It can be assumed that almost all of us now possess a “digital estate“. During a person’s lifetime, their attorneys, and after their death, the executors of their Will, need to consider such assets in the course of administering the affairs of a deceased estate.
In this article we discuss a topic that many people making Wills or Powers of Attorney overlook, and the best means of dealing with such digital assets, given the limitations and restrictions imposed by service agreements and providers.
The following are abbreviations of common definitions:
- 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; and
- 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 your 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.
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 (for example pursuant to 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 the best means at present to obtain access and deal with your digital estate.
As this is a developing area it is expected that there will be legislation to recognise digital estates and regulate access after death or incapacity, whilst preserving the security of your data. To this end, it is noted that the NSW Law Reform Commission is preparing a report for the Attorney General on laws affecting access to a person’s digital assets or records after they die or become incapacitated.
This article was written by Matthew Payne, Partner and Christine McPhilips, Special Counsel.
Publication Editor: Matthew Payne, Partner and Philip Davis, Special Counsel.