Episode 69 - Estate Planning for Your Digital Life and Crypto Wealth with Demetre Vasilounis
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Nicole Garton 00:00:02 Hello and welcome to Your Estate Matters, presented by Heritage Trust. Your Estate Matters is a podcast dedicated to everything estates, including building and preserving your legacy. If it's estate related, we'll be talking about it. We're having the conversations today that will help Canadians protect their families, their assets and their legacies tomorrow.
Hello and welcome to Your Estate Matters. I'm Nicole Garton. Today, we're talking about something that affects almost every Canadian but still gets overlooked in most estate plans digital assets. Think about your own life for a moment. Your email accounts, your social media profiles, your online banking, your photos stored in the cloud, your loyalty points, your streaming accounts, maybe even cryptocurrency. So much of our lives now exists online, and yet most will say nothing about what happens to those assets on death or incapacity that creates real problems. I see this firsthand in the estates we administer at Heritage Trust, an executor steps in, and suddenly they're trying to navigate privacy laws, platform policies and missing passwords just to access accounts that hold real financial or sentimental value.
Nicole Garton 00:01:17 Sometimes the information is simply gone. My guest today is Demetre Vasilounis. Demetre is a lawyer and trust and estate practitioner who recently joined the RBC Wealth Management's High net worth planning services team. He has extensive experience and trust and estate law and is widely recognized for his work on digital assets, blockchain technology and estate planning. He has spoken at the Society of Trust and Estate Practitioners Canada National Conference, and has become one of the leading voices in Canada on the legal and practical challenges digital assets create for executors, trustees and families.
Demetre, thank you so much for joining us. We are so lucky to have your incredible expertise and to share it with our listeners.
Demetre Vasilounis 00:02:06 Thank you very much for having me today, Nicole. I'm very excited to be here. I've been looking forward to it. So thank you.
Nicole Garton 00:02:11 So first of all, I want to say congratulations. You've got a really interesting new role at RBC. Do you want to tell people what you're doing?
Demetre Vasilounis 00:02:17 Absolutely.
Demetre Vasilounis 00:02:18 Yeah. So I'm a senior manager of high net worth planning services in RBC's high net worth planning services group. We fall under the Family Office services umbrella. And essentially my role is to sit down with RBC's clients, like their investment clients, and talk to them about trusts and estates and tax and issues that they may be facing. Right. So this is like a value add service that RBC adds to its investment clients. On our team, there are some licensed lawyers, there are CPAs, there are charter business evaluators. So depending on what the client's sort of needs are, we pair the client with sort of the right professional and they sit down and sort of just talk to the client, identify issues, and then kind of support the client. You know, I don't implement wills or powers of attorney or trusts anymore. I sort of put together a plan for the client and make suggestions and recommendations based on what the client's needs are, what the client's goals are, etc. they get the benefit of having, you know, legal and accounting and financial professionals without having to pay the extra fees.
Demetre Vasilounis 00:03:12 Also, I think just given some of the complexity of high net worth and ultra high net worth matters, it's always helpful to have another set of eyes, look at a plan or look at a particular situation. I think, especially on the tax side, when it comes to dealing with CRA. You know, I might have had particular experiences that maybe somebody else hasn't seen. And likewise, another professional who maybe deals with CRA on a regular basis. Maybe they've seen certain things or they've experienced certain things that I'm not attuned to. So I think the benefit to the clients and to the professionals, frankly, is, you know, being on a team and being able to sort of bounce ideas and bounce experiences off one another, I think is super valuable. But yeah, it's we're a national team. I'm based in Ontario, so I service the entire province. So I'm frequently traveling for this role as well, which I frankly enjoy. It's been really good. And of course RBC is a very involved organization in the trust and estates community.
Demetre Vasilounis 00:03:59 They just have a wealth of resources, no pun intended, aimed at trusts, estates, tax, you know, that family governance, that sort of stuff. So it's been really great to work with the team. They've been super welcoming and I honestly couldn't be happier. I'm very thrilled with my new role.
Nicole Garton 00:04:12 That's amazing. And they are lucky to have you and all your expertise, and in particular you are internationally known for your expertise with digital assets. Do you want to tell us about how you got into that particular niche?
Demetre Vasilounis 00:04:26 Yeah, so I mean, if I, if I start from the very beginning, I was a child that was into video games, into technology, right? I was sort of one of those terminally online kids. So I've always had an interest in technology and digital assets. You know, I decided to go to law school because I enjoy writing and I enjoy learning as well. And I know I, you know, I knew sort of from other lawyers in my family that law is a sort of constant process of learning and development.
Demetre Vasilounis 00:04:50 That was something that was very attractive to me. You know, when I started in law school and when I set out to be a lawyer I never anticipated I would seriously pursue a career in trust and estates. It was my first experience with my first firm, Fasken Martineau DuMoulin. I was in their Toronto office, I summered there, I articled there, I thought I was actually going to be a technology lawyer, so I was working with the firm's information technology group. So sort of doing like corporate law, but for software and other technology related companies. So think of software service agreements and things like that. And, you know, the regulatory side of things, privacy. I had done work there, for example, right, anti-spam legislation, I had done work there. So I thought that's what I was sort of going to go into. But when I was in my article long term, I wanted to make sure that I had a diversity of experience. And I think the one thing that I hadn't done yet at that point was trust and estates work.
Demetre Vasilounis 00:05:38 And, you know, growing up, I always thought, oh, lawyers do wills, right. That should be something that I try. Little did I know that a career in trust estates and private client work is way more than just wills. Obviously, wills are a very critical part of it, but I started working with the team at Fasken on the private client side, and I just found that there were many things about it that I very much enjoyed. I enjoyed the fact that it was very personal. And, you know, you get to know people's families, you get to know people's lives. You learn how people made their money. Right. I find that super fascinating. I felt that the community was really great. And it's not just the legal community, but financial professionals, the folks at the trust companies, for example, right. It's an amazing, supportive community. I like the fact that it's very academic. So I think in corporate law, you know, it depends on what it is on the regulatory side of things.
