In the modern world, digital assets have become an integral part of our daily lives. From cryptocurrencies to social media accounts, personal files stored in the cloud, and online bank accounts, these assets are often as valuable and important as physical possessions. However, dealing with a loved one’s digital assets after their death can be complicated, especially in the absence of a clear legal framework. Navigating this process requires understanding both the legal and practical steps involved to ensure the digital assets are handled properly and in accordance with the deceased’s wishes. This article will take you through what a digital asset is and how to handle them.
What Are Digital Assets?
Digital assets refer to anything that exists in a digital form and holds value. Common examples include:
- Cryptocurrencies like Bitcoin or Ethereum
- Social media accounts (Facebook, Instagram, X, etc.)
- Email accounts
- Cloud storage accounts (e.g., Google Drive, iCloud)
- Digital files and documents
- Online financial accounts (bank accounts, PayPal, investment accounts)
- Websites or blogs
- Domain names
- Loyalty program accounts and rewards points
These assets may hold sentimental, financial, or personal value, making it important to handle them with care after the person’s death.
Legal Considerations in the UK
In the UK, digital assets are treated as part of a deceased person’s estate, much like physical assets.
Last year, the UK government introduced the Property (Digital Assets etc) Bill [HL], which provides that digital assets can be considered to be personal property under the laws of England and Wales, and could therefore be afforded the same legal protections as other, traditional categories of personal property.
The bill itself is very brief. The key provision states:
Objects of personal property rights: A thing (including a thing that is digital or electronic in nature) is not prevented from being the object of personal property rights merely because it is neither — (a) a thing in possession, nor (b) a thing in action.
Here’s what you need to know:
- The Role of the Executor
If your loved one has left a will, the person designated as the executor of the estate will be responsible for managing all assets, including digital ones. Executors must follow the instructions laid out in the will and ensure that the deceased’s digital assets are distributed, deleted, or preserved as per their wishes. If there is no will, the estate will be managed by the next of kin, and the assets will be distributed according to the rules of intestacy.
- Accessing Digital Assets
The most challenging part of handling a loved one’s digital assets is gaining access. Unlike physical assets, digital assets often require usernames, passwords, or special authentication methods to be accessed. Without this information, it can be difficult or impossible to manage their digital accounts.
To ensure smooth access to digital assets after death, consider the following:
- Password Management: Before a loved one passes away, it’s helpful for them to use a password manager to store all login credentials securely, or to leave a list of key passwords with a trusted individual. It’s important for the person to have control over this information during their life, and after death, their executor can use it to gain access.
- Digital Will: While not yet legally recognised in the UK as a formal document like a traditional will, a digital will is an evolving concept. Some people use it to specify how they wish their online accounts, passwords, and digital assets to be handled. A digital will may help prevent confusion and ensure clarity in the executor’s role.
- Death Notices and Account Closure Requests: Some online platforms, such as Facebook, X, and Google, allow users to set up a “legacy contact” or specify who can manage their accounts after death. If no legacy contact has been appointed, the executor may need to contact the service provider to request account closure or transfer.
- Legal Rights to Digital Assets
When someone passes away, their digital assets, just like physical property, become part of their estate. However, digital platforms often impose terms of service agreements that limit the ability of the executor or family members to access accounts after death. For example:
- Cryptocurrencies: Access to cryptocurrency wallets is typically protected by private keys or passwords. If the deceased person did not share this information, it may be difficult or impossible for the executor to access these assets. In such cases, a probate court order may be required to obtain access.
- Social Media Accounts: Social media platforms have varying policies. Some may allow a family member to memorialise or delete an account upon proof of death, while others may require a court order to access or manage the account.
- Email Accounts: Accessing a deceased person’s email account may be complex due to privacy concerns. Most email service providers, such as Gmail or Outlook, will not provide access to the account unless legally required. Some providers offer a process for requesting access to a deceased person’s account if you are the executor or next of kin.
- Dealing with Digital Financial Assets
For digital financial assets like cryptocurrency or online bank accounts, it is crucial to follow the appropriate steps:
- Cryptocurrency: If the deceased owned cryptocurrency, the executor will need to find their private key or wallet recovery information. If this is lost, it may be impossible to access the funds. It is also important to consider any tax implications of liquidating or transferring cryptocurrency, as this may affect the estate’s tax liability.
- Online Bank Accounts: If the deceased had an online bank account, the executor will need to provide the bank with proof of death and, in some cases, a grant of probate to gain access. Some banks may allow access to certain accounts (such as joint accounts) more easily than others.
- Protecting Privacy and Security
When handling digital assets, especially those related to personal information or financial matters, it is important to protect the privacy and security of the deceased. Ensure that only authorised individuals, such as the executor or a trusted relative, have access to sensitive data. Using encryption and two-factor authentication where possible will also help secure accounts during the process.
Practical Steps to Take
Here’s a checklist of the steps you should follow when managing a loved one’s digital assets after death:
- Identify all digital assets: Make a list of online accounts, social media profiles, financial accounts, cryptocurrencies, and any other digital assets. This may include checking devices such as computers, tablets, and smartphones for access to digital information.
- Obtain account login details: Gain access to any relevant passwords, PINs, or two-factor authentication details. If these are unavailable, try to contact the service providers for guidance.
- Notify relevant parties: Inform financial institutions, social media platforms, email providers, and other digital asset services about the death. Some may require a death certificate or proof of authority to close accounts.
- Follow the deceased’s wishes: If the deceased left instructions for managing their digital assets, follow them closely. This may include transferring or deleting accounts or allocating cryptocurrency.
- Seek legal advice: If you are unsure how to proceed with specific digital assets or face complications (e.g., access issues or disputes), be sure to contact our private client team at [email protected].
Conclusion
Handling a loved one’s digital assets after death can be a complex and time-consuming process. However, with careful planning, clear instructions, and the right legal guidance, you can ensure that these assets are properly managed and disposed of according to their wishes. As digital assets continue to grow in importance, the need for legal frameworks and clearer regulations will likely increase, making it even more essential for individuals to include digital assets in their estate planning.
