The digital estate – planning for the modern age
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We all own more and more intangible assets, particularly in the context of the digital age. While a traditional estate may contain an apartment, a car, a boat, and many movable assets, a modern estate also consists of various digital assets, which one might not immediately think about.
These may include:
- online businesses and websites
- computer source code
- crypto assets (e.g. Bitcoin, Ethereum)
- documents in the cloud (e.g. on Dropbox)
- software licenses
- internet domain names
- social media accounts (e.g. LinkedIn, Twitter, Facebook, Instagram, and Snapchat)
- email accounts (e.g. Gmail, Outlook, etc.)
- ebooks (e.g. on Kindle)
- music, audiobooks and podcasts (e.g. on iTunes)
- movies (e.g. on Amazon Prime)
- blogs (e.g. WordPress, Blogger, Tumblr, Medium)
- video channels (e.g. on YouTube)
- photos on dedicated sites (e.g. on Imgur, Flickr, 500px)
These digital assets can have a significant financial value, such as bitcoins for example. However, often they will at least have a sentimental value for the testator’s relatives (such as the deceased’s photos in the cloud). In any case, they should be given the appropriate attention in estate planning and administration.
An inventory of digital assets and passwords prevents them from being lost forever
What needs to be considered when planning and administering the digital estate? First of all, it is important to find out what actually belongs to the digital estate of the testator. Ideally – but rarely in practice – the testator has created an inventory of digital assets during his or her lifetime. This inventory should also contain all the testator’s logins and passwords. Access to the testator’s email account is particularly important because it often is the key to accessing other websites. If the testator has not taken precautions, the passwords on various websites that the testator used during his or her lifetime can be reset and then accessed through the email account (provided that this is not illegal as is the case in some jurisdictions).
Particularly with crypto assets, it is essential that the testator provides his or her heirs with the “private keys”. Otherwise, such blockchain-based assets are basically lost forever. Of the approximately 18 million bitcoins currently in circulation, around 4 million have been lost through various combinations of sloppiness and bad luck. Passwords should also be written down for the heirs to find: take for example the case of Leonard Bernstein, whose memoirs have been encrypted on his computer since his death in 1990, with his heirs still trying to figure out what his passwords are.
Lack of clarity on rights of the deceased creates legal uncertainty and practical challenges
Another interesting question that requires clarification: which rights did the deceased really have (and thus which rights will the heirs have)? Providers such as Google, Facebook and others typically have terms of service (TOS). Upon closer examination, one will often be surprised to find that the rights of the testator were limited. For example, the terms may provide that he or she granted the provider an unlimited license to uploaded pictures and videos, or vice versa, that the individual has only obtained a license to the purchased films and music (which may even be limited to the purchaser’s own lifetime). A famous example is the case of the actor Bruce Willis, who apparently had a huge library of iTunes music and was annoyed that he could not leave it freely to his heirs – because the license granted to him by Apple was to expire with his death. Social media platforms take very different approaches. Some delete an account upon the death of the owner, others allow the account to be taken over by the heirs without restriction, and still others freeze the account and display a notice of the owner’s death. Innovative in this context is Google’s “Inactive Account Manager”, which allows the testator to determine who should have access after his or her death.
It is clear that the digital estate will continue to raise many interesting questions in the coming decades – both practical and legal. Individuals planning their estate should give sufficient consideration to their digital assets, so that their heirs are not left with riddles to solve.
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We all own more and more intangible assets, particularly in the context of the digital age. While a traditional estate may contain an apartment, a car, a boat, and many movable assets, a modern estate also consists of various digital assets, which one might not immediately think about.
These may include:
- online businesses and websites
- computer source code
- crypto assets (e.g. Bitcoin, Ethereum)
- documents in the cloud (e.g. on Dropbox)
- software licenses
- internet domain names
- social media accounts (e.g. LinkedIn, Twitter, Facebook, Instagram, and Snapchat)
- email accounts (e.g. Gmail, Outlook, etc.)
- ebooks (e.g. on Kindle)
- music, audiobooks and podcasts (e.g. on iTunes)
- movies (e.g. on Amazon Prime)
- blogs (e.g. WordPress, Blogger, Tumblr, Medium)
- video channels (e.g. on YouTube)
- photos on dedicated sites (e.g. on Imgur, Flickr, 500px)
These digital assets can have a significant financial value, such as bitcoins for example. However, often they will at least have a sentimental value for the testator's relatives (such as the deceased's photos in the cloud). In any case, they should be given the appropriate attention in estate planning and administration.
An inventory of digital assets and passwords prevents them from being lost forever
What needs to be considered when planning and administering the digital estate? First of all, it is important to find out what actually belongs to the digital estate of the testator. Ideally - but rarely in practice - the testator has created an inventory of digital assets during his or her lifetime. This inventory should also contain all the testator's logins and passwords. Access to the testator's email account is particularly important because it often is the key to accessing other websites. If the testator has not taken precautions, the passwords on various websites that the testator used during his or her lifetime can be reset and then accessed through the email account (provided that this is not illegal as is the case in some jurisdictions).
Particularly with crypto assets, it is essential that the testator provides his or her heirs with the "private keys". Otherwise, such blockchain-based assets are basically lost forever. Of the approximately 18 million bitcoins currently in circulation, around 4 million have been lost through various combinations of sloppiness and bad luck. Passwords should also be written down for the heirs to find: take for example the case of Leonard Bernstein, whose memoirs have been encrypted on his computer since his death in 1990, with his heirs still trying to figure out what his passwords are.
Lack of clarity on rights of the deceased creates legal uncertainty and practical challenges
Another interesting question that requires clarification: which rights did the deceased really have (and thus which rights will the heirs have)? Providers such as Google, Facebook and others typically have terms of service (TOS). Upon closer examination, one will often be surprised to find that the rights of the testator were limited. For example, the terms may provide that he or she granted the provider an unlimited license to uploaded pictures and videos, or vice versa, that the individual has only obtained a license to the purchased films and music (which may even be limited to the purchaser's own lifetime). A famous example is the case of the actor Bruce Willis, who apparently had a huge library of iTunes music and was annoyed that he could not leave it freely to his heirs – because the license granted to him by Apple was to expire with his death. Social media platforms take very different approaches. Some delete an account upon the death of the owner, others allow the account to be taken over by the heirs without restriction, and still others freeze the account and display a notice of the owner's death. Innovative in this context is Google's "Inactive Account Manager", which allows the testator to determine who should have access after his or her death.
It is clear that the digital estate will continue to raise many interesting questions in the coming decades – both practical and legal. Individuals planning their estate should give sufficient consideration to their digital assets, so that their heirs are not left with riddles to solve.