Demetre Vasilounis 00:06:20 Maybe that's a little more research oriented. But on the deal side of things, it's less academic, it's more transactional, it's more project management. I'm going to say, for lack of a better term. But in trust and estates, as you know, Nicole, you're constantly going back to the fundamentals of what is a trustee, what are a trustee's obligations, right. And things like that. So I like the constant references back to the common law and sort of where we draw our authority from. I liked all of that. So thankfully it all worked out for me. That team at Fasken was hiring at the time they brought me on, so I started as an associate in 2019. One thing I really appreciated about my time at Fasken was that they're very business development oriented, and they're very much supportive of different initiatives and sort of getting out there and making a name for yourself. And when I sat down and I thought about, you know, what are my interests, what do I like? And then what can I do? From a sort of business development perspective, I realized that, you know, wills and powers of attorney and trusts, you know, those typically deal with the financial, traditional assets, real estate or financial accounts, investment accounts, whatever.
Demetre Vasilounis 00:07:16 But I wasn't seeing too much out there on the digital side of things. Right. There had been some articles written here and there, but it wasn't really clear to me, you know, what happens to your social media on your death or what if you own crypto, for example? So I felt that there was a niche that I could potentially explore and sort of make a name for myself in. And in addition, as someone who grew up terminally online, it was just something that I found very interesting and enjoyable. So yeah, I honestly just started to write. I just started to do research, like identify gaps in the law. And unfortunately, as we'll discuss later on, there's still very much our gaps in the law when it comes to this area. But I started just researching, trying to find that out. This issue, digital assets in estate planning, intersects with privacy quite a bit. So I learned about that, learning about IP, and I first started writing for the All About Estates blog and Fast and would publish bulletins on its website.
Demetre Vasilounis 00:08:02 But I really enjoy and miss writing for that blog, and I might have to get my name back on there at some point, because it's a public website and I think my posts got a lot of exposure. And, you know, before I knew it, people were reaching out to me based on those posts asking me to speak about this topic. And I'm fortunate enough to say now that my interest in this topic has taken me all over the world. You know, I've spoken in the UK, I've spoken in Italy, I've spoken for judges. Right. So I've done a lot of this work. So yeah, it's super interesting and yeah, I think, sorry, maybe that wasn't such a succinct way of answering your question, but that's sort of my background.
Nicole Garton 00:08:36 No, it was amazing. And we invited you to BC, you did an amazing presentation for, for us in British Columbia.
Demetre Vasilounis 00:08:42 Yes. That's right. Yes, yes that's right.
Nicole Garton 00:08:44 Okay. So let's drill into some digital assets.
Nicole Garton 00:08:47 So what are the gaps? I mean, things are changing so quickly. Practitioners that are helping clients with estate planning issues. Often there's increasing value and complexity in digital assets. What are the knowledge gaps you see in professionals out there?
Demetre Vasilounis 00:09:02 So if we're focusing just on knowledge gaps right now, I think that there is still a lot of aversion to digital assets, right? There's a version particular to cryptocurrency. I think that is, you know, a lot of professionals who are not already familiar with crypto assets are still very much intimidated by learning about them. I think that's one of the reasons, again, why I've been asked to speak at these events and been asked to sort of produce materials and that sort of stuff. I think that crypto is probably where you see more of the knowledge gaps. I mean, we all use technology. The vast majority of practitioners are familiar with technology to some degree, right? You know, we all are used to using email accounts. Most of us have social media accounts.
Demetre Vasilounis 00:09:38 So I don't want to say that there's like a huge gap in terms of overall technology competency. I would say, though, you know, at least here in Ontario, for example, we as lawyers, right? Under the Law Society of Ontario, we have a requirement to be competent and as part of being competent, the Law Society has specifically said, you know, you have to be competent with technology or you have to have access to someone who is competent with technology if you're not right. And this particularly, I know we'll talk about maybe AI later as well. Right. But this is particularly sort of relevant to AI. So in terms of using technology just generally to help us in what we do, many practitioners have some familiarity or some level of it. I think the question then becomes incorporating, asking and inquiring about digital assets in the client's plan. Right. And I think this is changing, but I think the biggest issue is that some professionals simply are not asking the question of whether or not there are digital assets in the client's estate plan, or whether or not the client owns any digital assets to begin with.
Demetre Vasilounis 00:10:33 Because I think once you start asking that question, that will lead to other questions that will sort of inform the approach to take to clients planning. Now, again, I think there is more visibility when it comes to digital assets. I think the big industry events, the trade events, the conferences, you know, you're seeing more seminars about digital assets at these events. So I don't think that our community is ignorant to these issues. But I think beyond asking the basic questions, which again, I don't think all practitioners do, but beyond asking the basic questions, I think many practitioners don't know where to go or don't know what the next steps are or who to contact. So I see that as sort of one of the bigger challenges.
Nicole Garton 00:11:09 And we see heritage trust, the consequences of plans that don't encompass it. I think we have two current estates where there are crypto assets and we do not have the seed key. Oh, and unlike the regular bank, there's no customer service if you don't have the seed key.
Nicole Garton 00:11:27 So we'll get into that. But first let's start with the basics. So for our listeners, when we use the term digital assets like what are we actually talking about.
Demetre Vasilounis 00:11:36 Yeah. So I think you just brought up a good point about there not being a customer service department. So I think I like to categorize digital assets into sort of one of two buckets. Right. Custodial digital assets and non-custodial digital assets. And I think the approach that you take in the planning depends on whether it's a custodial digital asset or a non-custodial digital asset. So when I think of custodial digital assets, I think of email accounts, you know, social media accounts, frankly, any account that is facilitated by some type of third party or any asset, quote unquote, that is facilitated by a third party. So even if you have a website, for example, you usually have to go through some sort of domain hosting service, right? So if you own the domain apple.com, for example, that's facilitated by someone else, that's a custodial digital asset as well.
Demetre Vasilounis 00:12:20 If you have clients who are social media influencers, right. And they're generating revenue from a social media account, you know, you might want to categorize that revenue as part of the digital asset, the social media, digital asset, even files that you create yourself. If you store the file on, like a file sharing, like a Dropbox or something along those lines, that's a custodial digital asset. So you can think of custodial digital assets as sort of, again, anything that is facilitated by a third party. I guess anywhere that does have a customer service department, maybe that's the easier way to think about it. And then there are the non-custodial digital assets. And I think first and foremost, primarily it is the cryptocurrency, crypto assets where you're not using an exchange. And we'll talk about, you know, hot storage, warm storage, cold storage. Right. But the crypto that's sort of under self custody, as we call it sometimes, right. That I think is an example of a non-custodial digital asset.
