A digital asset is one that requires a password and username to access. Examples include web-based photograph libraries, digitally-stored music collections, domain names, Facebook and other social networking sites, Ebay, iTunes, Hotmail, Paypal, iCloud, gambling accounts, online investment and banking accounts and utility accounts.

A failure to plan for digital inheritance can cause problems for those left to sort out a deceased’s affairs. Without usernames and passwords it can prove difficult, if not impossible, for personal representatives to access valuable web domains, social networking sites and other online accounts. It is important that personal representatives are fully aware of and armed with the necessary information to do so. They will also need to close down accounts to prevent identity theft or ongoing liabilities.

It is important that personal representatives are notified about digital material. This will enable them to track down and access these assets. While personal representatives may be permitted access to a deceased’s online account by some companies, if a person dies without a will, many companies refuse to grant access without a password therefore denying the next of kin access to those assets.

Inheriting digital assets

The challenge is to keep the information up-to-date, hidden, safe and yet accessible when the time comes. However, you might be able to specify who should inherit your digital assets.

There are several website companies which specifically deal with this issue. Although they may vary slightly in their format or protocol, their basic objective is the same. They will store vital information - including personal messages - securely on your behalf in a ‘digital will’. On the face of it, this might be an ideal solution. However, there is the danger that sites might be accessed by hackers and fraudsters or that the website might no longer be in operation when you die. A ‘digital will’ of this kind is not a valid will.

Other solutions include leaving a record of passwords and codes entered onto a regularly updated asset log kept in a sealed envelope with the solicitors with whom you have made your will. You could also nominate the persons who should have access to those passwords and usernames - preferably your personal representatives. Apart from a paper record, you could burn the information onto a CD or put it onto a flash drive and again deposit it with your solicitor.

We are all aware that the main duties of a personal representative when dealing with assets are to identify them, secure them and maximise their value on disposition or transfer them to entitled beneficiaries. However, when trying to secure a digital asset, thought has to be given whether you can do it or not. Using the deceased’s usernames and passwords to access the asset may be breaching the terms of the provider’s service contract or even committing fraud.

Another point to note is that, with the internet so much a part of our lives, we are rapidly acquiring valuable digital assets of sentimental or monetary value. The actor Bruce Willis fought Apple over the right to bequeath his iTunes library in his will. Although an iTunes collection is no more than a personal licence to use the music, according to Apple’s terms of business, such property dies with the person who bought it.

There could be jurisdiction issues because digital assets are mostly stored on shared servers. The service providers may be based in a different country from their users and they may store data on servers in many countries, making it unclear whose laws would apply.

Finally - in what may be a legal world first, the Supreme Court of Queensland, Australia ruled that a will typed into an iPhone but not written out, signed or witnessed would stand. This was on the basis of exceptional circumstances and does not open the floodgates to people using mobile phones for do it yourself wills. In this case, the testator was about to commit suicide.