Like it or not, we live in a digital age where technology has changed the way in which we store our data and even our memories. Even if we are not aware of it, most of us will have digital assets of one kind or another. This begs the question as to how such assets are dealt with when we die. Can they be inherited and transferred to the beneficiaries in our Wills? Can our online accounts be accessed by our loved ones? Or are they lost forever?
What are digital assets?
In simple terms a ‘digital asset’ is something intangible but that has a value, be it a financial or sentimental one. Examples include but are not limited to:
- Online accounts
- Digital photographs
- Web addresses
- Digital money known as cryptocurrency
Do we own our digital assets?
It might surprise you to learn that we do not always own what we perceive to be our digital assets. Often, our online accounts, for example, are used under the terms of a licence agreement, which we enter into by accepting the provider’s terms and conditions. Here’s an example: iTunes accounts - we do not own the music that we “purchase”, but rather we just have the right to listen to it under the terms of the licence agreement. A licence is usually non-transferrable and will be specific to the individual licensee. This has implications after death, as the person might have wanted to pass on the content of their accounts, but the executors may find that they are unable to.
Generally if held under a licence, the licence agreement will determine what will happen to the account upon death. For example, social media accounts such as Facebook or Instagram can be “memorialized” where friends and family can continue to share memories about us after we pass away. Other providers, such as Twitter, close accounts upon death and provide our families with an archive of all our public posts.
Beyond our social media profiles, accounts such as those with Dropbox are automatically deleted after a period of inactivity. This is also often the case with email providers, although some allow access to authorised people after the account’s closure, where others allow the account to be transferred. It is not difficult to see therefore how confusion, uncertainty and logistical problems can arise. After all, the digital world is a relative newcomer and every day new inventions and systems are adding to the complexity.
To overcome these problems, you may simply opt to share your passwords so as to give access to digital content to someone you choose. However, notwithstanding issues of confidentiality during your lifetime, you should be wary of doing this because this could be in breach of your agreement under the provider’s terms of business.
How do our loved ones find out about our digital assets?
Given that our digital assets by definition have no physical presence, it can be extremely difficult to trace them when we pass away. However, it’s important that our executors are able to find details, particularly where the assets have a financial value, such as our PayPal accounts, intellectual property such as royalties or digital cryptocurrencies (e.g. Bitcoin). In some circumstances these assets can be highly valuable and should be declared by our executors, particularly as an inheritance tax liability may arise and penalties may otherwise become payable.
Our recommendation is at the very least to keep an inventory of all of your digital assets and details as to how they can be accessed, whilst still keeping your passwords private. This might involve the use of an online password manager, for example. We’ve created a useful digital assets inventory for you to use – you can download the PDF here.
Including your digital assets in a Will
You should also consider who you would like to inherit your digital assets where this is possible. You can include a clause in your Will giving your executors discretion to deal with these items, or you can include specific gifts depending on the asset in question. You should also consider your choice of executors as it is often advisable to have separate executors dealing with your digital assets, as opposed to all other assets.
There is clearly some need for legal reform in relation to digital assets and succession. There is no joined-up thinking as to how different types of digital assets are treated on death, as a result of a lack of relevant legislation. In the meantime it is important to be aware of the problems that can arise if you have not planned properly.
Wills and succession solicitors and advice
Tees has specialist succession planning solicitors who can help you:
- If you have digital assets and need to write or make amendments to your Will
- If you are an executor dealing with an estate involving digital assets
- If you have received an inheritance of a digital asset in a Will and need advice on how this can be dealt with
- If you are related to someone who has passed away without a Will in place where the deceased had digital assets