A decision from the Court of King's Bench of Alberta warned that big tech companies could face penalties for not granting executors access to digital assets.Marvin Samuel Tolentino Pineda/iStockPhoto / Getty Images
An Alberta judge has warned tech companies to expect “significant costs penalties” if they insist on demanding “redundant court orders” before granting estate executors access to the deceased’s digital assets.
According to the April 21 judgment, Apple Canada Inc. refused to provide the administrators of Graeme Shinjiro Wada’s estate with control of their late son’s Apple accounts, even after they presented the company with a grant of administration issued seven months earlier by a different judge from the same court, authorizing them to exercise rights over the deceased’s digital assets.
Instead, Apple demanded a further court order conforming to its own specific requirements before it would comply with the request.
“But a further court order was not required as a matter of law,” wrote Justice Colin Feasby of Alberta’s Court of King’s Bench.
The province’s Estate Administration Act gives estate administrators the power to take possession of the deceased’s property, the judge wrote, including digital assets such as e-mail accounts, social media profiles and a wide variety of other online accounts.
“The grant of administration is a court order that indicates that the administrators have full legal authority over the deceased’s digital assets,” Justice Feasby’s decision continued.
“Once that fact is established, Apple must deal with the administrators as if they were the deceased while he was alive. If Apple did not require a court order to deal with the deceased, after receiving the grant of administration, it cannot require a further court order to deal with the administrators.”
Unopposed chambers applications, such as the one in this case, are normally granted without written reasons. Justice Feasby published a formal ruling because refusals by large technology companies to deal with personal representatives of estates without a specific court order were placing “unnecessary and unjustified burdens on estates and the court,” Justice Feasby wrote.
“This court is not in the business of issuing duplicative orders to assuage risk-averse technology companies who are unwilling to learn the laws of the jurisdictions in which they do business. Going forward, an uncooperative technology company that demands a duplicative court order as a condition of doing business should be prepared to explain why they should not pay solicitor and his own client costs,” he concluded.
Apple was served with the Wada estate administrators’ application, but did not appear before Justice Feasby.
The company didn’t respond to a request for comment on the decision.
An increasingly common issue
According to Andrew Higdon, a lawyer with KPMG Law LLP in Ottawa, the administrators of the Wada estate are far from alone in being shut out of a loved one’s online accounts after their death or incapacity.
“It’s coming up more and more,” Mr. Higdon says. “A lot of it goes unreported because we don’t necessarily know how many times fiduciaries – people exercising their power under a power of attorney, or executors – attempt to get access to online accounts. Maybe they just give up, or they are eventually able to get access.”
Mr. Higdon says Justice Feasby’s ruling is a “useful decision for practitioners,” and he remains hopeful it will encourage a shift in the way tech companies deal with estate representatives.
But the companies may also decide they’re big enough to tolerate penalties as the cost of doing business, he says, and stick to their policies.
Sayuri Kagami, a senior trust specialist with RBC Royal Trust, says the decision is likely to make life easier for estate administrators “not just in Alberta, but across the country.”
However, she says she would have liked to see Apple take a more active role in the proceedings. Digital account disputes are often driven by the disconnect between laws on digital assets in Canada and the U.S., she says.
South of the border, legislators tend to take a more protective approach to the account holder’s privacy over electronic communications, even in death.
“What’s causing this friction is that there’s this attempt to comply with the U.S. law, which has a lot more requirements in place,” Ms. Kagami says.
“Without any input from the tech company, there wasn’t a chance for a deep dive into all these issues that exist, including the jurisdictional issue between Canadian legislation and U.S. legislation.”
Preparing in advance for digital assets
Dave Madan, senior manager of business development at Scotia Wealth Management in Edmonton, says it’s not just tech companies that should see the Wada estate case as a cautionary tale.
As Justice Feasby noted in his ruling, the need for court intervention could have been avoided altogether had the deceased taken advantage of Apple’s “legacy contact” feature, which allows users to designate an individual who can access their account after death.
Testators and their advisors should take a more proactive approach to their digital accounts, starting with an inventory of those accounts, Mr. Madan says.
Most other platforms have a feature similar to Apple’s legacy contact, he adds, such as Google’s inactive account manager.
“It’s up to advisors to ask the client what accounts they have and whether there’s anything in there they want their beneficiaries to have access [to] once they’re gone.”
When it comes to estate planning, Mr. Higdon says digital assets are often an afterthought for his clients, but they respond positively when the issue is addressed. He tries to capitalize on that enthusiasm by taking them through their legacy tool options and setting preferences right then and there.
“It’s an easy thing to take care of right away that can have an enormous impact later on,” he says.