THE music and belongings that you hold online or on your computer are known as your digital assets and are starting to make up a large chunk of individual estates, writes Samantha Dolby at Brewin Dolphin in Newcastle.
Managing your digital assets – and how to pass them on when you die, is a question that most of us wouldn’t even have considered when it comes to legacy planning. And yet, when you take into account the fact that music downloads, for example, typically cost around £1, many of us may have hundreds or thousands of pounds worth of digital assets sitting in iTunes alone.
A 2012 survey, for example, found that Britons could be keeping as much as £24bn of digital assets in cloud storage. The survey also highlighted that 68 per cent of people have not considered what will happen to their digital assets when they pass away.
One well known person that has considered his digital legacy was Bruce Willis. In 2012, it was widely reported that the actor was going to great lengths to make sure his digital music collection could be passed on to his daughters. This story was later denied by Willis’ wife but it still raises questions about how your digital assets fit into your estate.
While this might sound fairly straightforward, there are some problems with the definition of digital assets and whether certain types of digital content can legally be passed on when you die. This is because you don’t actually own the music, books and films you have downloaded. Instead, you have purchased a licence that means you can listen, watch or read that material for the rest of your life. When you die the licence expires so you cannot pass on your music, film or book collections to your descendants unless you have the physical records, DVDs or books. Some companies have taken steps to allow licences to be bequeathed but you will need to check each of your accounts – iTunes, for example, does not allow licences to be passed on.
However, not all of our digital assets become worthless when we die. Cash that you are holding online forms a part of your estate and you should make sure your beneficiaries are able to get hold of these assets after your death.
How to hand on your digital assets
The biggest hurdle your relatives will face when it comes to accessing your digital assets is knowing exactly what accounts you have and how to get access to them. With traditional assets they are discovered through the probate process but this has not yet been extended to cover digital assets.
This is a relatively simple problem to resolve, however you will need to sit down and make a list of all your online accounts and the passwords needed to get into them. While you are writing down all your financial accounts also include your social media accounts. Alongside each account you can write what you want to happen to it. For social media this can mean having your page shut down or turned into a memorial. For digital assets state who you want to inherit the goods.
Obviously, this is not a list you want to leave lying around. The best place to keep it is with your will and at a secure location where your loved ones will be able to find it. If your will is held by your solicitor then your digital directory can be classed as a Letter of Wishes and held alongside your will. If you expect your estate is going to be liable for inheritance tax then leaving your digital directory with your solicitor will help smooth the process of valuing your estate after your death.
One final thing to remember is to keep your digital directory up to date – particularly if you change your passwords!