Estate Planning in the Digital Age

Few of us relish confronting our mortality, but the truth is, everyone should plan for what happens to their possessions when they die. And you may actually have a lot more possessions than you think, because in the 21st century, some of what you own will be digital rather than physical.

For many centuries the assets distributed as part of someone’s estate tended to tangible in nature. Now it’s possible for any individual to own a whole library of digital products, from virtual currencies and NFTs to a vast array of digital photos, books, music and films. Many people now own a website, blog, or digital products they’ve created as well.

As part of modern estate planning, it’s vital to put in place a plan regarding what happens to your digital assets after your death, but don’t assume you can necessarily pass them on. Some digital assets don’t really ‘belong’ to you at all.

Which Digital Assets Can’t Be Inherited?

Digital assets that you own outright can be passed to your heirs in a will, but there are some things you might think you own that you don’t really. You just own a licence to access them, but that licence is tied to an online account, and that account is tied to you as an individual. This will generally include things like digital books, music and films, for example.

For years, I said I was going to leave my ‘library’ to my kids. I never actually had a library, of course, but I did have a lot of physical books. I still do, but a lot less than I once did. I’ve been reading on Kindle for over ten years now, and have got rid of a lot of my physical books. I have hundreds of books in my Kindle account though. Books I bought for cold, hard cash, but according to Amazon, I can’t leave those to my kids.

The same is true of a lot of digital content and downloads. While those things may be on a device, which is a physical asset that can be left to someone, the asset itself, such as an ebook, audio book, music album or film, is generally associated with the account used to make the purchase, and those accounts are usually non-transferable.

While you can leave your books, vinyls and DVDs to your heirs, it’s much harder to leave their digital counter-parts to anyone.

Digital Currency

If you own assets such as cryptocurrency and NFTs, or any other digital asset that is designed to be easily transferred from one person to another, you can pass them on to your heirs. However, it’s best to plan for this as obviously, the process will be different than with other, more tangible assets.

As cryptocurrency enthusiasts know, the most important issue with virtual currencies is keeping your private keys safe, which can be done by storing them in secure crypto wallets online or off. You can transfer those keys to anyone, and in doing so you have effectively transferred your cryptocurrency to them.

Technically you don’t have to include these assets separately in your will, but it’s highly advisable that you do. As Hughes Law point out it’s a good idea to include a specific legacy in your will regarding these types of assets, because:

“This will alert your executors to the existence of the holding so that they can take action after you have died to secure control.”

They also suggest you consider appointing executors with the knowledge and skills to deal with, access, and distribute your cryptocurrency and similar digital assets.

Online ‘Bank’ Accounts

You’re probably aware that any money in a regular bank account will form a part of your estate automatically, but what about online accounts such as PayPal and Stripe?

Any funds in these accounts also form part of your estate, but again, this can be complicated by the fact that these funds are purely digital. You can’t walk into a branch of Stripe or PayPal and withdraw money, as you could with a regular bank.

PayPal, for example, states:

We can disburse any money that remains in the account in one of the following ways:

It’s worth thinking about this and ensuring that family members and/or executors are aware of any digital accounts, and what the standard procedures are for closing such an account and transferring money into the general estate of someone who has died.

Blogs and Websites

You might own anything from a personal hobby-type blog, to a site that’s essentially a valuable business asset. Either way it can be left to an heir, but again this is not something that’s as straightforward as transferring a traditional business or asset, so it’s worth having a separate plan.

To make life easy for those you leave behind you’ll want to also leave them all the relevant details that would be needed by someone taking over, selling, or even just deleting, your site. Things like login credentials, along with information about your site host and domain registrar, will help your heirs or executors deal with transferring the site to someone else.

You might also want to let your heirs know what your wishes might be for your site or blog. They might feel pressure to keep it going as a legacy to you, or continue with it if it’s a money-making business, but that may not be what you’d necessarily want for them.

If they’re not bloggers or website owners themselves, they may not even know that a blog is a common asset and there are easy ways to sell it, which might be the best option if it’s worth significant money, as those funds can then be distributed among multiple heirs.

Intellectual Property

Intellectual property refers to often intangible assets that a human being used their intellect to create, and the exact definition of it is different in different countries and legal jurisdictions. Generally however, it includes copyrighted material, trademarks and patents, so it can be highly relevant to writers, artists, inventors, and entrepreneurs.

Remember that if you’ve created any copyrighted content, for example, the copyright doesn’t die with you, but can be passed on to your heirs. Under US copyright law, a work or character remains copyrighted for 95 years. After that is generally becomes ‘public domain’.

This can be vital for those involved in big business, as was demonstrated recently by the implications of characters such as Walt Disney’s Micky Mouse potentially becoming a public domain asset, but it can also apply to very ordinary creative entrepreneurs.

If you receive any kind of royalties as a writer or artist — including royalties on digital art, ebooks, song lyrics, and digital products — it’s possible these could legally become the property of your heirs after your death, so it’s worth consulting a copyright lawyer to make sure they receive any royalties they’re entitled to.

General Online Accounts

Many of us now store thousands of family photos, important documents, and all kinds of other things, in cloud storage. This can of course include intellectual property or business related assets.

Professional photographers, for example, may store all their commercial photos in the cloud. Again, one way to protect these assets is to make sure you leave login credentials for your heirs, so they can easily transfer them to their own accounts on your death.

Social media accounts fall under the ‘online account’ category too. A 2019 study by the Oxford Internet Institute found that by the end of this century, the number of deceased Facebook user accounts will reach nearly 5 billion.

Many platforms, including both Facebook and Instagram, allow relatives to memorialize a deceased user’s account as a legacy to them and a place where friends and relatives can come to honor their memory, but it’s fair to assume that many of these decisions are taken without any knowledge of what the deceased person would have wanted.

For that reason it’s a good idea to let loved ones know if that’s something you’re on board with, or if you’d rather your account was just deleted. Be aware that most social platforms, and many other online accounts, will require proof of death before closing an account at the request of a third party.

What Should I Do First?

The first step is ensuring you have a list of all your digital assets to allow your heirs to assess what to do with them. Include:

• Social accounts
• Email accounts
• Blogs and websites
• Online payment accounts such as PayPal
• Cloud storage platforms
• Cryptocurrency and NFTs
• Any digital assets you’ve created
• Any creation you receive royalties on
• Any patent, logo or trademark that’s registered in your name

If you have a lot of digital assets, you’ll definitely want to do further research on exactly what’s involved in passing them on, and ensure that your digital estate plan covers your specific circumstances.

Thinking about organizing your assets and writing your will? You’ll always want to consult a professional first.