As time goes on, more of our lives are being lived online.
Most people have signed up to numerous online services, including email providers, Facebook, and Trademe. Many people store digital files online, using services such as Dropbox and iCloud. Even if you don’t use the internet, there is still the matter of the electronic documents held on your hard drive.
Many online accounts and transactions have value – and create obligations – in the the “real world”. Some savings accounts are online only. Think of Paypal for example. Many people have upcoming transactions with Trademe or eBay.
And at a practical level, a person’s email can be the most important source of breadcrumbs regarding their assets, liabilities, and important relationships.
But what happens when we die or we lose the capacity to manage our digital assets? They’re becoming increasingly important in terms of succession planning, but it’s a difficult area to advise on.
Unfortunately, there is no one way of dealing with digital assets. Consider:
- Almost every online service provider has its own terms and conditions. Each service provider has its own unique approach to dealing with legal representatives of a person (whether that be an attorney for someone who is living but has limited capacity to make and communicate decisions or whether that be an executor or trustee of a deceased person’s estate). Many (most?) service providers provide services under a non-transferable licence rather than by granting ownership of digital assets. (For example, iTunes gives you the licence to use the music you “purchase”, but does not give you ownership in the sense that you can legally transfer this music to another person during or after your lifetime.)
- The laws relating to service providers differ. Online service providers are established in a number of different jurisdictions, and can store data in multiple countries or states. The laws relating to this data, including laws relating to privacy, can change from jurisdiction to jurisdiction.
Let’s have some sympathy for online service providers. When there is no consistent approach across the industry, and there is a patchwork of regulatory requirements trying to catch up with technological innovations, developing a strategy isn’t an easy task for an online service provider.
Consider that Facebook currently has more than 30 million accounts for people who are now deceased. At some point in the future, Facebook will have more deceased accounts than accounts for living people.
Some practical (if not legal) points:
- Use a password manager such as Lastpass or 1Password. This makes your life easier, provides greater security, and also means that all of your passwords are kept in the one place. You can also store other information and upload secure documents.
- Provide clear guidance to your loved ones – especially those you have nominated to act as your attorneys and/or executors/trustees – regarding what you want to happen to your digital assets.
- If you can, sign up to online services under a company name or as a trustee. Companies and trusts generally survive even if you do not.
- The reality is that online service providers will not know about someone passing away or losing capacity. They don’t automatically get notified of a person’s death – someone has to tell them. Nor are they likely to care. Their legal position is that they have to adhere to privacy legislation and other laws that limit what they can and can’t do. They are also obliged to hold up their end of the terms and conditions they have entered into. So if pushed, they will push back, however begrudgingly, because they are cornered into doing so. If you don’t make it an issue for them, it is unlikely they will make it an issue for you. So make sure people can access your digital life, and know what they want.
A personal example:
This blog is made possible by Fairhaven Wealth, my independent, fixed-fee, advice-only financial planning business.
I use a password manager (which I won’t disclose on this blog). I use a unique email address that I use exclusively to log into the password manager, and have a unique password for this email address. (I have a unique email address so that if someone wants to log in as me, they effectively need two passwords – the username/email address AND the actual password). I absolutely authorise, to the greatest extent possible, my wife and any other legal representatives to access any and all digital accounts and digital documents owned by me, and do what they think is appropriate. I have a preferred approach regarding my blog (keep it as it stands) and Twitter accounts (keep as they stand) and Facebook (keep it running, but don’t lock it – I want them to be able to delete it if they think it is appropriate). Ideally, photos with other people in them would be shared with those people, subject to the discretion of my wife/representative.
The above is similar to what I have set out in my letter of wishes. In my view, a letter of wishes is a very important succession document. It is an opportunity to provide your attorneys/executors/trustees with breadcrumbs regarding how they can go about acting for you, and allow you to exercise your wishes in a document that can’t become public knowledge in the way that a will can.
Given the level of uncertainty regarding how we live our digital afterlives, my key suggestion is to communicate clearly with the people who will be responsible, and let them know what you want to happen. Enable them to do this. And let them do it, to the best of their ability.