one place. Hartung recommends an estate planning binder that provides vital information regarding each asset you hold — both online and offline. 

Most of us do all of our banking and financial planning online, which means you need to make your executor aware of each account and financial institution. In estate planning, there are three assets you’ll need to cover: technology, internet and digital.

There are solutions where you can enter every single asset that you have into a spreadsheet or handwritten journal. However, these types of estate planning tools have both advantages and disadvantages. 

The advantage is that your executor can easily access all of the necessary information required to complete your wishes. The disadvantages are that you’ve created a honeypot for thieves. In a more relatable turn of events, you may also hide these papers somewhere and forget where you originally stored them. 

Whatever you choose to do, be sure that you don’t store confidential information somewhere that is easily accessible. If you have regular conversations with your executor, they should be informed of the binder whereabouts, and be able to access those documents at any time.

#4. Take some time to do tech-management

Regardless of your financial assets, one thing to consider with digital assets is how much you care to protect your sentimental assets. Sentimental assets include photos and videos that you’ve stored online. Hartung recommends that for these situations, you identify the top three digital assets that you’d be devastated to lose. 

Find out if those platforms have any pre-planning options so that you can set your executor up as a beneficiary or next-in-line manager. From there, read the terms of service, and take steps to ensure they’ll be accessible by your chosen executor. 

No one wants to miss out on loved ones’ digital wealth over the fact that they weren’t made aware of the account. Protect your digital assets and ensure that your sentimental assets are kept accessible to those who may want them after you’re no longer around.

Alyssa Davies
Alyssa Davies

Alyssa is an award-winning personal finance blogger and founder of MixedUpMoney.com. She writes about being a mom, overcoming personal debts, and how to get away with affording your ridiculously expensive latte habit. A new homeowner, Alyssa brings her real-life knowledge of the Canadian real estate market and smart money matters to this growing brand.

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