While not a lawyer, I still see the importance of educating my clients about estate planning as a crucial part of my role. People tend to devote more time to planning a holiday, choosing a house to buy, or even selecting a spot to have dinner than they do estate planning (deciding who will deal with and inherit their assets after they’re gone). Booking a trip or checking out restaurant reviews might be more enjoyable, but without estate planning, you run the risk of unintentionally creating arguments between family members. You also miss an opportunity to reduce income tax payable by beneficiaries.
Meanwhile, those that do engage in estate planning generally plan for their loved ones to inherit their house, their 1962 S-series Valiant, and their uncle’s 94-year-old pendulum clock, while overlooking an increasingly important and valuable kind of property: their digital assets.
Online digital assets (except website domains) are not the same as the assets that form part of an estate. Unlike physical property, a court cannot order they be transferred, because there is no current law that governs them. In Australia, there is no statutory scheme that provides a legal representative with the right to access and deal with digital records. That is, neither an Attorney (upon incapacity) or an Executor (upon death) has ‘automatic’ authority to access digital assets. This nominated person needs to know about the existence of a digital asset portfolio, retrieve it and possess the lawful right to manage it.
It is therefore prudent to plan what to do with your digital assets in the event of incapacity or death so you may minimise certain risks, including:
- The prevention of required asset transfers to family members who may not have access to or awareness of a person’s digital assets
- Identity theft after death which may jeopardise digital assets or lead to loss for estate beneficiaries, and
- Issues with social media, including pages being defaced and the continued online presence of a deceased person.
Digital asset inventory and e-registers
Create a digital inventory or e-register of all digital assets and their associated usernames, passwords and secret questions.
This could be stored as an Excel spreadsheet or Microsoft Word document online, on a drive or USB, or it could be hosted by one of the numerous websites offering online inventories. The comprehensive list should include movies, ebooks, music and other media and the platforms used to purchase them. Many people have a large archive of digital photos online, even if they’re not sure where. This is why online storage and backup services such as Google Drive, OneDrive, iCloud and Dropbox accounts should be noted. Email accounts are critical to include as they often contain important information and files.
Online accounts for social media, banking, PayPal, share trading and loyalty and incentive programs should also be included. Email accounts are critical as they often
This process presents an opportunity for the person making the list to clean-up and organise their digital folders and registries. Let’s face it, over time, files and folders can become a disorganised mess. Important photos and data files can be arranged in separate, clearly labelled folders or albums for different occasions and unwanted, sensitive and non-transferable information deleted.
The e-register needs to be updated regularly, as some accounts require passwords to be changed periodically. For these accounts it would be prudent to back up any information on to hard storage in the event the inventory is not updated.
Coat it with an appropriate and solid legal framework
Planning for digital asset succession does not stop at the establishment and update of an e-register. The creator also needs to leave instructions as to how they want the digital assets to be dealt with. This should include:
- Who should manage the document and how it should be managed
- Whether the person managing the digital asset should gift of it or dispose of it upon incapacity or death of the owner/creator. Bearing in mind that some assets are owned, while others only grant a contractual right of access and use
- Determining the extent to which this (these) person(s) can administer, manage or deal with the person’s digital assets, and
- Potential to apply to the relevant State Court for an order that they deal with digital assets.
The most important part of planning for incapacity is to sign an enduring Power of Attorney. This will enable the person planning to appoint someone they trust to deal with digital assets effectively and properly. The Power of Attorney document can also include specific provisions that allow an attorney (as far as possible) to manage and deal with digital assets.
When it comes to planning for death, the Will should give power to an executor to manage the digital assets.
Some providers offer after life options. For example, Facebook has a memorial feature allowing friends and families to request that a deceased account be frozen. Google has launched “Inactive Account Manager” allowing users to provide Google with specific instructions about what to do with their data when they die. Twitter works with the “person authorised” to deal with your estate. After a request is made, the authorised person needs to provide a copy of the death certificate and their identification.
However, the majority of social media and financial providers do not offer after life options with their online accounts. For example, Apple accounts are non-transferrable. Apple’s terms and conditions are very clear that “…any rights to your Apple ID or Content within your Account terminate upon your death. Upon receipt of a copy of a death certificate your Account may be terminated and all Content within your Account deleted.”
Start thinking about this now. A great digital estate plan is one that is thorough and planned with the right experts.