The internet is now not something used only by younger generations but by all ages as the digital world continues to grow apace. The ONS also reports that, since 2011, the percentage of adults aged 65 years and over who had never used the internet has declined by 27 per cent.
The digital world now influences almost every facet of our lives. But what happens to our digital assets after our deaths? Is there a “digital afterlife”? How should this be regulated?
This is an area which is increasingly being given attention by the media, internet service providers and others.
What are digital assets?
We are seeing more and more use of the phrase “digital assets” but there does not yet seem to be a universal, legally-accepted definition. A simplistic view would be that a digital asset is content owned by an individual that is stored in digital (non-physical) form. But often we are not talking about assets or ownership at all; instead the issue is often one of contract law. In some ways the law does not need to adapt at all, as it already provides for rules on succession to assets and deals with the transmission of contractual rights and duties.
It may be useful to think of digital assets as those which have a determinable financial value capable of being passed on and those which may have a sentimental/personal value with little financial value capable of being passed on.
Most are probably familiar with PayPal which started life as a payment mechanism for eBay transactions but is now widely available as a payment option for online retailers. A credit PayPal balance held by a deceased account holder may be difficult for an executor to uncover. A record of digital assets in the form of an inventory or similar would greatly ease this problem.
The Society of Trust and Estate Practitioners’ (STEP) Digital Assets Special Interest Group have created an Inventory for Digital Assets and Digital Devices (PDF), designed to inventorise assets and identify the location of access instructions (such as passwords) which are recommended to be stored elsewhere.
Details of other assets which may have a determinable financial value capable of being passed on might include air miles and loyalty accounts. It would be advisable to include details of these in the inventory of digital assets together with the provider’s current policy on transferal. It will of course be the executor’s responsibility to check the date of death position but this could be made easier by providing as much detail as possible in the inventory.
It is probably fair to say that (almost) everyone will have heard of cryptocurrencies, the most commonly recognised of these being Bitcoin. By its very nature Bitcoin is difficult to trace or attach to a particular individual and this problem is exacerbated by the death of the holder.
There is a significant section on GOV.UK dedicated to the tax treatment of cryptocurrencies. Perhaps unsurprisingly given that cryptocurrencies are a relatively recent phenomena, the vast majority of the guidance deals with their income tax and capital gains tax treatment. As far as inheritance tax is concerned, this only gets one line: “Cryptoassets will be property for the purposes of Inheritance Tax”. This tells us that on the death of a Bitcoin or other cryptocurrency owner there may be inheritance tax payable on those assets. As a result it is very important that details of these assets are held somewhere. Tax issues aside, this will make passing them on to beneficiaries more straightforward.
Digital assets with little financial value could include any digitally stored content such as images, videos, graphics, audio files, animations, data, presentations and even the relevant user rights, and perhaps may extend to online accounts owned by individuals. Some online accounts may be considered assets in and of themselves, such as blogging accounts and accounts of Instagram influencers.
The relationship between account holders and service providers is usually regulated by a contract, with the user agreeing to various terms and conditions of use. This often provides that the user does not own the account itself; instead they only have user rights or rights to the content. Therefore, many digital assets which individuals consider part of their estate may not be assets at all, as contract provides that ownership remain in the hands of the service provider. To give an analogy, an individual may have a treasured music collection. If this were in CD format, there is little question that the physical CDs which the individual bought over time forms part of their estate and the executors to the estate could distribute this accordingly. But what about, say, an iTunes account? The individual may have bought various tracks to store in their music library but does not actually own these like they would CDs. iTunes’ terms and conditions grant users access to listen to the music, but they do not actually own the account or the music they have downloaded. Is this sentimentally valuable collection locked away from next of kin as a result? Is that fair?
Many of us have amassed a large digital estate of significant value – be that financial or sentimental. It is important that digital asset providers acknowledge this and seriously think about how digital assets should be administered after an account holder’s death.
What are the issues?
The issues surrounding digital estates are extensive and raise a number of questions.
If online accounts can be considered digital assets, this begs the question – does an individual own the account or just the content stored and accessed using that account? How can executors readily ascertain this?
Banks and other financial institutions have long had bereavement teams – will internet service providers soon follow suit? Will providers have a formal checking and processing of death certificates to verify the death of the account holder? When, if ever, should a “digital asset” appear on an application for confirmation / probate to give executors formal authority to deal with the asset?
Executors have traditionally sifted through post, bank statement and financial papers to ascertain the extent and details of the deceased’s estate. But with the increase of “paperless” financial assets and communications by email, how do executors now carry out this exercise?
