Dealing with Digital Assets upon Death
22nd November 2018 by Lee Goodwin
As more and more aspects of everyday life are moving online, the number of assets existing solely in digital format continues to rise.
Consequently, the estates of a significant proportion of individuals are now increasingly likely to contain assets that are ‘intangible’, i.e. digital assets in the form of online photographs, music libraries, social network profiles, blogs, E-books, email accounts and Bitcoin and other cryptocurrencies.
Digital assets commonly have significant sentimental value attached to them, but an increasing number of them will also now have an inherent financial value which the owner is likely to want to pass onto loved ones following their death.
However, in the case of digital assets, we may not necessarily own all that we think we own.
Users of online services are regularly required to agree to the Internet Service Provider’s (ISP’s) terms and conditions, which will typically impose restrictions upon their use of these digital assets, including what can be done with the assets upon their death. More often than not, rather than owning the content of their online account, the user will instead possess a ‘licence’ to use the services provided by an ISP. This licence will often terminate upon death and will be non-transferable, with the ISP commonly citing issues of privacy and confidentiality as the main reasons preventing third party access or transfer following the death of the user.
Although difficulties are therefore likely to be faced in transferring ownership of digital assets upon death, there are certain measures that can be taken to help simplify the process for the Personal Representatives and/or beneficiaries of an estate.
For starters, it is advisable to prepare written instructions setting out what you want to happen to your digital assets following your death. An inventory of your digital assets should be created and regularly updated. This can then be stored alongside your Will, to serve as formal guidance to your Personal Representatives and to assist them in ascertaining the extent of your digital assets following your death. It is unwise to include such personal information in the Will itself due to the fact that a person’s Will becomes a public document upon their death.
With regard to access details such as usernames and passwords, most ISPs incorporate provisions into their standard terms and conditions prohibiting the user from recording details of their login information and passing this onto third parties (including their Personal Representatives). Whilst it would appear unlikely that ISPs would take legal action for breach of contract against an account holder who writes down secure information, or passes it onto their Personal Representatives in connection with the due administration of their estate, best practice for fiduciaries and advisers must be that the ISP’s terms and conditions should not be breached. A practical solution may therefore be to involve a third party provider of password and online ID security, such as a password management service provider for example.
Checks should also be made with the ISPs whose online services you use to see firstly what conditions apply upon the death of the account holder, and secondly whether or not they provide their own method to transfer ownership of your digital assets upon death.
Since your digital assets may actually be owned by the ISP, making it difficult for your Personal Representatives to gain access to the assets following your death, it would also be wise for you to back up your digital assets on a regular basis, for example, by saving the assets onto an external hard drive which can then be stored in a safe place, the location of which you can make known to your Personal Representatives in separate instructions.
It is possible to include a clause within your Will itself which specifically relates to the succession of any digital assets of purely sentimental value. However, for digital assets with an inherent financial value, specialist advice and/or treatment may be required, as the legal issues involved may relate more closely to intellectual property law than to the law of succession.
In closing, whilst the law relating to the treatment and succession of a person’s tangible assets upon death is currently very clear, the law relating to an individual’s digital assets and online information is still in the very early stages of development. Nevertheless, by engaging in some of the simple estate planning tips set out above, you can help ease the management of the succession of your digital assets after your death, as well as ensuring the protection of your own privacy in such circumstances.