Demetre Vasilounis 00:13:06 In theory, anything else that doesn't necessarily require a third party to facilitate the transfer. So let's say you have files like let's say even you just wrote a document, right? Or took a picture and you've stored it on a device like a cold storage device. So it's not connected to the internet. It doesn't, you know, require internet access to sort of gain access to the file. I think that's potentially a non-custodial digital asset as well. And then there, you know, there's sort of other classes, but I think those are the sort of the two categories I want to sort of highlight as well, that's the easy way of categorizing it. It's important to keep in mind that there is some draft digital assets legislation out there, and that that legislation has its own definition for what a digital asset is. I think most commonly you see this idea of digital assets being records, right? Like that's in the sort of key Canadian draft legislation and the key US draft legislation. You see references to digital assets being a record that is electronically or magnetically or whatever stored.
Demetre Vasilounis 00:13:58 And in the US legislation in particular, they talk about it being a record in which an individual has a right or an interest. So if we think about other intangible assets that we're more familiar with, let's take intellectual property, for example, right there, intangible. You can't touch them. But a copyright, for example, like Nicole, if you write a book which I know you have, right. If you write a book, you have copyright in that book, right? So it's not a physical thing that you can touch, but it's a right that you have. So if somebody tries to republish your book and your ideas and your views without your permission, you can go after them potentially. Right? So there's the custodial non-custodial categories. But then there's also this idea of digital assets being a record as well.
Nicole Garton 00:14:36 So let's maybe now that we're doing definitions like drill into crypto. So what does crypto mean? And I think people sometimes think it's synonymous with Bitcoin, which isn't exactly correct. And can you tell us what you mean when you talk about hot storage, warm storage cold storage…
Demetre Vasilounis 00:14:52 Yeah. So Bitcoin I mean it is a crypto asset. But it's not the only crypto asset. There are many, many, many other crypto assets out there primarily folks are familiar with cryptocurrencies right. So Bitcoin, Ethereum, Dogecoin…you know that sort of stuff. there's also NFTs, which you don't hear about too much anymore. Right. But those are also crypto assets.
Nicole Garton 00:15:12 Do you want to explain to listeners who don't know what NFTs are?
Demetre Vasilounis 00:15:15 Sorry. Yes. So NFTs are non-fungible tokens. And they also take advantage of blockchain technology, which I'll explain shortly. But NFTs are really. If I had to describe them, they're a serialization of different types of electronic things, I guess. So commonly you see NFTs in the art space, right? So folks can purchase or trade for, you know, serialized image files, but you could potentially serialize other files as well. So like music files, for example, you could have an NFT of an audio file, right? But the idea is that because of the way the blockchain operates, serialization is possible because you would have a way of sort of independently verifying that if you own one of like three NFTs of like the Board Ape collection, you guys, you probably heard of that, those NFTs, right? If you own like one of three of those, you'll be able to verify that by way of the blockchain.
Demetre Vasilounis 00:16:06 So non-fungible just means you can't defraud the blockchain. You can't sponge it for, for lack of a better term. Think about cryptocurrencies as sort of more akin to traditional fiat currencies, and NFTs as more akin to collectibles. The one side note I'll make about NFTs, just for listeners who are not familiar, is that I think one of the reasons they're not as popular as they once were is because when it comes to collectibles, and I've written about this topic as well, but I think people like physical collectibles, and it's different when it's just an image file on a computer. It's great that you have it serialized, I guess. Then you can verify that you own it. Maybe there's a prestige factor to it, but given that it's an image that can sort of be replicated as opposed to a physical thing that you can see, I think that sort of took away from the value of NFTs. That's what sort of people came to the realization of that. But both of these sort of categories operate via blockchain technology, and I have a whole presentation on blockchain and crypto assets and how that works.
Demetre Vasilounis 00:16:58 But the reason that they're so valuable, and the reason that folks place value on crypto assets is because unlike traditional fiat currency, cryptocurrencies can be traded in a way that is decentralized. So it does not rely on a central financial institution or customer service department for lack of a better term. Cryptocurrencies are trustless, so they operate on a consensus based model, which means that if you want a transaction to be verified, you're going to need consensus from a number of different nodes across the network, like all over the world, to verify that that transaction is legitimate, right? Again, you don't have to rely on one particular actor. Cryptocurrency transactions are immutable. They're all recorded on the blockchain. So folks out there may have heard of the blockchain sort of being referred to as a ledger. So there's a complete record of every blockchain transaction that is out there for each blockchain network. And so it's a very secure essentially form of transacting. And there's a lot of value in that. And the reason that it is secure, you know, long story short, without getting super, you know, complicated.
Demetre Vasilounis 00:17:57 But as I mentioned, you know, the blockchain networks operate on a consensus based model. And the consensus is with respect to a number of different, very complex mathematical cryptographic transactions that require a lot of processing power and a lot of computing power. Right. So on a large network like Bitcoin's network, for example, you have people all over the world who are trying to solve these transactions. That's called cryptocurrency mining, right? They're trying to solve these transactions because there are rewards. There's additional Bitcoin for them. So there's a lot of incentive for folks who are mining Bitcoin to verify legitimate transactions and not verify illegitimate transactions. So all of this is to say, it's a very secure way of transacting on the blockchain through the use of cryptography and encrypting information and transactions. It represents, again, a secure way for folks to transact. The one additional point I'll make just with respect to that is that it relies on the use of you've probably heard this nickel, and in fact, I know you've heard of this because you're struggling with it right now.
Demetre Vasilounis 00:18:56 Public keys and private keys. So public keys are essentially linked with a public wallet address. So a public key is something that you can share with others in order to transact with them. So if someone wants to send you crypto, you give them your public key, right? Which is, you know, your wallet's address so they can use the network to send crypto to you. Contrast that with private keys which are not meant to be shared, which are required to basically complete digital signatures that authorize transactions. So essentially, like if we have a transaction, you know, you collect all the transaction data, including the public keys, you put it together into something called a hash. You then use the private key to sign the hash. Right. That creates a digital signature and that creates a sort of secure transaction. Right. And once that transaction is completed, you can't reverse it. Right. That's the way the network works. So you need your private key in order to transact, particularly with your own crypto.
