The first question many clients ask when we raise the issue of digital assets is…‘What are they?’
Digital assets can be as basic as your Facebook page and as complicated as cryptocurrencies such as Bitcoin. In the middle, we have many different types of assets such as an online share portfolio, subscription to online newspapers, iTunes accounts or Kindle books.
Unfortunately a Will doesn’t always deal with these assets. For example, you only have a licence to the music you purchase in iTunes, and therefore your subscription dies with you, however your online share portfolio would still be an asset dealt with by your Will.
Often the issue is not whether your Will deals with these digital assets, but rather how does your executor obtain control of these assets on your death?
In particular, we are seeing a number of cases emerge where a deceased or incapacitated person holds a digital wallet of cryptocurrencies, which can only be accessed with a password and private key. There is no way of resetting a cryptocurrency password, so without a proper succession plan, the assets are simply ‘lost’ from the estate.
This issue is becoming an ever growing problem for executors and administrators, so much so, that the New South Wales Reform Law Commission is currently reviewing access by executors and attorneys to digital assets on death or incapacity.
The law that applies to tangible or intangible digital assets is the law where the deceased was domiciled.
However, the law that applies to digital assets that are regulated by End User Licence Agreements (EULA) is the law stipulated in the EULA. These include photos uploaded on Facebook or a licensed asset such as an iTunes music file or an eBook.
These EULAs, and their terms, can be a minefield and create the greatest hurdles for executors. It is also the inconsistency between laws in these agreements that can create difficulties for executors.
In or around 2016, both the USA and Canada introduced laws to regulate a fiduciary’s access to digital assets. Time will only tell if Australia will follow suit.
In the meantime, it is important that clients turn their mind to the complex world of digital assets and how they may pass control of their assets to their executor on death, and their attorney on incapacity. Putting it in the too hard basket is no longer a viable solution.