These virtual accounts are all “property” that an individual can own at the time they pass away. Unfortunately, because they are usually unknown to anyone but the owner and because they are otherwise not tangible, with little in the way of any form of physical record of their existence, they can also be lost to the virtual world unless the owner takes appropriate steps prior to his or her death.
It is trite to state that one of the key obligations of an executor is to gather in all assets of the deceased individual and to take steps to preserve and protect those assets. Failing to either gather all assets or preserve and protect all assets, can lead to liability for an executor. However, in the case of digital assets we should not be too hasty in expecting an executor to be able to fulfill these obligations given the challenges that may exist.
In the context of digital assets, it may be appropriate to expect some cooperation from the owner. Unless the owner of any digital assets takes appropriate steps to facilitate an executor being able to complete his or her job, there is a real risk that virtual assets will remain inaccessible and therefore unrealizable for the beneficiaries. In other words, the assets will ultimately be forgotten in cyberspace.
So what are some of the challenges posed by owning digital assets and what can we do to reduce the risks that may arise from such challenges. Well, the first challenge is the fact that service providers may not have any policy in place that allows an executor to access an individual’s digital asset. Or, if they do have such a policy, it is strictly enforced in the sense that they require an executor to have been expressly granted the authority to deal with the particular asset. In our experience, this may be interpreted to mean that the executor must have expressly become the succeeding legal owner of the digital asset or the executor must have been expressly granted the power to deal with the digital asset. As another commentator has recently described the situation: “We see a Catch 22 arise quite frequently where not only may an executor not have any authority to deal with the digital asset, but the provider or custodian of the digital assets may likewise have no authority to deal with an executor and disclose information about the account. The result: Once a user passes away, there is an authority vacuum.”
Are there things the owner of digital assets can do to avoid the risk of losing the value of his or her digital assets? Of course there are but it requires time, inclination and some ongoing attention to do. Here are some steps an owner of digital assets can take:
- Carefully review the contract of the service provider of a digital asset to determine:
a. if ownership of the digital asset can be transitioned on death,
b. if so, how authority over the digital asset, and ultimately ownership, can be transitioned.
- With social media accounts, leave instructions about whether the accounts are to continue or are to be closed.
- With points related programs, ascertain to whom points can be transferred and provide specific directions on death.
- Create a list of all digital assets, together with passwords and ideally copies of the contracts related to those digital assets. Ideally this information is “stored” in a readily accessible place that is known to family members, friends or trusted advisors. Better yet, consider storing this information in its own electronic safe, the details of which are shared with the appropriate people.
As the world continues to move towards having a more technological footprint in our personal and business lives, the planning that is associated with digital assets will only become more important.