In an era where individuals must extend their considerations beyond tangible possessions, the management of online presence and assets gains prominence.
Unfortunately, the fate of digital assets is frequently neglected due to the absence of well-defined legal frameworks, unlike their physical counterparts, which are routinely addressed in wills.
According to UNSW Sydney, digital assets cover a broad range of items that exist in digital form, including finances based on blockchain technology, emails, cloud-stored photos, and social media accounts. It also includes the devices and hardware that facilitate access to these assets. However, the ownership of certain digital assets, especially those tied to online services provided by businesses like Facebook or Instagram, can be more complicated. This is due to the terms of service agreements that users often agree to without fully understanding their implications.
The challenge lies in ensuring that loved ones have the necessary access and control over these digital assets after one’s passing. Unfortunately, inheritance laws in Australia, as well as in many other jurisdictions, have yet to address this issue adequately. As a result, it is crucial for individuals to take the initiative to include digital assets in their estate planning.
UNSW Sydney advises individuals to proactively assess their digital assets and incorporate them into their estate plans. This involves taking inventory of all digital accounts, documenting login information and passwords, and being aware of the policies of each digital service provider. By doing so, individuals can ensure that their digital legacy is properly managed and transferred to their chosen beneficiaries.
“It’s been assumed that we can deal with digital assets the same way we have dealt with traditional assets, but this is not the case,” says Professor Prue Vines, an expert in succession law from the School of Private & Commercial Law at UNSW Law & Justice. “Instead, the law has fallen behind, meaning will-makers need to be more prepared regarding their digital assets.”
The importance of considering digital assets in estate planning extends beyond the lack of legal guidelines. Many digital service providers include clauses in their terms of service that prohibit password sharing, even for assets that require digital access, such as online bank accounts. This restriction can pose significant challenges for executors who need to access digital accounts specified in a will.
According to Professor Vines, breaking the terms of service is often the only way for users to grant access to their digital accounts to their executors. However, this workaround is not ideal and can raise legal complications. Another solution is to use a password manager that securely stores all passwords in one place, allowing the executor to have up-to-date access.
The issue of accessing digital assets also extends to virtual currencies like Bitcoin. Unlike physical money, cryptocurrencies are stored virtually on a blockchain and can only be accessed digitally. To access these assets, the executor needs to know the unique private key associated with the cryptocurrency, which serves as proof of ownership. If the private key is lost, the cryptocurrency becomes inaccessible.
Professor Vines suggests that reform is necessary to address these challenges. The New South Wales Law Reform Commission has proposed legislation for a digital access scheme that would enable an authorized digital executor to access the deceased’s digital records specified in the will. This would provide clarity and ensure that the executor is treated as the user upon death, entitled to password access without violating any contract terms.
In the meantime, individuals can take steps to navigate the current landscape. Documenting digital assets and securely recording the details for each account in a designated location can help ensure that the executor has the necessary information. Additionally, explicitly stating in the will which digital assets the executor can access, where to find account information, and providing instructions for dealing with each asset can provide guidance in the absence of clear legal frameworks.
Source: UNSW Sydney