Future-proofing your digital life

Future-proofing your digital life

When a person dies one of the responsibilities of their personal representatives (PR) is to complete an inheritance tax return and pay any inheritance tax due (IHT). To work out how much IHT to pay, the PR must calculate the value of the estate at the date of death by adding together the assets and deducting any liabilities. When it comes to digital assets, valuing them is tricky as determining their worth is not a straightforward task.

Digital assets include photos, music and videos stored online in a personal account as well as online games, email and social media accounts. Often digital assets like photos are of sentimental value only, but others may be financially valuable. For the PR to be able to accurately account the value of the estate to HMRC they will need access to these digital assets to properly assess their value. Unfortunately accessing digital assets is not as straightforward as it is for their physical counterparts.

Misuse of people's data

The Computer Misuse Act 1990 (the Act) makes it a criminal offence for people to access a person's data if they are not authorised to do so. Any person who accesses a deceased person's online accounts without the necessary permission will be guilty of an offence under the Act and this includes a PR who does not have specific authority to access the data. It is easy for a person to run afoul of the Act without even realising they have committed an offence. Even scrolling through photos or videos stored on the deceased's phone could amount to a breach if the person doing so does not have appropriate authority.

In England and Wales, when a person dies their PR steps into their shoes and takes control of all their physical assets. However, it is different for digital assets. This is because most digital assets are accessed via an online account run by a third-party internet service provider (ISP) like Microsoft, Apple, Google and Facebook. The ISPs impose standard contractual terms and conditions when the account is set up and this is where you need to look to find out what happens to the assets after death. Some do not cover what will happen to the assets stored in the account following the death of the account holder. Where they do, each ISP's rules differ.

A further complicating factor is determining which country's law applies to digital assets given the international element of many of these accounts. The account holder may reside in one country while the company that owns the platform is registered in another, and the servers and data may be stored in yet another with each location being subject to their own laws.

Planning for the future

As we have seen, only those who have been granted specific authority will be able to access a person's data without committing an offence under the Act. Whereas appointing a PR in your Will gives that person authority to deal with your physical assets after your death, it is unlikely to work in the same way for giving access to your digital property. Therefore, it is very important to take steps now to assist those who will be dealing with your digital assets after your death. Consider:

  1. Drawing up a list of your digital assets and online accounts and the ISPs that run them. Keep this with your Will, along with a separate record of all the passwords. Diarise to review it every six months or so. You must keep such a list securely to ensure that it cannot be accessed by anyone except you so that you don't breach any ISP's terms and conditions. Keeping a list significantly reduces the likelihood of any digital assets in your estate being overlooked and ensures that your PRs will be made aware of them.
  2. Once you have a list, begin by reviewing any relevant ISP's terms and conditions which govern the assets to find out what will happen to the assets after your death. Some accounts will be closed and access withdrawn when the ISP is made aware that the account holder has died, others may have a specific digital legacy path to follow.
  3. Giving express authority to those who will be accessing your digital assets. By granting a PR the necessary permission they will be able to effectively deal with digital assets right away without the risk of being in breach of the Act.
  4. Where possible, naming someone within your account to receive access to it after you die. For instance, Google and Facebook allow an account holder to nominate a person who will be allowed access to their account following their death.

If you would like to learn more about future-proofing your digital life, please get in touch with a member of the Private Wealth team for more information and advice.

This article was also authored by Carol Daley, Solicitor, and Caroline Pellow, Practice Development Lawyer at Womble Bond Dickinson Private Wealth.