‘Digital Estate’: We live in a digital age. We access, store, transfer and receive information and valuable documents electronically. During our life our attorneys, and after our death the Executors of our will, need to consider and access our ‘digital assets’ in the course of administering our affairs or a deceased estate respectively.
In this article, we consider some critical issues for people making Wills or Powers of Attorney. We also discuss the best means of dealing with digital assets, given the limitations and restrictions imposed by service agreements and providers, and we consider the need for legislative reform, which may now be implemented
The problems faced are now the subject of a recent referral to the Law Reform Commission by the NSW Attorney-General, Mark Speakman, referred to at the end of this article.
For the purposes of this article, we have adopted the following terms:
digital estate means digital assets, digital devices and digital accounts.
digital assets means data, text, emails, documents, audio, video, images, sounds, social media content, codes, health care records, health insurance records, computer source codes, computer programs, software, software licences, databases, or the like, including the user names and passwords stored by electronic means on a digital device.
digital devices means an electronic device that can create, send, share, communicate, receive, store, or process information, and include desktops, laptops, tablets, peripherals, servers, mobile telephones, smartphones, and any similar storage device.
digital accounts means an electronic system for creating, generating, sending, sharing, communicating, receiving, storing, displaying, or processing information which provides access to a digital asset; it also includes rights of access to records, information or transaction facilities in any bank or building society account, financial institution account, investment, accessible or operated by an electronic system, but it does not include any chose in action or legal or beneficial property right to those things.
Both your Power of Attorney and your will should empower your attorneys and Executors respectively to access and manage your digital assets; your will should also contain a gift of your digital assets, digital devices and digital accounts with appropriate definitions.
A gift of your digital estate should make it clear it does not carry with it a gift of the underlying financial assets held in the various accounts and investments which the digital assets are used to access, only the rights to access information and records.
Apart from financial information, digital assets can include photographs and videos stored electronically, which can be lost to your family if one’s attorney or Executor is prevented from access to your records. Other information contained in emails can be lost. If you are involved in managing a business and rely on emails, this could be disastrous if access is denied or data is lost.
As many of your financial affairs may be controlled during your life by electronic means, it can prove difficult for your attorney or Executor to trace assets without the ability to access your passwords and ascertain the extent of your investments; and liabilities, especially where there is no paper version held.
Whilst passwords regularly change, the best practical advice at present is to prepare a secure memorandum to be kept with your will and Power of Attorney with details of passwords and instructions, updated from time to time, and instructing your representatives as to the existence and location of such memorandum. This memorandum represents in effect a ‘digital estate plan’ for your representatives to access when needed.
Dealing with the service provider and current obstacles
The terms of a Service Agreement should be considered to determine what is allowed regarding access to digital accounts and devices.
Given the need for restrictions for security reasons, some agreements contain prohibitions on transfer; some may be automatically terminated on the death of the customer, with the loss of data. Some service providers only offer digital products with single user rights, or non-transferrable rights of use. This is the issue where legislation may be required.
Social media sites (for example, Instagram, LinkedIn, Facebook) have procedures for closing a deceased member’s account. They also provide for ‘Memorials’ for a deceased member.
Until there is a clearer position (such as by legislative regulation), if the terms of your Power of Attorney and Will are clear and specifically authorise your representatives to access and manage your digital assets this is presently the best means to obtain access and deal with your digital estate.
Terms of reference to NSW Law Reform Commission
It has been expected there would be legislation proposed to recognise digital estates and regulate access after death or incapacity, whilst preserving security to your data.
The NSW Attorney-General has now asked the Commission to review and report on the following:
- Laws that affect access to a NSW person’s digital assets after they die or become incapacitated;
- Whether NSW should enact legislation about who may access a person’s digital assets after they die or become incapacitated and in what circumstances; and
- What should be included in any such legislation.
In particular, the Commission is to consider:
- Relevant laws including those relating to intellectual property, privacy, contract, crime, estate administration, wills, succession and assisted decision-making;
- Policies and terms of service agreements of social media companies and other digital service providers;
- Relevant jurisdictional issues, including the application of NSW laws, Commonwealth laws and the laws of other jurisdictions;
- Appropriate privacy protections for the electronic communications after a person dies or becomes incapacitated;
- The Uniform Law Conference of Canada’s Uniform Access to Digital Assets by Fiduciaries Act (2016) and the American Uniform Law Commission’s Revised Uniform Fiduciary Access to Digital Assets Act (20-15); and
- Any other matters the NSW Law Reform Commission considers relevant.
Preliminary submissions to the Commission have now closed. We will provide a further update when the Commission releases its report.
This article was written by Christine McPhillips, Special Counsel, Accredited Specialist Wills and Estates.
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