14 Mar Succession of your Digital Assets – what happens to them after death
Author: Munazza Hollingsworth, Partner and Head of Private Clients at RHJ Devonshire Solicitors
It is assumed that an estimated £2.3bn worth of digital assets is stored online sites. However, how is the legal system in the UK prepared for this?
There is no substantive law dealing with digital assets. A study revealed that only a third of individuals consider their digital assets as potential “inheritance” that they can pass to their heirs when they die. However, merely 11 percent of individuals have given thought about their digital legacies and have left passwords in their Wills.
Meaning of Digital Assets
A digital asset is anything that exists in a binary format and comes with the right to use. In other words, it is something that has value and can be owned but has no physical presence.
As explained by STEP’s Digital Assets – Practioner’s Guide, the expression “Digital Assets” is used to describe two different concepts with different legal consequences:
- Digital Assets can describe digital records that exist on computer devices or cloud services and which represent text, images, sounds, videos and other information. These records are contained in digital files and do not fall part of the estate of a deceased within section 25 of the Administration of Estates Act 1925 and do not vest in the personal representative.
- The expression is also used to describe digital property rights and interests that are associated with digital records. These rights and interest are part of a Deceased’s person’s estate.
Who owns your digital assets?
Digital assets are usually not owned by an individual and all we have a is a licence to use a service.
When opening an account with the service provider we accept the terms and conditions of use, as set out in the licence agreement. It is the licence agreement that will determine what will happen to the assets on your death.
Normally, licences are specific to an individual and are not transferable and will terminate on death – meaning that the asset will not therefore form part of your estate.
Having said this, one has ownership of photographs and songs that are stored electronically on a device. Of course, while the estate may have ownership of those photographs, it might not be easy or possible to gain access to the device itself; and manufacturers of devices, on privacy grounds, may be extremely reluctant to allow third parties to access devices.
This could lead to the legal issues involved not being ones of succession law, but instead of intellectual property law.
What can you do
As one will identify, there are potential difficulties when trying to leave digital assets to the heirs as we enter the age of digital innovation. The problem that arises is that there is no textbook answer as to how
The steps you can take to ensure your digital assets are passed on:
- Consider all the digital assets you have and wish to pass on;
- Create a ‘digital assets inventory’;
- Review your digital assets and the contents of your accounts and consider how you would like them to be administered;
- Review the terms and conditions of each digital asset;
- Create a Will which includes provisions for your digital assets and keep it up to date together with your digital assets inventory; and
- Consider the appointment of separate ‘digital executors’
If digital assets are owned by you, they can have value, which means that they can be bequeathed. It further means that they may have a value for tax purposes, so the question that arises is of how to accurately value these assets.
We at RHJ Devonshire Solicitors would be happy top advise you in this regard and assist you with preparing your Will to include any digital assets you may own.
Please feel free to contact Munazza Hollingsworth on 0203 923 0446 for an initial conversation.