Digital assets

Of course, the idea that only the young understand technology and that the old are preoccupied with their own mortality is a crude, simplistic and no doubt incorrect stereotype.  Nevertheless, it is incontrovertibly true that technology (often pioneered by the young) disrupts society, and that the law (often written by more senior generations) usually fails to keep up.  Digital assets, and in particular succession to them on death, are a prime example.

To understand the issues, it is first necessary to understand what is meant by "digital assets".

Helpfully, there is no legal or accepted definition of the term. A good starting point though is the idea of electronic records to which you have access; in other words data, held in any format. These could include email accounts, photographs, cryptocurrencies, social media accounts, intellectual property rights and others.

Digital assets could therefore be classified into three broad categories.

1. Online accounts which represent real-world assets.
2. Digital assets with financial value.
3. Digital assets with non-financial value.

In this article, we will explore the differences between these assets and how they are treated on a person's death. Crucially, we will also look at the practical steps that a person should take to ensure their digital assets can be inherited on death.

Online accounts which represent real-world assets

Arguably, these are not actually "digital" assets. They are in fact real-world assets that you access through an online platform. For example:

• Online bank accounts;
• Paypal or equivalent online payment systems;
• National Lottery accounts; or
• Online gambling accounts.

In each of the above cases, the actual asset you own is money. It is important therefore to consider what happens to these assets when you die. As they are representative of real-world assets, they are classed as part of your estate on death. This means that your executors are responsible for finding and closing each of these accounts and distributing the funds to your beneficiaries.

The global nature of the online world, and in fact the online nature of the assets in question, does raise two very important questions.

Firstly; where is the asset actually located? If the account is located outside England & Wales, then you will need to check which jurisdiction the account is located in and check whether your English will would be accepted there. If not, do you need to make a separate will?

Secondly; how will your executors discover the existence of the account? If there is no paperwork in connection with it, and if your executors do not have access to your email account (or other electronic records), how will they discover its existence?

Digital assets with financial value

There are many, many digital assets that do not represent real-world assets but which nevertheless have financial value. For example:

• Cryptocurrencies;
• Domain names;
• Online music accounts;
• Online or mobile gaming accounts which have virtual credits or items in the game that can be exchanged for currency or traded in the real world;
• IP rights over designs of items in games or virtual worlds;
• The social media accounts and the associated brand of online influencers;
• Blogs, vlogs, websites and eBooks that you have created;and
• Some film and musical recordings.

It might be possible to convert the value of these assets into cash; alternatively they may simple have value in that the asset took time and money to acquire, and transferring that asset to a beneficiary may save them time and money in acquiring the same thing.

It is therefore important to consider what happens to these assets on your death. Would your executors be able to locate and access the assets after your death? Cryptocurrencies are a good example – often, they can only be accessed using a password or private key and if you are the only person who knows that bit of information then if you die, your cryptocurrency holdings will die with you.

It is also important to know the legal jurisdiction that governs the asset (if any) and any rules surrounding access to the assets on death by any relevant service provider.

Digital assets with non-financial value

The last category is arguably the common, and is likely to include:

• Email accounts;
• Social media accounts (such as Facebook, Twitter or LinkedIn);
• and Photo or document sharing websites (such as Flickr, DropBox or Instagram).

Although these accounts may have no financial value, they are likely to have significant sentimental value. They may also hold the keys, as it were, to a great number of other digital assets. Your email account is likely to be a virtual treasure-trove of information, containing details of most, if not all, of your online accounts.

One of the main practical issues with these services is that in the vast majority of cases you do not actually own the account or the content associated with it; instead, you have a licence to access and use the site. A licence is usually personal to an individual and often it will come to an end on the individual's death. The terms of the licence will depend on the service provider and their standard terms and conditions; at the time of writing, Yahoo for example explicitly states in its terms and conditions that any rights to a Yahoo account will terminate upon death and that any data in the account may be deleted - the contents of the account cannot be transferred. Apple currently requires a court order, specifically mentioning the deceased's Apple ID, before it will release the contents of an account to grieving family members. This is, of course, not an easy or cheap process.

The question then becomes, what can you do now to deal with these problems before they arise?

Practical advice

Digital assets form an increasingly important part of our lives, and will continue to be important after our deaths. It is clear that such assets will need to be properly administered once you are gone, although it is not so clear how that can be achieved in the current legal framework.

If one thing is certain, it is that simply making a will is no longer enough.

There are however a number of steps you can take during your lifetime to make your executors' roles easier and to ensure that valuable assets or information can be accessed after your death.

• Create an inventory of all your online accounts (or rather, the ones you would like people to access after your death), including utilities accounts, email accounts, social network accounts, online banking accounts, accounts holding your intellectual property etc. along with the account access details and update this frequently. This list should be created and stored as a physical copy only – do not create or save this data to an electronic device.
• Find a secure place to store this information but ensure that it is in a place that your executor will be able to find easily. This is important as they may need access to certain documents or information which is stored online or through one of these accounts. It may be necessary to alert your executors to the existence of the list – but do not give them a copy.
• An alternative to a hard copy of your list is to make use of one of the various companies that provide secure online storage and/or password management and which will release that information to your executor(s) after your death.
• Check the terms and conditions for your most important and sensitive accounts; try to ascertain what happens to each of these accounts when you die and how your executors can access them (e.g. Facebook has a 'Legacy Contact' feature which allows you to nominate someone to manage your account after you pass away). Where necessary, make any required nominations – do not rely on the fact you have appointed executors in your will.
• Back up all documents, photographs and other data that is stored online onto physical media and store them in a safe place that your executors can access.
• Alternatively, it may be possible to back up such data to the cloud, provided that the service provider allows access to that data after your death. There are some specialist companies offering such services.
• Consider what information you have stored in photographs and in emails and whether there is anything that might cause distress to family members if accessed by your executors. Executors might not be able to destroy items if this could reduce your estate's value and websites will not necessarily co-operate in removing material if there is no other reason for them to do so. You should manage any sensitive information during your lifetime and delete it where necessary.

A word of warning – some commentators consider that if you give your account access details to your executors, and if those executors access your data after death, then this would likely be a breach of the service providers' terms and conditions and may therefore be an offence under the Computer Misuse Act 1990. Others consider that as the role of an executor is to "step into the deceased's shoes" then they have the right to access any information the deceased would have had access to. Either way, until we have some clarity on the matter, and perhaps some internationally-agreed standards as to access to a deceased person's accounts, you will need to give some thought as to how any important digital assets or information can be accessed after you are gone.

For advice on dealing with your digital assets after your death, or to make or update a will to take into account any digital assets you own, contact our team below.