Posted by Komal Joshi, CEO of Legal Futures Associate Planned Departure
During the dotcom boom of the late 90s, the period when digital technologies were beginning to make their mark, it would have been inconceivable that digital property should be included in estate-planning documents. Ten years on and still the issue of digital legacies would seem absurd.
It took the fairly recent media disclosures of the difficulties parents faced with trying to access the social media accounts of their deceased children to shine a spotlight on who actually owned this content.
Today, digital estate planning is essential because virtually every part of our lives, personal and professional, is impacted by this digital era. Smartphones, tablets, laptops and other digital gadgets have become reflections of our personalities, our interests and our identities, to the point that, for many, they have become part of the very fabric of our being.
In the recent 2014 Digital Impact Survey conducted by the Apigee Institute and Stanford University’s mobile innovation group, figures demonstrated that rising numbers of smartphone owners are becoming increasingly dependent on their devices. More than 90% reported that having a smartphone has altered how they connect with friends, and many claim they could not maintain a relationship with someone significant or find new friends without their smartphone.
That might be seen as a sad reflection of our society today, but the reality is that digital is not going to decline any time soon and that we need to be taking a much more proactive view of the digital assets we’re accumulating.
Estate planning and administration practitioners should be discussing with their clients what they want to happen to their digital estate in the event they become permanently incapacitated or die.
We hear a lot about parents’ anguish at not being able to access their children’s social media accounts after their death, but what if these children didn’t want their accounts exposed? What if they wanted them permanently erased when they die? It is vitally important that these wishes are included in any digital estate plan.
Digital property includes all digital assets such as music, films and photos, usernames and passwords, websites, Frequent Flyer Miles – anything that is stored digitally – as well as digital accounts (online banking, social media, online subscriptions etc) and digital hardware (smartphones, tablets, laptops etc).
Equally, there may also be different types of digital assets and digital devices – those personally owned and those owned by an online service provider and licensed under a terms-of-service type agreement.
And herein lies a conundrum. Digital property may not necessarily comply with the same legal characteristics as physical property.
Take, for example the viability of the copyright regime, an area that has been considerably challenged by the advent of the Internet and digital technologies. The registration of domain names is a good case in point. The creation of the Internet has generated a new type of property with similar characteristics to trade mark rights, but without inherent ties to the trade mark law of any individual country.
Since cyberspace has no physical boundaries, defining rights in this new, valuable property presents a number of questions, including those relating to transferability, conditions for ownership (such as payment of registration fees), duration of ownership rights and forfeiture if there is abandonment.
Then there is the case of physical property – media such as books and music, for example – that are generally protected by the first sale doctrine. Digital media, on the other hand, is universally governed by an end-user licence agreement (EULA). The purchase of such assets universally requires creating an account with the content provider, an account also governed by an EULA. As such, the first sale doctrine does not apply to digital media.
Whilst there continues to be considerable discussion internationally on this topic, there has been no formal legislative recognition of digital property in estate planning or estate administration, apart from some states in the US.
That said, there are clear definitions of what constitutes digital property and they are broad enough to cover the field for estate planning and administration purposes. A carefully drafted inventory, along with the rights of access and clear instructions for inheritance, will allow the digital estate to come into the legal possession and/or control of an executor or administrator, in the absence of a law or agreement to the contrary.
Even though the owners of digital property may have a written will regarding their physical assets, the two property forms should be kept separate. Given the formality attendant to the execution of non-holographic wills and the often rapidly changing nature and ownership of digital assets, wills can be an awkward vehicle for digital property.
Furthermore, it remains unclear whether service providers will respect the terms of wills to transfer ownership of digital assets.
A record with the will (instead of in the will) of where the digital inventory (including usernames and passwords) is being held is the best option.
The management of digital property is not difficult and there is a growing number of dedicated professionals who can help and support law firms with this process. The starting point is the realisation that digital property certainly has value and that is should be protected accordingly.