Demetre Vasilounis 00:19:46 And so to your point, if you don't have the private key because the blockchain network is decentralized, because it is trustless, because it is immutable. Right. And because of the way it operates, if you do not have that private key, it is very bad and you might not be able to access your crypto at all for the future. So sorry, that was a lot of information at once, but that's sort of a Coles notes version of how crypto works.
Nicole Garton 00:20:07 That's okay. So what percentage of Canadians do you imagine actually have crypto?
Demetre Vasilounis 00:20:12 I don't know the exact number. I think it's a growing percentage for sure. I think to go to your earlier question, because I realize I didn't speak to hot storage and cold storage. Right. But the point I want to make is there are many different ways of getting into the crypto market. You can get into the crypto market without even actually employing necessarily hot storage or cold storage because, for example, you could buy Bitcoin ETFs now. Right. So that's a particular option.
Demetre Vasilounis 00:20:35 But the sort of main ways that we see Canadians owning crypto is either through hot storage or cold storage. And then there's another alternative warm storage which I want to talk about as well. So hot storage essentially means storage that is connected to the internet right. So typically these are the customer service departments. They're typically the crypto exchanges. You can actually buy and sell crypto from the exchange right. The exchange is the one that actually has custody of the crypto assets at the end of the day. Right. And it has its own ledger and records and they're regulated as well. But if you want simplicity and you want to trade just as you would on a more traditional finance app, you would use a crypto exchange.
Nicole Garton 00:21:12 And what are some examples like Coinbase or like what are some examples of it?
Demetre Vasilounis 00:21:16 Coinbase. I like ShakePay because you can shake every day and get a very, very fractional amount of Bitcoin as well. Newton is another popular one. There are many in the US like Kraken, Binance, etc. so there are many, many different exchanges out there.
Demetre Vasilounis 00:21:31 That's one sort of form of hot storage. You could also just have your own hot wallet. You're not dealing with an exchange. It's your own wallet. You still need phrases. So we have this term called seed phrases. Right. So the private key is like this very random jumbled, garbled combination of letters and numbers. And that's what you need to actually transact. But to make wallets a little more accessible, the technology that these wallets employ allows you to use seed phrases. So they're, you know, usually like 12 or 6 or 24, probably not six, like usually more 12 to 24 seed phrases that could be like stone, glass, water, you know, cloud, like things like that. Right. Words like that. So you have that combination of those phrases. If you enter it into your wallet, you're able to access your wallet. The advantage of hot storage is that it's connected to the internet, and it's very easy to transact with cryptocurrency when it comes to hot storage. So what we like to say in the crypto space is that if you are going to transact with crypto, it's good to keep like a smaller quantity of crypto, I would say in your hot wallet, so that if you want to do some trades here and there, you have it there it's accessible.
Demetre Vasilounis 00:22:35 You don't have to sort of go through a whole process to access it. Let's contrast that with cold storage, right. Which is not connected to the internet, which is essentially, you know, it started out with paper wallets. People don't really use those anymore. But cold storage just basically means that blockchain network generates a public key and a private key for you. And so as long as you have that, you're able to transact. But if you don't do anything with that public key and that private key in theory, the theory behind blockchain is that nobody should be able to access or get to your crypto, so long as you don't use those. I know back in the day, people have gone to sort of extreme lengths where like they generate a paper wallet, they print it out, and then they destroy the printer that they use to print it out. Now there are better solutions. Another really good example of cold storage are hardware wallets, right? Some of them look like little USBs.
Demetre Vasilounis 00:23:21 And then for sort of more advanced solutions, you know, they might look more like a hard drive, right? Like a bit of a beefier sort of meteor device. And the idea is that these devices, they don't store your crypto. Remember, your crypto is stored on the blockchain. The device stores the private key, which is the means by which you can transact on crypto. So the idea is, if you have one of these little USBs, you don't plug it in anywhere. You don't connect it to the internet unless you absolutely need to in order to transact. And there are very, you know, you could have very secure, air gapped methods of transacting where, for example, you know, you have your device connected to the internet, you put partial transaction on the device, and then you could put it on a micro SD card or a USB, or by use of a QR code, you go to your cold storage, you add the private key to the transaction data, then you take it back to the hot storage, right? And then you complete the transaction.
Demetre Vasilounis 00:24:10 So that way your cold storage never touches the internet. And I should mention so it's not susceptible to hacking or being lost or anything like that. But as I mentioned earlier, that's a little bit of a cumbersome way of transacting. Anytime you want to make a transaction and keep in mind more sophisticated crypto investors maybe engaging in like hundreds or possibly thousands of transactions a day, right? So it may not be the most practical method for transacting in cryptocurrency. However, if you are a long term investor. So if you've just bought like a significant quantity of Bitcoin for example, and you just want to hold it right and you don't see yourself transacting for some time, cold storage would be a really appropriate way of storing it. Right. Again, just going back to your particular conundrum, which is not a unique one. We've seen this sort of unfortunately play out in other jurisdictions as well and in other scenarios. But the problem is, if you don't have access to the cold storage, or if you don't have access to the phrases that can get you access to the cold storage, then you're going to have a real problem.
Demetre Vasilounis 00:25:00 So in summary, hot storage is more convenient but less secure because if it's connected to the internet, in theory, that makes you sort of susceptible to hacking. Cold storage, in contrast, is more secure but less practical from both a transacting perspective but also in a state administration perspective. Because remember I have ShakePay. So if something happens to me, my executors can go to sheikh pay. They can sort of deal with them, just as you would with a traditional financial institution. And chances are you'll be successful. You'll probably need probate. I mean, I actually don't have that much there, so maybe you don't need probate, but you'll probably need probate to deal with the financial institution just as you would with the traditional ones. So these are all things you need to consider. I want to mention warm storage as well, which we're starting to see more of, and which especially for the high net worth, ultra high net worth folks. Right. Is it more of an appropriate solution for storing crypto, particularly if it's, again, if it's larger quantities of crypto? So warm storage, as the name suggests, is a little bit of a hybrid between hot storage and cold storage.
