Are you thinking digitally? Dealing with your digital assets
By: Anne Campbell
With virtually every aspect of life becoming captured and stored in some digital form, the protection of digital assets is rapidly becoming a major issue. When you think of making your Will, deciding on what happens to your digital assets may not be at the top of your mind. Yet, as we store more and more information online, some of it valuable, it’s increasingly important to ensure you set out how your digital assets should be dealt with on death.
Although figures are hard to determine, a recent survey by PriceWaterhouseCoopers (‘PWC’) found that the estimated value of digital assets within the United Kingdom (‘UK’) alone amounted to the equivalent of almost $50 billion with this figure continuing to grow exponentially. Global Bank HSBC is planning to track $20 billion worth of digital assets on a blockchain-based custody platform by March 2020.
What are digital assets?
Digital assets can range from monetary (credit stored online with PayPal, Amazon; crypto-assets such as Ethereum, Litecoin; reward cards e.g. supermarkets, British Airways) to sentimental (family photos or videos and music with Dropbox, YouTube, and iTunes).
How does the law deal with digital assets on death?
Private client law on digital assets is practically non-existent, as it was not written to take into account the advances in technology. Therefore, there is a limited control over digital assets on death and many service providers maintain access and transferability of those digital assets. The only common law jurisdiction, which has attempted to make an authoritative decision on the legal status of crypto-assets, is the UK. A recent investigation by the UK Jurisdiction Taskforce headed by the Chancellor of the England and Wales High Court, Sir Geoffrey Vos, issued a statement that crypto-assets are to be treated as property under English law. The decision cautions that crypto-assets ‘cannot meaningfully be treated as property unless it is possible in principle to determine who owns it, and how ownership can be transferred.’ A person who has lawfully acquired knowledge and control of the corresponding private key would be treated as the owner of those crypto-assets.
Whilst you may have a written Will for your physical assets, they can be an awkward vehicle for digital assets, due to the rapidly changing nature and ownership of digital assets, as they become out-dated quickly or take a new form entirely. It remains unclear whether service providers of digital content will respect the terms of Wills to transfer ownership of digital assets. As many of these digital providers are US companies, many have to rely on US law and the terms and conditions of the service.
In order to ensure digital assets are adequately protected and to generate maximum financial return for beneficiaries and future generations, it’s essential that the digital assets forming part of your estate are taken into account during the Will-making/estate planning process.
Which assets do you want to be sure are preserved?
Make a note of which digital assets are important to you and which can be deleted if you die or lose mental capacity. This will help your Personal Representatives (PRs) know which of your digital assets they should deal with first e.g. those with monetary value or those with only sentimental value.
Prepare an inventory of your digital assets
Tracking down your digital assets could become a major, time-consuming task for your PRs. You’ll make their job easier by providing a list of your digital assets, including: cloud accounts (grouped by category); the computing devices they’re stored on and important information e.g. ownership (the keys) of any cryptographic tokens.
You should also ensure your PRs will be able to access the assets after you’ve passed away, so you may need to include username and password details, or details of the email address needed to reset a password.
Your list needs to be easily accessible to your PRs when they need it, but stored in a very secure place until then – perhaps with the original Will held by your Attorney or a safety deposit box at a financial institution.
Does the asset have any monetary value?
Clear instructions should be prepared detailing your instructions on the handling of stored information, whether or not these are of a solely sentimental nature or whether such assets have an intrinsic value to your estate. Please consider that the value of the digital assets may not be obvious to the PR, such as Intellectual Property connected to a blog, copyright of an unpublished novel or advertising revenue derived from a line of successful You Tube videos hosted by a popular health guru. Digital information of a purely sentimental value may be equally as valuable to surviving family members and friends interested in retaining access to photographs and other memories collected over the course of a lifetime.
Give your PRs authorisation and control
Would you like to know more?
This publication is for general guidance only and does not constitute definitive advice.