Planning your digital inheritance
Wealth planning expert and Cripps Pemberton Greenish partner Simon Leney looks at the implications of online assets and inheritance.
Have you got an eBay or Paypal account? How about Facebook or email? Or maybe you just have photos held electronically either in your computer hard drive or in a cloud account? All of these and many other “digital assets” are accessed via passwords and usernames you have chosen, and no doubt kept confidential to reduce the risk of misuse by one of the many fraudsters lurking online. But that confidentiality becomes a problem if you are no longer around to tell your family about your digital accounts and how to access them.
Often sentimental value is just as great if not more important than monetary value. While it’s commonplace to encounter sibling rivalries about photos and “heirlooms” with little financial value but plenty of family significance, solicitors are increasingly advising on access to online digital accounts. Key things to think about when writing a Will are who should be able to access your accounts and how to provide this information. You should also consider whether such access is important should you lose mental capacity.
One complication is that some digital assets (like a PayPal account in credit) represent monetary value making them part of an estate’s value, while others have a personal value but do not need to be valued as part of the probate process. And if there are (say) three beneficiaries, which one should acquire any legal rights to digital assets? When the issue of digital inheritance first began to be a factor in estate planning, concerns were focused on ownership and it became increasingly known that certain accounts (such as music held on an iTunes account) are merely licensing arrangements, so that music downloaded is not owned by an iTunes account holder but, like a library book, merely borrowed. Nonetheless it’s possible to log into an account with the username and password, even if not the original account holder. Making that information available to someone else in the last resort, if you have died or can no longer access it, is sensible planning.
These issues have led to software coming onto the market, designed to hold details of digital assets, with a “master” password access or in some cases delegated authorised access for a nominated individual in specified circumstances such as on production of a death certificate. Some software will automatically collect sign up data and store it as you register user names and passwords on your devices, while other entry level software requires manual entries. The latter is really little different from a password-protected Word or Excel document, except that the software provider will control access until proof of death. If you are not overly sensitive about lifetime access it’s possible just to notify your next of kin of how to find digital accounts and to provide the access data. The trick is to remember to update that information each time a password change takes place, or whenever you open a new online account.
Of course caution dictates that software which collects your log-in data could be at risk of being accessed improperly by hackers and it is that risk which understandably holds back many clients from using it. Physical data storage containing the information, for example a CD or memory stick, or even plain old paper, although cumbersome, may in practice offer greater security.
In planning terms, it’s sensible to start by making a list of your digital accounts to judge the size and significance of the problem. Things like bank accounts generally permit access to your executors and attorneys (so long as they know where to go) by a variety of mechanisms of which online access is only one. This means it is those that are only capable of access online which need consideration, such as (say) your email account. A simple approach is to keep that list with your Will (you have made or reviewed yours recently haven’t you?) the whereabouts of which you should make known to your family. Specialist solicitors will offer an opportunity to discuss how to manage your digital inheritance as part of the Will-making process and enable you to decide what arrangements suit you best.