Demetre Vasilounis 00:25:51 But essentially there are organizations out there that, long story short, they offer, I'm going to call them multisig solutions, or sometimes you call them MPC, like multi-party computation solutions. But essentially the idea is that if you have a cold storage device, for example, you have one way of accessing it, right? Usually it's your seed phrases, or maybe it's a pin, or maybe you have one of either way. But the idea is that it's one individual who has the knowledge or who has the phrases sort of written somewhere to access that device. The way warm storage and multi signature storage works is that you actually have different parties who each have their own code or key or phrase for accessing the crypto. So even if I am the progenitor of the crypto or whatever the owner of it, right? You know, if I sign up with one of these institutions, maybe my executors are going to have a copy to a key. Maybe the institution itself is going to have a copy to the key. Maybe I give one to my financial advisor, although I have a note on advisors and key storage as well.
Demetre Vasilounis 00:26:46 But maybe you know somebody who's a qualified custodian, maybe somebody else has one. And to access the keys you need like 2 or 3 of the five or whatever. The numbers are right to access it. A majority of the parties ideally need to sort of agree and come together to access the crypto. So it's more secure because it doesn't necessarily have the same security flaws as hot storage, because it relies on different parties, you know, acting together. And presumably these are your trusted advisors and people where they're going to be consequences, you know, if they're trying to steal your crypto. But it also has the convenience of warm storage, because, again, if something happens to me, I'm the owner of the crypto. Now we're in a state administration scenario. There are ways of accessing the crypto that don't rely on me and don't rely on my personal knowledge. And there are many different platforms out there, many different storage solutions out there in different ways that they sort of do things right. So it's a really interesting time right now, and there definitely are better solutions.
Demetre Vasilounis 00:27:36 But of course, you know, any solution requires that advanced planning, right. And requires a sort of proactive involvement in action. So yeah.
Nicole Garton 00:27:45 I think the difficulty with digital assets is there's this inherent tension between security and accessibility.
Demetre Vasilounis 00:27:51 Correct.
Nicole Garton 00:27:52 Right. So you want to keep it secure from hackers or losing this value. But if you were suddenly incapable or died, you want to make sure that the individuals you've appointed have access to it. So maybe let's talk about that. How do we juxtapose those tensions? And do you have some planning tips or best practices of how people can work on documenting their digital assets and keeping them secure, but also making sure that people can access them when and if needed?
Demetre Vasilounis 00:28:19 Yeah, so it's a good question. the first thing that just comes to mind when I think about this is this whole developing area of digital assets in estate planning. I think even the advice that we've given has sort of changed over the years. Right. For example, like let's just take general password sharing.
Demetre Vasilounis 00:28:34 And that's not just for cryptocurrency. That could be for other digital assets as well. Right. You know, maybe when I started out I would have said don't share your password under any circumstances. But sometimes, like, listen, it could be the most practical solution to share a password. I'm not suggesting it's a one size fits all solution.
Nicole Garton 00:28:49 But it often violates terms of service. Right.
Demetre Vasilounis 00:28:51 So. Well, that's exactly the point that I was going to make, right? Yeah. Because I've been asked that question before and I've had clients ask me, well, why don't we just write it down somewhere? And, you know, I trust my spouse or I trust my kids or whatever, and you absolutely can do that, right? From a legal perspective to the point that you just mentioned, in the vast majority of cases, it does violate the Terms of Service agreement. From the practical perspective, what are the odds or what are the chances that a third party is going to know that the person is, you know, without being presented a death certificate? What are the odds that the custodian is going to know that the person has passed away? You know, I guess sometimes when you log into an account on a different platform from a different computer in a different jurisdiction, some custodians, they give you a notification, they ask you, was this really you? Did you log in, you know.
Demetre Vasilounis 00:29:32 Can you do the multi-factor authentication? Which is another important thing you need to keep in mind when it comes to transitioning online accounts. But I just want to start with the password anecdote, because this area is evolving and because passwords are so important. But then to go back to what I just said, the password may not be the only thing that you need to log into account, because many platforms now have two factor authentication or MFA multi-factor authentication. Right? I have an authenticator app on my phone now for many of my apps. So you can give someone a password, but if they don't have access to the phone with the authenticator app, that could be a big issue as well. Right. So I feel like I'm answering all of your questions in a roundabout way, but I promise it's all relevant. But I think that the first tip, the first thing you need to do is understand what you own and understand how you access it. Is it just a password? You know? Does it have two MFA or MFA? Does it require biometrics, for example? Right?
Demetre Vasilounis 00:30:22 Some people lock their accounts, but, you know, behind their fingerprint, right. We don't. I don't want to get into that morbid discussion. If you've passed away and now somebody needs your fingerprint, but you have to understand what the qualities of the assets are. There are still some general best practices. So to jump back to a point that I made earlier, I can tell you that me as a professional, I'm not qualified to store people's passwords. Like I don't want people to give me their passwords, for example. I don't want that. That is a liability. And of course, you know, every time you share your password, every time you write it down, there are potential issues with that beyond the terms of service agreement, because you could write down a password today, for example. But if you change it or if you're forced to change it or whatever, and you don't write it down later on. Well, now you've relied on the password sharing solution and that solution is not going to work.
Demetre Vasilounis 00:31:04 Similarly, another reason why I don't want to take passwords is because, you know, I work in an office and of course we all have security procedures and confidentiality and privacy procedures. But, you know, when you're in an organization at a given time, right? I don't know who's in my organization. Right. I haven't met all of my colleagues. So just from a liability and a risk perspective, I just would not recommend taking passwords unless you know you are qualified to do that. Those are some just risks I want to highlight. The other thing I would say to you is if you are going to employ any sort of password sharing strategy, you don't want to put it in the will. Because as you know, once wills go through the probate process, they become public documents. So God forbid you write a private key to crypto in the will. And you haven't you haven't moved it out of the wallet that it's in yet. And now somebody can look it up and try to access the crypto.
Demetre Vasilounis 00:31:48 So you don't want that either. But there are solutions out there. First of all, one of the best things that you can use and one of the best things people can take advantage of. I've talked about the crypto solutions that are out there in terms of the custodial solutions. There is, for example, if you have an iPhone, there's Apple's legacy contact feature, and that's something people who are listening to this podcast right now, they can literally do it while they're listening to this podcast. Go to your settings for your iCloud account. You can designate a legacy contact so that if you pass away, this legacy contact can go to Apple, they can provide the requisite information and Apple will provide access to. I think most of the account details and most of the account information to the legacy contact. So that's a very easy thing that you can do. And particularly when it comes to custodial assets, digital assets. That's like the best thing that you can do because they're going to be very happy if you use their internal tool.
