Back to the Future: How to deal with Digital Assets on Death
Dealing with digital assets on death, like the movie title above, has become a paradox for Private Client Practitioners. To successfully deal with digital assets on death, the issue should be addressed during lifetime estate planning. Therefore, in this article I briefly set out what a digital asset is and explain why the best way to deal with it on death is through lifetime estate planning.
What is a ‘digital asset’?
A digital asset is a broad term which is difficult to define but is in essence an asset which exist in a binary format and can roughly be broken into 6 categories:
This covers digital assets which, for example, come from a service agent who grants licenses to use their platform, for example, YouTube;
A design digital asset could include online designs such as logos, graphics and illustrations;
- Financial digital assets
The most obvious example of a financial digital asset would be cryptocurrency such as Bitcoin but this term would also cover online store accounts such as Amazon and PayPal;
- Written digital assets
When considering what a written digital asset is, a straightforward example would include domain names which are the addresses which take you to a website. However, it also includes emails, word documents and client databases;
A storage digital asset could include all cloud storage used to back up data;
This is probably one of the most common digital assets which is used regularly in a personal capacity and some examples include Facebook, Snapchat or Instagram.
Accessing Digital Assets
Some of the above digital assets may seem obvious, however, accessing them may not be. Therefore, as part of your estate planning you should keep a list of all your digital assets and how to access them. Generally when someone is considering what assets they own as part of their estate planning process, they tend to think of financial assets. Certainly many digital assets may hold financial value but many also hold emotional value and it is important that digital assets which hold a high emotional value such as Facebook or Instagram accounts are sensitively and properly dealt with as you would wish. In any event, when someone passes away, their personal representatives must deal with all assets of their estate irrespective of their value.
Digital assets are not straight forward to deal with on death as each category has different requirements. Depending on the digital assets, this may be determined by your service agreement and terms of business which you sign up to with the service level provider. For example, media such as photography stays with the deceased’s estate whereas Snapchat will delete an account on production of a death certificate while on Facebook a loved one may close an account but there is also an option to have a memorialised account which stays open. This decision can be made during a person’s lifetime and therefore it is important to consult your legal advisor about any estate planning for digital assets which can be done during your lifetime rather than leaving it to your personal representative on death.
The role of the legal advisor in dealing with digital assets
Your legal advisor will also be able to consider whether your digital assets are transferable on death or extinguish on death, and will indeed need to consider whether the contract which you have entered into with a service level provider creates property or creates a licence. This is important as it is up to the Will drafter to determine if the benefit of an asset can be transferred by a Will.
In summary, this case highlights the importance of taking good professional legal advice in relation to estate planning and ultimately resulting in a properly drafted Will. However, our Private Client team can offer more than just a Will drafting service and can provide full estate planning to ensure that all your assets both physical and digital are dealt with during your lifetime planning as you wish so that there is as little ambiguity as possible on death. If you would like to discuss estate planning, making a Will or any other points raised in this article please contact Neil Bleakley, Andrew Davison or Naomi Lamont.
*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.