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Estate Planning: Why Are Digital Assets So Tricky To Deal With?

Zahava Lever, 22 May 2020

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A timely question - with or without a global pandemic - is what becomes of your digital assets? Their intangible nature presents legal issues for inheritance as they carry no UK statutory definition. How then should you manage your digital footprint, in the here and now, and for the hereafter?

This guest article explains what happens to your digital assets after your death and what actions you can take to ensure that they end up in the right hands. The piece is authored by Zahava Lever, associate in the private client team at Forsters LLP. She points out that as more of our daily personal and business lives move online, we lose a level of control over them, often without realising. "Until the government introduces legislation to regulate the procedures of ISPs in respect of a user’s data following their death, it is for the individual and their legal advisors to ensure that suitable planning is undertaken." The editors welcome this contrbution and any feedback from you. Email tom.burroughes@wealthbriefing.com or jackie.bennion@clearviewpublishing.com

What are digital assets?
When it comes to inheritance, there is no UK statutory definition of “digital assets”. We tend to mean things held otherwise than in a tangible sense, including emails, photographs, and social media accounts. Like bank accounts, digital assets are often controlled by intermediaries. In the former case, this will be the bank; in the latter, an internet service provider (ISP).

Why are digital assets so tricky to deal with?
Unsurprisingly, many people presume that their digital assets pass on their death in the same way as tangible assets ie, to their executors for distribution in accordance with their will. Unfortunately, this is not always the case.

More traditional assets, such as cars or bank accounts, are dealt with under long-established laws put in place to effect the transfer of property after death. Part of the issue here is that such laws do not extend to all types of digital assets and new laws have not been introduced to fill the gap. ISPs have not yet had the time (nor the inclination) to streamline the process of accessing assets after death.

Banks will accept the will, death certificate, and grant of probate as adequate evidence of entitlement to the account, as will NS&I for Premium Bonds. In contrast, ISPs’ behaviour suggests that they may only be willing to accept a court order. Practical considerations aside, there are two main arguments raised by ISPs: privacy and contracts.

Privacy
For any number of reasons, a deceased individual may not have wanted his or her spouse (or other relatives) to have access to their emails. Yet while it is necessary to remain sensitive to the wishes of the deceased or the reactions of the beneficiaries, it is not for the intermediary or the executors to determine what is or is not suitable for beneficiaries to receive.

There are also potential data protection concerns for ISPs with regard to allowing access to email accounts.  However, the General Data Protection Regulation 2016/679 applies only to the data of living individuals, so it is not a valid argument for refusing to access to data of a deceased person.

Terms and conditions
By agreeing to one well-known ISP’s terms and conditions you acknowledge that your account is non-transferable and that any rights to your content terminate on your death.  A second ISP prevents you from transferring your credentials to another user. Such provisions are not unique to those two ISPs. This results in a frequent contradiction between the terms and conditions governing the relationship between an ISP and a user during life, and the expectations of a user as to what will happen to their data on death, a conflict that can only currently be resolved in court.

So what can you do?
One recommendation is to sign up to a “password manager”. These are heavily encrypted software programs which allow you to store your passwords securely, and to gain access through a long and complex password. The master password may be written down and stored in a safe place. While a risk element remains, it is significantly more secure than writing down your passwords and handing them to your executors.

In addition, until the government carries out a review of the operations of ISPs in relation to probate, users should follow the in-service recommendations from each ISP in order to streamline the process for your executors, and ensure that your chosen beneficiaries receive the information you want them to have. Where ISPs do not provide for access to data after death, it may be necessary to consider retaining hard copies of vital information.

What does the future hold?
As time passes, the problem is only going to get bigger. However, it does not seem to be a current priority for the government. As more and more of our daily personal and business lives move online, we lose a level of control over them, often without realising. Until the government introduces legislation to regulate the procedures of ISPs in respect of a user’s data following their death, it is for the individual and their legal advisors to ensure that suitable planning is undertaken.

Final thoughts
It is vitally important to perform a regular health-check of all your assets, digital and otherwise, to consider what you want to happen to them after your death, and seek advice if you are not sure. If you do not do this, your executors’ job becomes significantly more challenging.  We recommend that you review your will regularly, and include in this a review of all your assets, both tangible and intangible.

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