Demetre Vasilounis 00:32:36 Right. Because they're familiar with it. They know it. They don't have to deal with a court order from a different jurisdiction. And that's where custodians can get a little tricky very recently. And the name of the case is escaping me right now. It's a recent Alberta case. So you might be interested in this. Nicole. It is the Wada estate. W-A-D-A, the Wada estate case. It's very recent. It's an Albertan decision. And essentially in that case, the executors had obtained the probate grant and they presented it to Apple. And Apple said, well, we need particular information. We need this grant to specifically say that you have lawful consent to access the Apple account. So in this case, it was an Apple account. The deceased did not use the legacy contact feature I just described, and Apple essentially said, this court order is not good enough. We need it to say these specific things. Right. And the Albertan court did not like that at all.
Demetre Vasilounis 00:33:24 They were very sort of dismissive of Apple's concerns and essentially said, listen, this is a court order. This is a grant of probate. This should be sufficient for giving the executors the authority to access the Apple account. You know, it is a waste of the court's time and resources to issue these sort of duplicative orders, as Apple has sort of requested. And in the future, if technology companies ask for this, there are going to be costs awards against them. So it was a fairly scornful decision, I would say, in favor of the executors. But my problem with that particular decision is that it didn't really talk about the various issues that come into play when it comes to particularly cross-border digital assets. Apple is based in California, as you know, right. There's U.S. legislation there that particularly on the privacy side, that Apple wants to make sure it is protected against any claims under this legislation. There are other issues in terms of whether digital assets are property. You know, traditionally speaking, because there's this whole other world about our digital assets, property, or are they really personal information and are they really under the purview of privacy legislation? I say all this to say that there's still a lot of legal ambiguity.
Demetre Vasilounis 00:34:28 And I've written a number of articles, you know, many of them are on the All About Estates blog, and I'm happy to share others if folks are interested. I did one for the National Conference a couple of years ago, which that's where I met you actually. So that article that I did is like a pretty comprehensive overview of the legal gaps there. But I bring all this up to make the point that because there's still a lot of legal ambiguity, if you're dealing with a custodian and they've made a tool available, it is best to use that tool.
Nicole Garton 00:34:54 Let's name them for people. So there's the legacy one for Apple. Meta…
Demetre Vasilounis 00:34:58 So Meta. So Facebook, Instagram have a memorialization process and LinkedIn has a memorialization.
Nicole Garton 00:35:04 And doesn't Google?
Demetre Vasilounis 00:35:05 Google has an active account manager, right?
Nicole Garton 00:35:08 Okay. Any other big ones?
Demetre Vasilounis 00:35:09 Honestly, the most recent big one was Apple was a little later to the game than Meta and Google. I'm trying to think of any big ones, any other huge ones…I don't think YouTube has one.
Demetre Vasilounis 00:35:19 I mean, YouTube is Google, so I think it is sort of related to your inactive account manager, but I can't think of any other huge, huge ones off the top of my head because this is the next point that I wanted to make. First of all, not all of these tools are created equally right? And second of all, not all institutions have these tools on the first point. Not all tools are created equally. Let's take Facebook as an example. So as I said, Apple gives you a lot of information, right? You can essentially sort of access most of the Apple account details and contents if you use the legacy contact feature. Facebook does not actually do that right. Facebook will not give you access to the messages, or actually they won't even give you access to the account. There are certain things you can do with the account to essentially memorialize the profile, right? Like you can post on the profiles page to sort of, you know, let others know so-and-so has passed away, for example.
Demetre Vasilounis 00:36:04 Right. And the page will say in memory of so-and-so, but it won't actually give you access to the messages. You'll need a court order for that. And we've seen courts rule against Facebook in favour of executors and beneficiaries, so that's good. But you know, you also have to jump through hoops to get these court orders. And it's a very timely and costly process. So first of all, not all tools are created equally. Second of all, I think the reason I can't think of any other ones off the top of my head is because these tools and these infrastructures are not cheap to implement, right? They obviously require time, resources, etc. so when we look at the Googles Apples and Facebooks of the world prior to these implementing these tools, they've probably gotten so many requests and so many people asking them about this that at a certain point, it made sense for them to invest in this so that they would spend less time fielding and dealing with these requests. Because we have to remember these big custodians, these big technology companies, they're machines, right? And they have their processes and they're trying to gather data from people and they're trying to advertise to people.
Demetre Vasilounis 00:36:57 Right. To the extent they can prevent anything interfering with those processes. Right. That's great for them. You know, a deceased user, as morbid as it sounds, right? A deceased user is probably not valuable to them anymore because they're not constantly advertising. To that individual, they're not collecting further data from that individual. So, you know, from the custodian perspective, I can see why they'd be reluctant to implement an infrastructure like this unless there was a business case for it and unless there was a benefit. So there are many custodians out there that don't have something like this in place just because they're not big enough or they don't have the infrastructure, it's easier for a custodian to say, hey, go away, get a court order, and maybe we'll talk, but otherwise we're not going to help you, right? So I think that these custodians have just received so many of these requests that it finally made sense for them to implement something.
Nicole Garton 00:37:40 So what if it's ChatGPT or Claude? You know, there's been cases they're getting sued for people that maybe have committed suicide or the individual that caused the violence in Tumbler Ridge, like somehow somebody access that history.
Nicole Garton 00:37:53 How's that working?
Demetre Vasilounis 00:37:53 So that's a good question. First of all, in Canada, at least for many of the provinces, not B.C., B.C. has its own privacy legislation, but we have the Personal Information Protection and Electronic Documents Act here. So essentially these organizations collect personal information, which is information about an identifiable individual for their own business purposes, and they cannot disclose personal information without the consent of that individual. So one of the big questions is if a person passes away and they don't provide explicit consent, is them dying consent? Does that vitiate consent or do away with the need for explicit consent under the law? And I think traditionally, sort of before the advent of technology, there was no question, for example, that the executors could go through like the personal papers of the deceased. Right. There was no privacy concern. There's even case law out there that talks about, you know, executors can waive solicitor client privilege on behalf of a deceased individual. Right. So there wasn't that question. Now there is that question right under keep it up.
