So, what are digital assets?
‘Sharing details of your digital legacy is as important as making a will’
– Marc Shoffman (Times Money, May 2019)
‘Digital assets’ mean assets stored in a digital or online form, e.g., information stored digitally. Such as tablets, mobile phones and other devices, email accounts, social media profiles, online storage resources (Dropbox, the Cloud), financial assets such in PayPal, eBay and online bank accounts.
Techopedia define a digital asset as ‘any text or media that is formatted into a binary source and includes the right to use it; digital files that do not include this right are not considered digital assets. Digital assets are categorized into images and multimedia, called media assets, and textual content’.
These digital assets continue to exist as technology progresses regardless of the device where the digital asset is stored or created. Distinguishing and defining the various types of digital assets can help in digital asset management. As conventional broadcast, print and graphic assets are gradually transformed into an advanced digital form, digital assets are becoming increasingly important. And in turn are leading to growth in the digital asset management industry. Big corporations like Oracle, Microsoft, Apple and many others are consistently growing their enterprise to provide third-party digital asset management through Web-based repositories.
Your Online Accounts are your Digital Assets
Have you ever thought about how many online accounts you have? Do you listen to music on Spotify? Have you uploaded your family history and photographs? Do you bank online or via an app? You might have made a Will, but you will need to safeguard your digital legacy.
How do I do that? It really boils down to making sure that your family can access your various apps and accounts by using your passwords. But it may not be easy to keep a store of all your passwords, and even if you did, would you keep that list updated? And where would you keep that list? Would you make life easy for yourself and use one password for everything? (not a brilliant idea!). A really ‘obscure’ single password such as %66&9&8(+=t$nyD”1!>lk@#n7~9 is a very bad idea; imagine trying to remember it!
It is both annoying and time consuming to have to dig out different passwords when dealing with e.g., BT, electricity and gas accounts, Ring, bank and building society accounts, e-mail accounts … the list is endless. So you could use password managers, like Dashlane, LastPass or Sticky Password. Or you could make a social media Will. The Digital Legacy Association (DLA) says technology companies should introduce end-of-life policies. Allowing users to say what they want to happen to their ‘online-presence’ and create a social media Will that sets out their various accounts, user-names and who they want to manage them.
Reference your Assets in your Will
On this last point, it makes sense if every Will includes reference to digital assets. So granting authority to a deceased’s personal representatives to deal with digital assets. This is especially important where there may be intellectual property stored on a PC. For example, authors may have stored their manuscripts on their PCs. Where each manuscript could comprise anything from 80,000 to over 100,000 words; say 200 to 250 pages of writing, it could comprise a substantial asset in anybody’s estate, and unfinished works could be completed by family or at their direction and in some cases be worth millions of pounds.
Further, it might be easy to access say, the deceased’s ‘book folder’ but each work in that folder might have it’s own password. How frustrating then when the two simple words ‘access denied’ means kissing goodbye to what could be a more comfortable life for the deceased’s grand or great-grandchildren. Or to the widow or widower.
Or you could exercise a phenomenal level common-sense, brilliance and organisational ability and carefully record and update the twenty, thirty or more passwords … and keep it pinned to the cooker-hood with a fridge magnet.
More from Parkinson’s
It is essential for the modern draftsman to consider digital assets when preparing a Will and will only become even more so as time progresses. And more of the digital generation start thinking about making a Will. A failure to consider digital assets and the effect of Will provisions on such assets will not only cause great trouble for the testator’s family and loved ones but may also leave the draftsman vulnerable to a negligence claim.
The financial value of some digital assets could be high. The most valuable domain names are sold for millions of pounds while balances in PayPal accounts, gambling accounts, eBay accounts, and other similar accounts may also be valuable. Similarly if the testator is a photographer, writer, graphic designer or equivalent their online content may constitute a very significant proportion of their net estate.
If no thought is given to digital assets there is a real danger of significant financial loss occurring. Due to the executors being either unaware of or unable to realise assets in online accounts, in digital content or stored in an electronic form. There is also potential for significant emotional distress to family and friends of the testator due to them being unable to close social media profiles; which could result in the additional risk of the deceased’s identity being stolen and used for criminal purposes.
There is a dearth of rules and formal guidance as to the treatment of digital assets because the area develops so quickly that legal rules have not had sufficient time to catch up. And the international nature of digital assets makes them uniquely difficult to legislate and provide for. Such situations can cause significant problems for the draftsman when attempting to provide his client with the best possible service.
Take not of the Terms and Conditions
When drafting provisions concerning digital assets it is vital to take note of any terms and conditions; or terms of service relating to a digital asset as they may affect how it can be used after death. For example, the majority of email accounts are only licensed to the user; meaning that after they die the email address and all its contents revert back to the provider. Similarly, despite what many members of the public believe, when a person buys music on iTunes they only purchase a licence. Which allows them to listen to the music and not the music itself. Meaning the songs in a person’s library cannot be passed on to the next generation, regardless of any provision in the Will.
Furthermore, many social media sites and other digital accounts contain rules prohibiting a person from logging into another person’s account. Which can affect the way certain digital assets can be passed on and prevent a beneficiary from inheriting an account even if they have the testator’s username and password. The terms of service may also set down the consequences of the death of an account holder and the procedure to be followed by any personal representatives.
There are some practical problems concerning digital assets:
1 Identification.
Unlike a house or a large chattel the executors and descendants of the testator are not certain to just discover the existence of a digital asset. There is no physical item to spot and unless the testator has brought the existence of the asset to somebody’s attention there is a real risk it will remain unnoticed and unrealised.
2 Realisation.
Even if the executors are aware of the existence of the assets, the absence of usernames, passwords, pin codes and logins can exclude the executors from being able to fulfil the testator’s wishes. Even a temporary delay can effectively destroy the assets. E.g., most email accounts are deleted forever if they are not used for a few months; betting accounts and online bank accounts if not used for a certain period may be closed and the proceeds in the account disposed of. Domain names with .uk endings will terminate unless the personal representative has transferred them to another person; this must be done within one year after the death of the holder or at the end of their appointment. Therefore, even if the personal representative is eventually able to gain access to the account it may be fruitless if too much time has passed.
3 Jurisdiction.
The majority of digital assets are international in nature. The rights and powers of the executors may depend on what sort of digital asset it is and where the company behind the asset is legally based. For example, PayPal is registered in Luxembourg, while Yahoo in based in the USA. If valuable digital assets were based in USA it would be inappropriate to restrict the UK Will to only UK assets. This is something the draftsman must consider carefully when drafting any jurisdictional provisions in the Will.
Caveat:
The digital world evolves rapidly and the type, form and content of digital assets can change dramatically over the space of a short period of time. For this reason, great care must be taken when providing for assets of a digital nature. Therefore gifts of digital assets in a Will should be reviewed regularly. However, despite the difficulties inherent in providing for legacies of a digital nature it is far more detrimental to the client to fail to consider or provide for such assets at all.
Crystal Clear Estate Planning can insure your digital assets are left to your loved ones and are not forgotten. Contact us today to speak to an expert with over 30 years experience dealing with Wills and Estate Planning.
