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Prudent estate planning in the digital age

08 May 2015

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  • Wills & Estates

Most people in this digital age will have some form of online presence or online assets. Information, documents and assets are being held by people in a multitude of electronic forms, either online or stored in electronic devices. The way that information is stored and held keeps changing with advances in technology. For example, note the rapid technological changes in how we save and store data from cassette recordings and hard discs to DVD’s, USB flash drives, the “cloud”, etc. The mind boggles with how much information is being created with laptops, phones, emails, documents, photos, etcetera – so many devices and backups.

Have you ever wondered what happens to your digital data or property when you pass away or can no longer operate your online accounts?

In contemporary times, when many of our assets are stored in the ‘digital universe’, an important aspect of estate planning involves accounting for digital assets in the case of incapacity and death.

The term “digital assets” includes but is not limited to any files stored on  digital devices, email accounts, online bank accounts, pay pal, digital videos, digital photobooks, tweets, digital music, e-books, iCloud, games, virtual storage facilities, virtual real estate assets, software licenses, loyalty programs digital currency and any social media and social networking accounts that operate in one’s name, regardless of the ownership of the software or digital device upon which the item is stored.

Given this expansive definition, you can imagine that significant monetary and sentimental value may be lost or rendered irretrievable if one does not comprehensively plan ahead with respect to their digital assets. Comprehensive planning translates to having arrangements in place for access and control of your assets by another person.  This is important because privacy is so tightly drawn over the persona of an online person when they die.

… So how would a prudent planner deal with their digital assets?

Dealing with your digital assets through an enduring power of attorney

In the event of incapacity, a prudent planner would ensure that their access details are made known to their attorney.

Imagine the encumbrance felt by an attorney in having to overcome the various obstacles posed by service providers in order to obtain access to, for example, your bank account just to do something as simple as pay an account on your behalf. Without usernames or passwords, accessing accounts becomes a burdensome task which could take months to achieve, if at all. This could be avoided by simply noting the information down, informing your next of kin of its existence and updating the information regularly.

At Snedden Hall & Gallop, we recommend that our clients complete a ‘memorandum of digital assets’ to be stored with their personal papers in a secure place.  A memorandum contains the access information to the various online accounts held in the person’s name. When we draft Enduring Power of Attorney at Snedden Hall & Gallop, we include a standard clause in relation to digital assets in the document which refers to a memorandum of digital assets and which includes a direction allowing the attorney to deal widely with the digital accounts. Of course, the wording can be altered or removed according to the client’s preference.

Dealing with your digital assets through your will

Given the ubiquity of digital data in present times, it is crucial to bear in mind your digital assets when preparing your will so as to ensure that administration is as efficient and productive as possible for your executor. We recommend you keep the following points in mind:

Choose a technologically savvy digital executor

This might be a special ‘digital executor’, who is separate from the executor appointed under the will to deal with your regular possessions. Alternatively, you might prefer to nominate a person who is authorised to assist the executor with the technical aspects of managing the digital estate.

Being ‘tech savvy’ involves the competency to navigate the digital platform that is hosting the digitised asset in order to carry out the following:

  • identifying when something is a digital asset of the deceased
  • recognising the value of an asset
  • knowing how to realise or “unlock” its value effectively
  • transferring the value of the asset, or the asset itself, to the name beneficiary
  • shutting down the account after the value of the asset has been retrieved, or transferring the account to someone else for a certain purpose

Complete a memorandum of digital assets

As the will becomes a public document through the process of obtaining the grant of probate, it is important not to refer to the access details to accounts directly in the will. Further, the disclosure of passwords could be a breach of licence conditions or terms of service of the online service provider. For security reasons, the will should instead refer to the existence of an external document containing the details.

Steps for completing a memorandum of digital assets:

  • ascertain what your digital assets are and their contents
  • note down all of your access details to your various accounts in a document to be kepy with a copy of your will
  • inform your executor of the existence and location of that document
  • review the memorandum regularly to ensure it is up to date

Provide clear instructions regarding your digital assets

In preparing for the death of their loved one, rarely do people think to ask about their intentions with respect to their digital property. People tend to focus on tangible property, and as such, digital assets are frequently overlooked altogether, or the executor is faced with nasty obstacles later on when it comes to the administration of the digital estate. In order to avoid this situation, it is crucial that you bear in mind your digital possessions when preparing your estate plan.

If there is something specific you want to happen to a particular digital asset, leave instructions for your executor. For example, it may be that upon your death you would like so and so to be given your photos, music and other sentimental effects contained on your Facebook account. Do you want your email account accessed or do you want it deleted with no-one knowing the contents?  Specific provisions in your will can be included to give effect to your wishes. For instance, you may want to specify that any revenue-generating digital possessions be passed to someone to continue operating them.

When we draft our clients’ wills at Snedden Hall & Gallop, we insert standard clauses dealing with digital assets which refer to the memorandum and allow the executor to administer the digital estate according to the instructions contained in the abovementioned memorandum.

Ensure your instructions are consistent with the service provider’s terms and conditions

It important to note that your executor’s power to carry out your wish is subject to the terms that are stipulated by the service provider of the specific account. Terms of Service agreements are not the same across providers, and some are much more stringent than others. As such, a prudent planner would review the terms and conditions before noting down their instructions to ensure that your delegation is authorised.

For example, a clause may provide for the power of your executor to log on, retrieve the assets and then shut down or ‘memorise’ your Facebook account. In order to do this, your executor must be nominated as your ‘Legacy Contact,’ as stipulated in Facebook’s terms of service.

The rules surrounding digital assets in the context of estate planning are inconsistent and sometimes confusing. At Snedden Hall & Gallop we strive to prepare your documents in a way which caters for flexibility within the confines of the uncertainty and inconsistency inherent in this emerging area of law. Contact our Wills and Estates team today.