Demetre Vasilounis 00:38:48 For example, there are very few references to executors or trustees or beneficiaries or estate situations. There's like one provision that talks about, you know, custodians can disclose personal information of the deceased, you know, can have the choice. It's not even that they have to, they can choose to disclose 20 years after the date of death of the deceased individual, which is not helpful, of course. Right. So getting back to your question, ChatGPT and all that. Like so these organizations presumably have collected personal information about an individual because the user is typing all sorts of things into the AI program. Right? The last point I was going to make before you asked that question, I think it's relevant, actually, is if all you want to do is get everything deleted and get the personal information cleared out, right. And maybe there's concerns, especially with the AI companies, that they've collected information about a particular individual. I think that process is easier. Like traditionally it's been easier for, let's take the non AI companies first.
Demetre Vasilounis 00:39:40 Right? If you had the death certificate, if you were able to sort of show that the deceased individual was the actual owner of the account, I should say, then usually it's a pretty simple process to get the account closed and, you know, presumably the information deleted, whether or not that actually happens is a different story. That brings me to the AI piece, which is interesting because, you know, as we know, once you put something into an AI algorithm and like an AI, LLM, right, once you put information in there, that information is used to train AI. Unless you opt out. So that was the point that I was going to make. You first want to check your settings to see what information is AI collecting about you. What is it using to train on you? I think you still need to be careful about what you put into AI, because even if you do take that setting off, I mean, at the end of the day, we're not the ones running these companies, right? I'm not a conspiracy theorist or anything like that, but, you know, you always need to be mindful of the fact that you are using a third party platform.
Demetre Vasilounis 00:40:30 And, you know, technology isn't perfect either. Right. So that is something important to keep in mind. So let's say you didn't have that setting, for example. You know, somebody passed away. Can you now go to the AI company and say, not only do I want the account deleted, I want you to make sure that anything that was put into this AI is also wiped. I'm not so sure if that's easy or even possible to do. Right. So, it's a great question. We don't really have precedent for that right now. But certainly I think some of the issues you've highlighted, particularly the AI induced psychosis, it's a really big issue. It's sort of that's a little outside the digital assets and death sort of thing, but it is a really big issue as well. So something we need to be mindful of for sure.
Nicole Garton 00:41:07 So Demetre, you've done an amazing technical deep dive. Maybe let's bring it back to what people can do today. So somebody listens to this and they're like, “okay I think the stat is the average North American has like 100 digital accounts.”
Nicole Garton 00:41:20 Like, what can someone do today to start getting organized in the event that they were suddenly incapable or not living, that they're executors and powers of attorney could deal with this? What can they do?
Demetre Vasilounis 00:41:30 So yeah, great question. And yes, we'll try to be a little less technical for this, but I think the easiest thing you can do, like the super easiest thing is again, use these tools. Right? Use the Apple legacy contact. Use the inactive account manager because they're literally just settings. They'll guide you through the process. Right. So it doesn't really require too much sort of external work from you. So just looking at whether a particular account has that particular setting, I think will go a long way, particularly for Apple and particularly for Gmail. Right. Like iCloud and Gmail.
Nicole Garton 00:41:59 And I would add make sure, if that's going to be a different person than your executor, then I think I would just think through the logistics of that as well, if what that's going to look like.
Demetre Vasilounis 00:42:10 100%. And I was just going to make that point, you have to be mindful of who you are choosing as well, right? Ideally, yes, it is the same person as your executor. Otherwise you could potentially have issues there. Ideally, it's someone you know. Same considerations for choosing an executor as well. You know ideally it's someone who you see they'll be around after you're gone, right? Someone who's reliable, someone you can trust because you know the other piece to that. It's the privacy piece. Right. And I spoke about this at that step National conference presentation a couple of years ago. You have to keep in mind that these individuals are going to be looking at your messages and looking at your emails, potentially. So some people might say, hey, I don't care, I'm dead anyway. Other people may say, oh, you know, I actually don't know if I want my kids to see everything that I have on my inbox. So whether or not you want to disclose those details to begin with is super important.
Demetre Vasilounis 00:42:57 So you have to think about that and you have to consider that as well. There are some considerations there. There are some things that you should do, but from a pure process perspective, using those settings or like that's the easiest first step that you can do. Otherwise, just as we do in traditional estate planning, I think sitting down and making an inventory of your key digital assets can be very informative and can also be very helpful, not only from an estate planning perspective, but also from a digital hygiene perspective. So I wrote a two part article for the Step Journal, and part one was all about making an inventory and then looking at digital hygiene. So what is that? You know, the average person has like 100 accounts or whatever the statistic is. So if you have time, right, it might be a very valuable exercise to sit down, look at the accounts you have and then think about, you know, which accounts do I have that I don't really use anymore, I don't really need anymore?
Demetre Vasilounis 00:43:43 Right. Closing those up, getting your information deleted if possible. That can first of all, just help you feel better. Can help you feel more organized, right? But that's a really good step to take from a digital hygiene perspective and from an estate administration perspective, because that's one less thing that your executors need to worry about. Maybe there is an email account that you have, but then there's really nothing there, right? The last thing you'd want is for your executors to jump through hoops to get access to a particular email account, only to discover that you really didn't use it that much. It was sort of like a backup account, and it's not helpful from an estate administration perspective. This also allows you to look at your passwords, look at their strong enough, look at your MFA and your too far. Consider whether or not you want to do that. I mean, generally speaking, it's a good idea just from an account security perspective. But then you also want to think, okay, let's do like the mock death scenario.
Demetre Vasilounis 00:44:28 For example, if I pass away I now have 2FA or MFA on my account. Right. How are my executors going to access this account? So I think looking at that, doing that exercise of creating the inventory will sort of help you with that. So that's probably the next big step, I would say creating the inventory and then looking at each asset one by one. And then of course, when it comes to the more complex assets, like if you are out there and you are a little bit more of a sophisticated crypto investor, I think that's where you want to sit down and maybe contact a professional who might be able to help you ensure that your solution for transitioning your crypto is secure. I've had some clients over the years. Some of them have been very fortunate where they actually had the Pin to the phone and, you know, the deceased had actually stored their private keys on their phone, right? Or they actually did have the Pin to the wallet, which was super helpful. But I think just sitting down with a professional and having an advisor help guide you in terms of, you know, who the right people to contact are for your crypto storage, that you know that can be useful depending on the magnitude of the asset, right.
