Recent reports in the media have warned of the importance of planning ahead to ensure your digital assets are well protected in the event of your death. With such vast and conflicting information available what guidance should you take, and what actually constitutes a digital asset?
- 0.0.1 First step, what are digital assets?
- 0.0.2 Picking a way through the conflicting and confusing advice
- 0.0.3 Terms and conditions that can mean your account dies with you
- 0.0.4 It is important to plan ahead
- 0.0.5 On-line banking, Paypal, share-dealing, gaming etc. accounts
- 0.0.6 Passwords
- 0.0.7 An international problem
- 1 Next steps?
First step, what are digital assets?
‘Digital assets’ here does not just mean personal financial assets such as banking, PayPal, or gaming accounts, but also items of sentimental value – perhaps the family photos stored in the cloud, or something as basic as family emails which take the place nowadays of the letters that might once have been carefully tied up in ribbon and passed down the generations.
Then there are the digital assets that are clearly business-related: a clutch of valuable domain names, or a blog whose success has taken you by surprise.
And there are some assets that cross those too-simplistic boundaries: for example the portfolio collection of a professional photographer that is stored and available online. Which has both value for sale and also personal value for those who accompanied him or her on the trips that led to the collection.
Picking a way through the conflicting and confusing advice
We do need to think ahead and plan for what would happen, in the event of our death, to our ‘on-line life’. Otherwise financial or sentimental assets may simply be lost to our families or intended heirs.
One thing that has been clear from all the media reports is that this is not an easy or straightforward topic. There has been a huge explosion in on-line presence. Even those who would regard themselves as not particularly technically savvy are carrying out important parts of their life on-line. Email may not look quite as appealing as the letters tied up in ribbon, but to be able to retrieve them can be just as important: one of the most tragic reports on this topic in recent months was of the family of a soldier killed in Afghanistan that, after his death, realised that the many ‘letters’ they wanted to be able to keep were actually in his email account, not in theirs, and his account provider (entirely in accordance with its legal rights under the terms and conditions when the account had been opened) would not give the family access.
Terms and conditions that can mean your account dies with you
On the distressing facts of that particular case, a compromise was reached and the family eventually did receive access to at least some of the emails, but the key point that arises from this story is that we all, when we open up a great variety of new online accounts, click the box that says ‘I agree to your Terms and Conditions’. It is known that the number of people who actually read these terms and conditions is tiny – and indeed some might say what would be the point of doing so, because if you want the product you have no choice but to accept them.
In some cases, these accounts are specified to be personal to the individual who opens them and they cannot be transmitted on death. This is likely to be true for some cloud-based storage systems – for example the kind of site where you might store your family photos, videos, or perhaps that next best-selling novel that is very nearly finished.
In some cases, such as Google’s Inactive Account Manager, it is now possible to specify what is to happen to a Gmail account in certain circumstances. This is a great step forward in that it at least recognises that this is an issue to be addressed here, but it does not solve all the problems.
It is important to plan ahead
The first step in planning ahead for assets that may cease to be accessible following a death is the simple, practical one of making sure that the items will not go up in a puff of smoke on death, but will actually continue to be available. That comes down to thinking about storing, and backing up, off-line, particularly important and valuable items. Once the important assets are backed up (regularly) so that they will at least exist and be available to an heir, the next question will be who should receive it or them. Are specific provisions in the Will necessary to achieve this?
Another kind of asset that may be in danger of simply being ‘lost’ is the financial asset where the only record of its existence is on-line. The point here is not that the assets will cease to exist in the event of death, but the very basic one of how are executors to collect in the value of an account if they have no knowledge that it even existed? It may be possible to deal with this simply by keeping an orderly, brief record of all these accounts with the principal papers intended for the executors.
Should passwords for these accounts be provided to family, executors, solicitors or others? You will too often see the extreme advice that the passwords should be included in your Will. A moment’s thought shows that, if nothing else, this is impractical and ill-advised. As a matter of routine security most of us expect to have to change our passwords several, and possibly many, times before our Will comes into effect. Moreover for security reasons they should not be included in a Will.
In handing on passwords, however it is done, the first priority is to be very careful about those passwords, particularly for banking and financial assets, where you have already agreed to keep the password secure and not disclose it to anyone. These highly confidential passwords should not be compromised.
For many financial assets the executors will be able to collect in the assets provided they have the basic record of details we have already suggested, and they will not need access to the password to do so. Their approach would be similar to that for any other bank account etc, though it may take longer and be more complex to recover the funds.
There may be cases however, where access to a password is essential, perhaps because there is no physical asset that underlies the online account in the way there is for a bank account. One approach here may be to keep a record of passwords in a place that is physically secure, such as a safe: it very much depends on the type of asset that is password-protected, and the overall situation. Any such list is, of course, only useful if it is properly maintained: out of date passwords provide no help at all.
An international problem
Life on-line has exploded in the last decade. It has always been the case that our legislators take time to make sure the law catches up with major changes in society, but in this case the problem is greatly intensified by the fact that use of the internet knows no national boundaries. The account that is used in the UK say (and also when abroad too, perhaps) is very likely to be based in yet another jurisdiction, quite possibly but not necessarily the US, and the account terms and conditions will specify that all issues are to be governed by US law, or whatever is the local law of the provider. Because of this cross-border angle, it will ultimately need international co-operation if a simple legal pathway is ever to be created through the digital assets minefield.
While we wait the many years before that may happen, there are simple practical steps that we can all take to preserve both the financial value of our digital legacy, and safeguard sentimental items that we want to pass on. This should be part of our normal testamentary planning when we make a Will.
It is worth remembering that – quite apart from the digital assets question – any Will that is more than five years old is likely to have become out of date because personal circumstances have altered to a degree that makes some change appropriate. Tax laws may have also changed so that what was once a beneficial structure is now disadvantageous.