If you’ve written a will – and if you haven’t, you may want to consider it – you’ve almost certainly thought about what you would like to happen to your assets, like property, after you pass away.
But have you also considered getting your digital affairs in order?
As our lives become increasingly digitised, most of us will likely need to consider the fate of our digital possessions when we die. However, inheritance laws in Australia don’t strictly address digital assets and access – even though they can, and should, form part of your estate.
“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,” said 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.”
What are digital assets?
Digital assets cover a broad range of items that exist in digital forms, such as blockchain-based finance, emails, photos held in the cloud, and social media accounts. It can also include assets that facilitate access, including any computer hardware, tablets, and smartphones.
Dealing with some of these assets in a will can be straightforward. If the digital asset belongs to you and is transferable, it can be gifted in your will, like funds in a bank account or physical items like a laptop.
However, not all digital assets we regularly access – and consider to be ours – are owned by us.
For example, many of our digital accounts belong to businesses whose services we use, like Facebook or Instagram. This is stipulated in the terms of service we agree to when we sign up that many of us don’t bother reading.
“Instead, most of those contracts state the user doesn’t own the account as property but has a non-transferable license to use it, which expires at death.”
As such, many of our digital assets aren’t regarded as our property to pass on, even if we created them.
For example, unlike a physical letter, an email usually does not belong to the user and can’t be transferred after death.
Passwords and barriers to access
Almost every single digital service provider also has clauses forbidding password sharing in their terms of service. This can also apply to assets that are not digital themselves but where digital access is required, such as an online bank account.
“The prohibition on password sharing can prevent the executor from accessing digital accounts, even where a will stipulates digital records are part of the estate,“ Prof. Vines said
“In other words, while it may be essential for your executor (person who carries out your will) to get access to your email, officially, there is no right for them to do that.”
There have been several cases overseas where companies have refused to give access to the digital records of a deceased user because of this provision.
“To get around the problem at the moment, it often amounts to users breaking the contract terms with the provider,” Prof. Vines said.
“In reality, we know people do this all the time by casually sharing passwords with others.
“The other workaround seems to be using a password manager to hold all passwords in one place, which the executor can be kept up to date with.”
What about cryptocurrency?
Similar issues exist when leaving virtual currency like Bitcoin in a will. Unlike regular money, which may also be physical, these assets are stored virtually on a blockchain and can only be dealt with digitally.
To access the cryptocurrency, the executor must know where to find its unique private key – a code used in cryptography to authorise transactions and prove ownership of a blockchain asset. If the private key is lost, then so is the Bitcoin.
“With Bitcoin, the paper of physical wallet carries the only copy of the private key, which could be hidden and presumably the executor can be told where,” Prof. Vines said.
“Although for secrecy purposes, it may be unwise to put the details of this location in the will itself.”
Prof. Vines said much-needed reform is likely on the way.
“Ultimately, we need clarity, and now is a good moment for us to create a sensible regime around digital access to assets in succession law,” Prof. Vines said.
“There should be a clear statement that the executor is to be treated as the user upon death and entitled to password access to the property in the estate. That way, there will be no confusion, no resistance, and no question of breaking a contract.”
Pending the legislation, in the interim, will-makers can consider documenting their digital assets and recording and storing the details for each account in a secure location.
They can also state in their will that the executor can access the will-maker’s digital assets defined in the will, where the information to access the accounts can be located, and instructions for how each asset should be dealt with.