From assets like bitcoin to intellectual property like published articles or music, our personal assets are quickly moving beyond just physical properties like real estate to digital ones as we continue to increase our online activities. With social media giant Facebook looking to be saddled with more deceased user accounts than living by 2100, there is a need for any of us sharing photos with friends and family, publishing content, managing finances, or any of the other many ways we now utilize the Internet to for interaction, to think about what happens to our digital assets after we pass on.
Digital assets cover a wide range of components–hardware, password-protected accounts, intellectual property, domain names, monetized platforms and content, acquired or collected data, digital currency and so many more. They could also mean online mementos like photos, videos and music playlists. Given the dynamism of the digital world, the specifics of these asset classes is ever changing. But typically, if it exists in a digital form, is searchable (or discoverable) with metadata, and holds value, whether personal or to an organised entity, it is referred to as a digital asset. In traditional estate planning, a will or testament lays out explicitly how a person’s assets are to be divided amongst their surviving friends and family. An executor is often named to ensure the directives of the will are followed accordingly. If one passes without a will, they die “intestate” and the intestacy laws of their location determine how their assets will be divided. With digital assets, the lines aren’t as clear cut.
What happens to your “digital estate” when you pass on?
Relatively new and largely still unregulated, there aren’t sturdy structures around the mining and use of digital currencies across the world. While governments are still considering regulations and use, hackers are keenly interested in the over US$200 billion financial sector. Digital currencies are therefore held in highly encrypted systems and access often times limited solely to its owners.
“Death of cryptocurrency owners is one major way that most cryptos have been lost,” says Frank Eleanya, a Cryptocurrency Analyst based in Lagos, Nigeria.
In February, QuadrigaCX, Canada’s biggest cryptocurrency exchange lost access to US$145 million worth of bitcoin and other digital assets after Gerald Cotten, its 30-year old CEO and co-founder, died of complications arising from Crohn’s disease while traveling in India. His wife had no knowledge of the password or recovery key of the encrypted computer with which Cotten ran the exchange. In April, the company declared bankruptcy after filing for creditor protection having run into over US$150 million in debt.
“Often the owners of the wallets don’t share their keywords or passkeys with their loved ones, probably for fear of being exposed to hackers, because you might share it with a loved one and because they are not so invested in the market they may not be as meticulous as you,” adds Eleanya.
Besides digital wallets, cryptocurrencies are also stored in paper wallets, something referred to as cold storage, which is easier to pass on to loved ones. But sometimes, even these do not suffice. Many of Quadriga’s digital assets were held in cold wallets whose pass keys only Cotten knew. Understood, most pass keys are held in such close confidentiality due to increasing cyberattacks on cryptocurrencies. But lost cryptos are irrecoverable and, in some instances, something referred to as “probate by truck” can be effected. In this situation, “heirs” can claim property under the assumption that the deceased would have “wanted them to have it.” Ultimately, one can amass a fortune in digital currencies and without proper planning, lose all of it or not have it benefit their loved ones when they are gone.
How about other digital financial solutions like online savings and investment accounts, blogs that generate income or other platforms that directly or indirectly have monetary value?
Facebook and Instagram both offer two estate planning options to its users. Accounts can be memorialized if family or friends of the deceased contact the networks, or users can have their accounts permanently deleted after passing on.
For Facebook, memorialized accounts are marked with an indicator with birthday notifications or likes ceasing. Instagram memorialized accounts do not appear any differently and show up everywhere except the “Explore” page. Facebook also allows users to designate a legacy contact to manage a memorialised account. Instagram allows no access even to a deceased’s close circle. While Twitter will not grant a deceased’s family or friends access to their account, they deactivate accounts of users upon their demise if they are provided with necessary documents.
A thread that runs through each platform is that these requests must come from someone authorised by a will to execute such instructions or be set-up by a user before their death. There are chances that you know one of Facebook’s millions of deceased account holders and most likely still receive notifications about birthdays or friendiversaries. This can be disconcerting. But without clear directives for those left behind, social media accounts tend to live on indefinitely.
Digital content from platforms like Kindle, Amazon or iTunes, in tangible formats like hard or flash drives can easily be bequeathed to another person upon demise but with content you do not own (music, movies, e-books etc), they cannot be left to an heir.
So what should you do?
Ideally, one should be conscious of the terms and conditions of online platforms as you sign up and leave your footprints across the web. Find answers to the following questions and address them accordingly:
- What applies to accounts created or data stored after one has passed?
- Are these accounts and their data transferable?
- Can they be accessed by next of kin?
- What documents need to be presented as proof in the event that a next of kin tries to take over an account?
Arming yourself with this information better allows you to plan for how your online estate is managed after you’re gone. Disclosing passwords to online financial or social media accounts is also another way to handle your digital estate.
“The ideal thing to do is include it as part of a will,” Eleanya says about cryptos.
This can be applied to everything. Making provisions for what happens to your digital assets in a legally binding document like a will and even having a digital estate executor ensure that the directives are carried out is a sure-proof way to plan how your online business is handled when you’re gone in a way that is not only beneficial to your legacy but also to those you leave behind.