As young professionals, we are increasingly aware of the highs and lows of “adulting” – life insurance, property taxes, and the endlessly gripping fixed vs variable rate debate. We also know that we should have a will to protect our house and financial assets, and our young families. But what other assets should we plan to protect? As more facets of our lives are being lived online, it is more important than ever to ensure that our digital assets are included in our estate planning, not just to maximize their value, but also to ensure that our data ends up in the right hands.
Digital Assets by the Numbers
Digital assets include emails, social media accounts, blogs, digital photos, electronic folders, funds held in accounts such as iTunes and PayPal, online subscriptions, Air Miles or other rewards points, and cryptocurrencies such as Bitcoin or other altcoins.
- A report from the Social Media Lab(1) found that 94% of adult Canadian Internet users have at least one social media account.
- A recent study by Bond Brand Loyalty shows that the average Canadian participates in 12.2 loyalty programs(2).
- The same Bond Brand Loyalty study shows that Canadians are sitting on $16 billion of unused reward points.
- And, 55% of collectors don’t know how many points they have, 41% are unaware of the value of their points, and 25% have never redeemed any of their points for rewards.
If you want to make sure that your social media accounts, including dating apps, are deleted on your death, include instructions in your estate planning. You may have uploaded photos to apps like Instagram or Facebook that your loved ones will want. Similarly, provide for the posthumous management of your digital files and folders, such as content stored on iCloud. This is particularly important if you store any sensitive material in digital files, or if you store any intellectual property, such as a draft of a novel, or an unreleased recording of a new song.
Loyalty and rewards points can be more complicated, and the requirements for transferring “points” are usually found in the terms and conditions unique to each company. For example, one company may permit your loved ones to transfer your loyalty points free of charge simply on request, while another may require a death certificate, a letter from the estate trustee, and a specific bequest in a valid legal will.
Cryptocurrency is taxed in Canada like any other investment. Any gains on cryptocurrency should be reported as capital gains, which are added to your income and taxed at your marginal tax rate. If you are leaving cryptocurrency to loved ones in your will, you should consider the tax implications of such a gift, and plan accordingly.
If you are a social media influencer or content creator, your digital assets can be particularly valuable. According to a recent study by Izea(3):
- Influencer and content marketing is now among the top 4 most effective marketing approaches measured in Canada, far more effective than traditional print and radio marketing.
- 1 in 4 marketers recently surveyed said that they dedicate more than $1 million per year for influencer marketing.
- 3 out of 4 marketers surveyed have stand-alone budgets for content and/or influencer marketing.
For example, Lilly Singh is a Toronto Youtube sensation with 14.9 million subscribers. Her social media presence is so strong that she has recently landed her own late night television show on NBC, called A Little Late. Engagement at that level translates to valuable sponsorships and partnerships, and it is a prime example of a digital asset that should be protected with comprehensive estate planning.
Start-up companies, no matter how big or small, should plan for the future by including their online presence in an estate plan. darsbars is a Toronto company that makes handmade, organic, natural skincare products. The business currently has 709 followers on Instagram (and steadily growing), and a website, darsbars.com. As darsbars continues to grow, its social media accounts and website domain will also become more valuable.
If you do not have a will, or have not updated your will in some time, you should consult a reputable estates lawyer to discuss what qualifies as a digital asset, why it is worth including in an estate plan at all, and what, if any, tax implications may arise.
(1) The State of Social Media in Canada 2017, Gruzd, A.; Jacobson, J.; Mai, P.; Dubois, E.; Social Media Lab, 2018
(2) Love & Loyalty: The Loyalty Report 2017, Bond Brand Loyalty
(3) 2018 Canadian State of the Creator Economy, IZEA, 2018
Authors: Sheila Morris, Minden Gross LLP
Sheila Morris is a wills and estates litigator at Minden Gross LLP. Prior to joining Minden Gross, Sheila gained a breadth of civil experience, from insurance litigation to commercial litigation, at two boutique firms in Toronto. Sheila is a member of the OBA’s Elder Law Executive, and regularly writes and speaks on estates and elder law issues. Sheila is a proud young woman in the law, with a mandate to refer to women, mentor women, and advocate for women’s issues.