Email accounts often represent the master key for all other online assets. Will valuable assets be missed because the details are locked behind a username and password and there is no other readily accessible indication of the asset’s existence?
Social media accounts have been compared to a form of online diary and can contain private messages between individuals not intended to be seen by anyone else. Should executors be able to access these accounts or are online service providers right to operate strict policies? What about the people on the other side of the correspondence? Is their right to privacy being breached?
What if information ends up in the wrong hands? Is it safe to write down a note of usernames and passwords? Does this breach user policies?
Different digital asset providers are subject to different laws across multiple jurisdictions. Whilst a user is situated in one location, where is the server located? What law applies to the service provider? How does this fit in with our digital estate planning? If different laws could apply, which one takes precedence? Do we really know the governing law of data held in the “cloud”?
In the media
Internet service providers, such as Facebook, originally provided platforms designed for the living. However, as the social network grew, it has also had to decide what should happen when users die.
In 2015, Facebook rolled out a new feature allowing users the chance to have more of a say in what happens to their online presence following their death. The feature provides users with the option to either have their profile page permanently deleted when they die or kept going (“memorialised”) by an appointed other. It was envisaged that the appointed legacy contact would be able to upload profile and cover photos, manage friend requests, write a post on the deceased person’s timeline and amend posts already published, but would not have access to the deceased’s private messages.
However, Germany’s federal court of justice has recently ruled that Facebook must grant a grieving mother access to her late daughter’s profile and private messages. The mother had wished to view the private messages in a search for answers surrounding the circumstances of her daughter’s death. She had the details and was able to log in, but as the account has been memorialised the private messages could not be accessed. Facebook had originally refused to allow the mother access to the private messages, citing data protection laws, but it seems arguably greater interests trumped this.
Facebook has been seen to issue apologies to various family members and friends of deceased persons whose accounts have been memorialised, for causing upset by making inappropriate suggestions through their automatic features and algorithms. Algorithmic features have sent users suggestions to wish happy birthday to account holders who have died, or suggestions to invite them to events. The “Year in Review” feature (which selects posts which have had high levels of engagement from users) has also caused distress by highlighting images of friends or pets that have died that year. Facebook has promised to use more emotionally intelligent artificial intelligence to stop such suggestions in an effort to minimise the distress which has been caused to users so far.
It is not just social media accounts which have made it into the news in this regard. Recently, a widow won her long legal battle to gain access to her late husband’s online Apple account. Being an avid photographer, he took and stored all of the family photographs on his iCloud. When he died, his wife had no access to these precious memories. Apple referred to their terms and conditions which stated that a user account is not transferable and that the right to access the content ends on the death of the user (like many other service providers), unless it has otherwise been provided in law, or required to grant access by court order. Ultimately, the court granted Mrs Thomson access to her husband’s account and made clear that changes to the law need to be made in order to avoid the need for such a protracted and expensive action in these situations.
A recent study by Oxford researchers reported that if Facebook continues to grow at its current rate, the site could have 4.9 billion deceased members by 2100 – and may eventually have more dead users than living ones. As such it becomes more and more important that we think about our digital afterlife; online service providers must adapt.
Is there anything we can do now?
Given the speed at which the digital world continues to evolve, there is no doubt that the law has some catching up to do. Pending any definitive guidance as to how digital assets are managed on death there are a number of things to be considered in the meantime.
Encourage your clients to think about the extent of their digital estate and how these assets are to be dealt with on their death or incapacity as part of overall estate planning when preparing wills and powers of attorney.
Ask the question. What digital assets do clients have? How valuable (financial or sentimental) are these assets to them? Are these owned by the client or by the service provider? Who would be the appropriate, tech-savvy person to be appointed to look after such matters?
Different digital service and social media providers have different policies when it comes to how assets are dealt with after death. Encourage clients to familiarise themselves with the policies of the online service providers that will apply. How would they like these assets to be dealt with on their death?
Discuss making a digital inventory, “digital will” or some other record of digital assets which are important to the client. The Digital Legacy Association suggests a template and other considerations.
As technology is evolving at an extremely fast rate, the need to consider reforming legislation to cater for these circumstances is becoming more and more important. These digital issues arising on death are only going to continue to occur, as we increasingly rely on technology for every aspect of our lives. It is time we start thinking seriously about our digital afterlives.
Stacey Gourley is a solicitor in the Edinburgh Personal & Family department at Brodies. She is also an Associate Member of Solicitors for the Elderly. Email email@example.com.