Demetre Vasilounis 00:45:22 So those are probably the top three steps I would say.
Nicole Garton 00:45:25 And there are resources like STEP has a digital asset checklist. We can put that in our show notes. It's almost too comprehensive though it might be overwhelming for some people. Do you have some other ideas of templates or things that might help people?
Demetre Vasilounis 00:45:40 I mean, it's funny, you could potentially use AI to produce a simplified template for you, right? I'm on the STEP digital assets global special interest group steering committee. Right. So I definitely do want to plug the STEP resources. I think they're really great. But to your point, I think those resources are aimed more at advisors and professionals. So if you are an advisor or professional listening to this right now, I don't think it would be inappropriate for you. I think for the average person, it could definitely be overwhelming. So I can tell you, for example, for myself now with my clients, whether this was in private practice or whether this is in my current role now at RBC, you know, I always send the questionnaire to the client, like the general estate planning questionnaire.
Demetre Vasilounis 00:46:16 But I tell them, listen, I really don't want you to worry about filling this out on your own. If you find it intimidating, we're going to sit down together. We're going to walk through it, we're going to go through it. And I try to make the process easier for the clients. Some people love to fill it out, and some people are very organized and will do it on their own. Others, you know, are not. And they sort of need their handheld a little bit. So it depends on the individual as well. But in terms of universal templates I've got to promote STEP’s template. But again you could take a STEP template. You could put it into like a Claude or a ChatGPT and ask them to simplify it a little bit. And, you know, in all likelihood it'll be a fairly sufficient simplified template. But like anything AI generates, you always have to, you know, double check and be sure that everything sort of is accurate. Right.
Nicole Garton 00:46:55 So, Demetre, this has been amazing.
Nicole Garton 00:46:57 Are there any final steps or tips you want to leave people with?
Demetre Vasilounis 00:47:01 Yeah. I mean, listen, an ounce of prevention is worth a pound of cure, right? That's the old saying among the various other estate planning and administration cliches that we're familiar with. But I do think it's helpful to be proactive. Estate planning is something that individuals don't want to think about. Sometimes it's something that they want to sort of put off to the last minute. But for listeners out there, you know, you really need to think about particularly like my Gmail. Like, let's take Gmail as an example. I use Gmail all the time, every day, right? It has all my ongoing payments and subscriptions. It has information related to, like my beneficiaries, for example, like friends and people I've emailed with. Right. It has, you know, other information about my financial assets and stuff like that. So if my executors had to start from square one, my Gmail account would be such a great way for them to sort of figure out what's going on.
Demetre Vasilounis 00:47:47 So I encourage those out there who are listening to really take a moment, put yourself in your executor's shoes and think about what information would they need to make your estate administration as sort of simple as possible? And for those of you who are out there who you know might find that a little daunting, that's where I would encourage them to seek out a professional, because that's the professional's job at the end of the day. In contrast, for the professionals out there, I would say it is very clear that more and more clients are owning digital assets. You know, you're seeing particularly more and more interest in crypto and getting into the crypto market. So I certainly encourage professionals who are out there who are listening, who are not super familiar with these topics, to go and seek out resources. Again, Step has a lot of them. I'm always happy to field questions and to sit down and talk to people about this if there's interest out there, but really just sort of ensuring that you're, you know, getting a general sense of what the right questions to ask are.
Demetre Vasilounis 00:48:35 And then, of course, when you meet with your clients actually asking those questions, and that will sort of help inform and guide what the next steps are.
Nicole Garton 00:48:42 So, Demetre, you are an incredible resource. If people wanted to find you, what's the best way to find you?
Demetre Vasilounis 00:48:47 Honestly, I think the best way is LinkedIn. I do check it fairly regularly, so if you just Google my name, I assume my name is going to be on the podcast page for this, right? If you just search me on LinkedIn, I don't think the only other Demetre Vasilounis I know that's out there is my cousin in Greece and he does not have LinkedIn, I can assure you of that. So I'm probably the first one that will pop up. Please feel free to reach out to me on LinkedIn. I'd be happy to chat.
Nicole Garton 00:49:08 That's wonderful to meet you. Thank you so much. It's been really incredible. Thank you for all your wisdom and tips.
Demetre Vasilounis 00:49:12 Thank you so much for having me, Nicole.
Demetre Vasilounis 00:49:14 I really enjoyed it. Thank you.
Nicole Garton 00:49:20 Demetre. Thank you. This has been such an important conversation. What really stands out to me is that our estate planning has not kept pace with the way we actually live. So much of our financial life, our personal history, and even our identity now exists in digital form. If those assets are not identified, planned for, and made accessible in the right way, families can lose both value and memories. Even when there's a perfectly valid well in place for listeners. Here are the key takeaways.
First, prepare a digital asset inventory. Make a list of your important online accounts, digital devices, cloud storage, loyalty programs, and any cryptocurrency holdings. Your executor needs to know what exists and where to start.
Second, use the planning tools already offered by major platforms. Set up your Apple Legacy, contact Facebook Legacy, Contact and Google and Active Account Manager. These take minutes and can save your family enormous frustration.
Third, make sure your will and incapacity documents properly address digital assets.
Nicole Garton 00:50:19 That includes giving your executor or attorney the authority they need to deal with them. Fourth, if you hold cryptocurrency, make sure there is a secure and workable plan for your private keys and seed phrases. Without that, the asset may be unrecoverable. Fifth, do not put passwords in your will. Use a safer system and make sure the right people know how to locate what they need when the time comes. Demetre, thank you again for sharing your expertise with us. And thank you to our listeners for joining us on your estate Matters. If you found this episode helpful. Please share it with someone who may benefit from us and join us next time for another practical conversation about estate planning. Estate administration and legacy in Canada. This podcast is for informational purposes only and should not be considered individual, legal, financial, or tax advice. Make sure to consult the advisor of your choice to advise you on your own circumstances. Thank you for joining us for this episode of Your Estate Matters. If you like this podcast, make sure to follow it on your podcast platform of choice.
Nicole Garton 00:51:23 Whether you're planning your own estate or you're acting as executor for somebody else's heritage, trust can help partner with Heritage Trust to protect your family, your assets, and your legacy. If you'd like more information about Heritage Trust, please visit our website at Heritage Trust Company.
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