Digital Assets and Probate

tyemason
February 28, 2013

When someone sits down to write a will, they may begin with a list of their property, savings, shares, valuable items or household goods generally. Digital assets can often be overlooked when considering what to do when someone dies.

Digital assets include files, folders and software you have on your computer and phone at home or work. They also include things held by others, such as:

Emails held in web-based accounts, such as Hotmail or Gmail;
Retailers accounts, such as Apple or Amazon’s online music storage, or a blinkbox account;
Social networking sites;
Online business assets, such as domain names and websites;
Information used to access physical assets, such as the passwords for internet banking accounts.

Why are digital assets important?

Digital assets are becoming increasingly widespread, more important for day-to-day life and make up a greater proportion of the value of the average person’s estate.

An executor has the responsibility of collecting in a person’s entire estate, before distributing it according to the deceased’s will or the laws of intestacy. This responsibility includes dealing with digital assets.

More traditional assets and liabilities are often now accessible only online, too. Many people will have all of their bank statements and utility bills sent to them by email or accessed online.

Digital assets can also be an important part of a business, often closely related to the company’s intellectual property: including client databases, website content and confidentiality. The relationship between the two types of asset is close because software and licences are so integral to digital communication and goods.

Things to look out for

In practical terms, most executors will not need to identify digital assets as a separate category, but the following should be considered:

Ownership: Identifying which assets are personal and which are owned by someone else. This is a general issue with the whole of a person’s estate but is particularly important with digital assets as (a) they can be moved around easily and accessed from more than one location – sometimes simultaneously; and (b) because of the prevalence of licence agreements, which can cause similar problems to rented or ‘hire-purchase’ goods;

Access: Many accounts are protected by passwords. This can be a problem for executors trying to find out information but also for things like business continuity;

Confidentiality: the distinction between personal and business information can become blurred, especially when personal computers and email accounts are used for business use. For instance, where a client becomes a personal ‘contact’ on a personal, web-based email account. Similarly an employee’s acceptance of the terms of use of certain websites or software could give permission for site to monitor and/or use clients’ information held on the employee’s home computer. When executors and/or beneficiaries have access to those email accounts or computer files, the data protection principles are potentially being breached;

Unauthorised access: putting hacking aside, not everyone keeps their passwords and access details secret. It is not uncommon for a couple to know each other’s login details for a range of things, similarly good friends. However permission to access the account whilst someone is alive is not the same as being allowed to use the assets when they are dead. An executor is responsible for securing all parts of the estate for the beneficiaries

Jurisdiction: not all assets are held in the same jurisdiction to the deceased. Many, many companies have their servers located in other or multiple jurisdictions. In particular, a lot of cloud based services are based on US hosted servers. In the same way that this can effectively remove a lot of the privacy protections of the person’s home jurisdiction, this can also (theoretically) change the probate regime that the assets are subject to. In many cases this will not be an issue in practice but if the asset were particularly valuable, it has the potential to cause a problem. English subjects living abroad can, for instance, be in the situation where the law of England and Wales states assets are passed in accordance with the law of the country of domicile but the law of the country where they live states that assets are passed in accordance with the law of the country of origin;

Division: say, for the sake of argument, a person had £5,000 worth of music and films held in an account or a service (and assuming they held the title to the copies, not licences). How would those assets be divided between three beneficiaries? Pre-paid subscriptions?

Sensitivities: losing a loved one is a difficult time. Some people find reminders, such as Facebook pages and updates, distressing. There is also the unfortunate reality of internet ‘trolling’. The executors should give consideration to closing the deceased’s social networking pages as soon as practicable, but…:

Closure of accounts: It is widely reported that Facebook, as an example, allows an executor to close the account of the deceased person but will not pass on their login details. This may quite distressing if, as is becoming more common, their online accounts were their preferred way of storing their photographs and other personal media. In addition (although unlikely for the vast majority of people), the information the accounts contain may have some value to the estate – for instance for posthumous biographies, or just personal interest. There is the possibility the information may be useful in a dispute about a will. Consideration should therefore be given to securing information prior to asking for the account to be closed.