Don't lose out — digital assets in estates

According to a recent report from Cooperative Funeral Care on 'Death in the Digital Age' the average UK adult possesses eight digital assets and on-line accounts. Although many of these will have no intrinsic value as part of the estate of a testator under whose Will a charity is going to benefit, the digital revolution has thrown up new types of assets which only exist in digital form and may be more valuable than they first appear. Identification of and access to digital assets are very important in the context of the administration of an estate. Without good records of a testator's digital life, assets may be lost or forgotten, leading to loss to the charity beneficiary.

Although there is no precise legal definition of a digital asset in the context of how such assets would pass under a Will, they can broadly be described as assets or material held in a digital format. This might, therefore, encompass assets which are already covered by the testator's Will; for example assets held within an investment, pension, brokerage, bank or building society account which is accessible or operated on line. Other assets may effectively be chattels, for example films, photographs, and sound recordings among others. These may have no special value but are important to family beneficiaries, and executors must ensure that they are not lost or forgotten. The same might be said about the contents of social networking accounts or other on-line accounts. The importance of these in the administration of an estate is not their value, but making arrangements to access and/or close them following the testator's death; an issue which can cause problems for the executors.

Other types of digital asset may not look like a normal estate asset and it is important to ensure that they devolve correctly under the will. Such assets may also turn out to be unexpectedly valuable. One example is Bitcoin – a virtual currency which only exists on line. HMRC have accepted Bitcoin as a currency and treats it like a foreign currency for corporation and income tax. Bitcoins can be bought, sold and transferred. Not knowing about a Bitcoin account can lose the estate money.

The original content of an email, blog, music or digital art stored on-line, on-line photographs and domain names could also be capable of benefitting from copyright protection and may have a significant monetary value. A YouTube channel can be opted in for monetisation, a partner arrangement with the YouTube advertising company which may enable eligible videos to earn money from relevant content. A popular video which has a large number of views can produce significant earnings even though the amount paid per view is very small.

In the truly digital world, some on-line multiple player games (for example World of Warcraft) may have significant value where a player's virtual character on account has built up value to a high level, which may be sold. Although on-line sales platforms run auctions of virtual gaming accounts, there may be legal issues if game creators adopt a policy which bans the buying and selling of such accounts.

From a more prosaic perspective, small amounts of money may again be held in digital form and are in danger of being overlooked – lottery accounts, on-line gift cards, on-line shopping accounts and auction accounts may contain money held for the testator which may be forgotten or simply not known about.

Dealing with the digital estate of a testator therefore involves an executor in two principal issues – identifying the assets and whether a testator actually owns them on the one hand, and gaining access to those assets on the other. The ownership question is not un-complex. Many assets held in digital form are part of a testator's intellectual property and are, for example, covered by copyright law. Conversely other digital assets may not be part of the estate. For example an Apple/ iTunes account only grants the account holder a licence to use an MP3 file whilst ownership stays with Apple. The licence to listen to the file terminates on death and cannot be assigned under a Will or by a gift. Assets which a testator believes they own – for example a significant collection of music held in the form of MP3 files – may in the event not have a value at all as they are not owned.

Identification of digital assets and access to them after death are therefore key. An executor needs to be aware of, and if necessary have access to, the digital assets of the testator in order properly to administer their estate. A failure to identify and administer digital assets could cause significant problems for an executor, in terms of their obligation to beneficiaries, including charities, and to HMRC. Accessing digital assets may however be difficult to achieve. Without a log of digital assets the executor may not be aware of what the deceased had and, even if there is information, the executor may not be able to access the testator's computer or other digital devices without passwords to assess the assets. There have been a number of recent cases where executors have tried unsuccessfully to request internet service providers (ISPs) to give passwords following a testator's death and the ISPs concerned have refused, citing privacy rules and their own terms of service to which the testator had signed up. To add to the difficulties, an executor is at risk of committing an offence under Section 1 Computer Misuse Act 1990 if he accesses an on-line account without authority.

ISPs are, however, beginning to catch up with this unsatisfactory situation. In the US the Uniform Fiduciary Access to Digital Assets Act has been passed, providing executors and others with power to access, control and manage a deceased's digital assets without breaching privacy and unauthorised computer access laws. Although the US statute only applies to the States which have enacted it into their own legislation (at present only Delaware) it is more than likely that our law will begin to catch up.

Encouraging testators to make suitable arrangements so that their executors will have the information they need to deal with their digital estates has also become more popular. There are a number of third party providers offering a service which keeps a record of a testator's digital assets on a single hub. Passwords and user names can then be passed to the user's 'guardian' who is allowed access to each account in specified circumstances. A guardian can take over in the event of the user's death.
In the social media world, Google and Facebook have both relatively recently put arrangements in place allowing the accountholder to select a nominee who will be allowed access to the account following death. The Google service, Inactive Account Manager, allows the accountholder to choose when his account will end from a series of options ranging from immediately to in excess of 12 months after a period of inactivity. At the end of the selected period Google checks traces of an on-line presence and then waits for a month before sending an alert by text and email to persons nominated by the accountholder.

Facebook's Legacy Contact has recently been launched for US users only. Under it a user can appoint a person to manage their account by writing and posting on the deceased's timeline, responding to friend requests, updating a profile picture and cover photo and downloading an archive of photos, posts and profile information. The Legacy Contact will not be able to log in as the deceased or see that person's private messages. Facebook also has a memorialisation procedure which can be used where they are notified of the death of an accountholder who has not nominated a Legacy Contact. Memorialisation allows family and friends to continue to post comments and photos on the deceased accountholder's timeline after which the information is deleted.

The most difficult issue in relation to social media accounts generally for executors is the wide range of different rules and regulations for different ISPs which apply when executors try to gain access to or control of the account following death. This makes it very difficult for executors to know what action they need to take to deal with these particular digital assets.

Testators should be encouraged to plan for their digital estate starting with a log of their digital assets and being clear as to what will happen to each one on their death. A list of logins and passwords for personal devices will help an executor to see what information is on them and, if permitted, a list of logins and passwords for on-line accounts. Storing the list either as a hard copy or securely on-line using the services of a third party storage provider is probably a sensible option as is considering whether any of the nomination arrangements might be appropriate for access to on-line accounts following death. From a practical perspective, encouraging a testator to make hard copies of any important photographs, emails and documents is also a useful step.

As a final thought, digital assets could represent a marketing idea for charities. When closing blogs operated by the testator, it might be appropriate to include a memorial page or reference not only informing readers that the testator has died but also to indicate that they had left a residue or a legacy to charity. This could contain a link to the relevant charity's website and attract new support.