STEP and the Microsoft-funded Cloud Legal Project at Queen Mary University of London have today published a joint report on digital assets and estate planning.

The survey says...

The report includes results from a survey completed by estate planning practitioners (around 500 STEP members) during early 2021. While the survey was completed by STEP members worldwide, 41% of respondents were from the UK and Ireland and lessons can be taken from the conclusions.

The report encompasses a wide range of digital assets including crypto-currencies, digital media stored online on services such as iCloud or Dropbox, and also social media accounts.

The main conclusions are, perhaps unsurprisingly, familiar with respondents noting a great deal of confusion around how digital assets can be dealt with after death. The survey revealed that practitioners were increasingly dealing with questions about digital assets and that this was only ever going to grow. Around 25% of respondents' clients had experienced distress at trying to deal with accounts after death.

The law says...

'Digital asset' is not defined in the UK legislation. The phrase is often used encompass a range of ideas.

It sometimes includes physical items on which information is stored (laptops, phones, hard drives), information stored on other devices such as the cloud, cryptocurrencies, or perhaps other online accounts that someone may have.

Each of these requires separate consideration and treatment.

Physical items may well have monetary value as may the information stored on them. Cryptocurrencies also have a value and should be dealt with as an asset of the estate (and see our separate post about where these may be located for tax purposes).

For many online accounts, the relationship between the provider and customer is contractual. Once a customer dies, the account comes to an end.

Accessing accounts or devices can also cause issues. The Computer Misuse Act 1990 prohibits unauthorised access by third parties. Simply leaving a list of passwords for your executors may be a pragmatic step (and which 40% of respondents suggested as a suitable approach) but that could fall foul of this legislation. This is is particularly the case if the terms of the account do not allow third party access.

The companies say...

Today's report references an earlier 2018 study which reviewed the terms and conditions of 35 online providers. It found that 85% of terms and conditions did not address what happens to a customer's account on their death and around 90% prevented the account being passed on to someone else.

Some providers do now have legacy functions. Facebook and Google have the ability to nominate someone to take over your account (or access or close it) after a period of prolonged inactivity (which, perhaps presumptuously, they take to mean your death). Apple has also announced a similar scheme for their customers but that is yet to be rolled out.

As alluded to above, many providers state that customers should not share their login details. Doing so could be a breach of the terms and conditions.

What next?

The STEP report suggests three steps:

  1. Education - both for practitioners and the public around the uncertainties that currently exist and existing best practice;
  2. Collaboration - between professionals and digital service providers so that the practical issues can be understood and mitigated; and
  3. Legislation - The Law Commission for England and Wales have begun a project to review how the law deals with cryptoassets and other digital assets. The STEP report highlights the US' Uniform Law Commission Uniform Fiduciary Access to Digital Assets (2014) which has been adopted by a number of states, as a potential model to bridge the gap between an individual's "preferences, the provider's terms of service, and the privacy of third parties".

More information

If you would like to speak with us about how your digital assets may be dealt with on your death or have any questions about STEP's report or the current legislation, please do get in touch.

Legal systems need to provide clear rules around property rights and rights of access by personal representatives. There are some encouraging signs, including the Law Commission of England and Wales’ project in relation to digital assets in 2021, but there need to be wider efforts and greater cross-border collaboration in order to achieve consistent international standards

https://www.step.org/research-reports/digital-assets-call-action