The trend toward clients having more of their lives, and in particular their financial information and personal details, existing in the digital world will be an increasing challenge for all professional advisors, says an accountant specialist in information technology and systems auditing.

“We’re all going to have to learn to deal with information in digital form in a professional way, and with the unique problems that arise [from it],” said Jerrard Gaertner, director of technology assurance services at Toronto-based accounting firm Soberman LLP, in a presentation to the national conference of the Canadian chapter of the Society of Trust and Estate Practitioners (STEP Canada) in Toronto on Monday.

For financial advisors, that will mean being aware that clients increasingly may have certain assets that exist only in the “virtual” world.

“People underestimate the value of assets that are embodied digitally,” said Gaertner in an interview. “There may be intellectual property, works of art, photographs, domain names, and the income generated through online businesses.”

On the other hand, clients may be unaware of their tax or other compliance obligations in regard to their online assets, which is also a subject advisors will have to address with clients.

Increasingly, Gaertner says, financial professionals of all stripes are dealing with the fact that some of clients’ information and documentation exists in electronic form only, and sometimes under aliases or pseudonyms. That’s creating obvious challenges for trustees and executors, in particular.

“We need to know effectively about identity to be able to administer the estate in a number of areas, to track and recover assets, to dispose of assets,” Gaertner explains. “How do you dispose of a domain name, if you don’t know the deceased’s user ID?”

There are also a variety of emerging legal issues in this new area.

“Your testator may have a large amount of money on deposit with PayPal. You can log in [if you are in possession of the password] under the theory that as executor you stand in the shoes of the deceased, but that happens to be in contradiction of PayPal’s terms of use,” Gaertner says.

Fourteen U.S. states have now enacted laws that allow an executor/administrator to log on as the testator, even if it’s in breach of a website’s terms of service, but no such similar law exists in Canada yet, Gaertner says.

What can executors and trustees do to provide service to clients and meet their expectations? Talk to clients and their families regarding their digital information and lives, and find out what the risks are, Gaertner says.

“What information does the testator keep in electronic form? How is it accessed and how does he intend you to access it after death, if at all? Is the information sitting on a computer that you can seize, or is it sitting ‘in the cloud’ in some foreign jurisdiction, where you or may not be able to access it?” Gaertner says.

“Depending on the answers you will want to document at least that you had discussion, and [have] a plan, so that when the testator dies, you will have a little bit of control, and some idea of which way you should be going.”