Digital assets are intangible but nonetheless can hold high value – both personal and financial. But have you ever considered what happens to them on your death? Many people are not aware that in law, digital assets survive death, hence it is important to plan how you would like these to be handed down.
The best way to ensure your digital assets are passed on in the way you would like is to include them in your Will. This raises many potential questions, some of which we will address in this article, including; a) what exactly is classified as a digital asset, b) how should the necessary information be passed on to provide ownership and access to the assets, and c) can all such assets be handed down in your Will?
Defining a digital asset
There is no legislative definition of a digital assets in UK law. One common view is a digital asset is anything that exists in binary form with the rights for its use, and can include (this is not an exhaustive list):
- Information and data held on an electronic device
- Information and data held in the ‘cloud’
- Online accounts including banking and social media
- Digital books, movies, and movies.
- Virtual currency ie Bitcoin
- Files of any kind
- Patents
- Software code/IP
- Logos, artwork & designs
- Domain names, websites (including the associated database)
- Email lists
However, tangible assets can also be covered under the term ‘digital assets’, including computers, tablets, mobile phones, memory cards, external hard-drives, digital cameras, or any other device required to enable access to a digital asset.
And any artwork (music, art, writing) created by you and you hold the IP rights for (under the Designs and Patents Act 1988), can be passed on as part of your inheritance.
How are digital assets passed on?
Not everything can be passed on. For online assets such as accounts, some of the many User Agreements you have agreed to may not permit transfer of ownership. For example, Facebook allow personal accounts to be ‘memorialised’, and for a nominated individual to be given access to manage it. As such, the account isn’t fully transferred in full.
In 2014, the Law Society, who had observed the growing tide of digital inheritance matters issued a plea to the public to leave clear instructions regarding such assets on death[1]. A complete record of your digital assets should be collated by your solicitor, which will be made available to the chosen executor on your death. It is not recommended you provide a list of passwords and PIN numbers though, as in doing so could mean your executor breaches the Computer Misuse Act 1990. There are formal mechanisms that can be followed to transfer ownership or close down online accounts, as defined by those individual businesses. When listing your digital assets, it is recommended you state how you would like each to be managed; e.g. would you like your online accounts closed, memorialised, retained, or bequeathed?
When it comes to digital cryptocurrencies, you will need to provide the ‘private key’ in your Will. This private key will enable access to your Bitcoin wallet, and hence access to the funds you wish to pass on.
It is also useful to provide hardcopies where possible, which provides a backup in the event there is a problem accessing the digital version of the asset, especially if there is a sentimental value attached (e.g. family photos).
Valuing digital assets
As an executor, you may need to seek a valuation for the digital assets of the estate you are managing. You will need to determine the final balances of any online accounts, e.g. PayPal Any item passed on that has value, such as software intellectual property, design documents, digital artwork, online assets (e.g. a domain name), and digital documents, may require specialist valuation; this also applies to cryptocurrencies such as Bitcoin.
In summary
A Will which outlines your wishes for your digital assets is increasingly important in our modern world. It is important to remember, if you die intestate (i.e. without a Will), any digital assets you possess will not be covered under ‘personal chattels’ as defined in the rules of intestacy, as such your digital assets will not be passed automatically to your surviving spouse. Making such a provision in your Will should be considered regardless of your age – the sooner the better. Leaving behind a digital history can be complex and needlessly time-consuming for your family or executor to tidy and finalise on your death. By providing as much detail about your entire digital legacy now, you will have you the peace of mind that all of your assets will be managed according to your wishes.
Hart Reade Solicitors is a full-service law firm with offices in offices in Eastbourne, Hailsham, Polegate and Meads. We hold a Lexcel accreditation from the Law Society of England and Wales and are members of The Association of Lifetime Lawyers. To make an appointment with one of our solicitors regarding the drafting of your Will, please phone our office on 01323 727 321.
Please note, this article does not constitute legal advice.
[1] https://www.telegraph.co.uk/technology/news/10773297/Britons-urged-to-leave-a-digital-legacy-after-death.html
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Please note the above is for information purposes only and is intended to be a short summary. It should not be treated as a comprehensive guide and should not be acted on without qualified legal advice.
