Irwin Mitchell Private Wealth | How should an executor deal with digital assets?

When author Terry Pratchett’s Will ordered the destruction of all his unfinished novels, his executors had a dilemma. Could they be sued for failing to maximise the value of the estate’s assets if they carried out the author’s wishes?

The simple answer is yes. Such decisions potentially leave executors open to challenge from beneficiaries who feel they could have achieved more under the Will. An executor inevitably faces a conflict between his duty to the beneficiaries and his duty to administer the estate in accordance with the testator’s wishes.

Authors’ requests that unfinished works be destroyed are not always honoured. Most famously, Franz Kafka’s diaries and stories were published after his death in 1924 in spite of his order to burn them. Pratchett’s 10 or so novels were on a hard drive, and the executors decided to follow the author’s directions and place it under a seven-ton steamroller at a Dorset fair – apparently without legal challenge.

But the episode also sheds light on a potential legal minefield: digital assets, an increasingly important aspect of life but one which the law has yet to catch up with.

Research by YouGov found that 52 per cent of us said no one would be able to access their digital accounts if they died because they had not left any arrangements about what should happen.

Paula Myers, National Head of Will Trust and Estate Disputes, said: “The current law relating to estate planning and wills only covers traditional property, contract and estate issues. It does not provide adequate guidance in relation to issues regarding digital assets. Legislation has not changed to reflect our current digital age, the rapid changes in technology and the increasing number of people who want to conduct their business and personal life online.”

Some digital assets are obvious such as online banking, shares and auction accounts. However, digital can also cover social networking sites, domain names, email accounts, business and client lists, gambling accounts, photo sharing, and as in Pratchett’s case works such as novels, blogs, and art stored online. The list is ever growing as technology continues to develop at a rapid pace.

The issue of digital assets also raises potential jurisdiction issues. Many of these assets are stored on shared servers, and service providers may be based in a different country to their users, making it unclear whose laws would apply. The lack of clarity around this means that a service provider’s terms of use become the arbiter of how a digital asset is dealt with following the death of a user.

The US is already responding. There it is now commonplace to appoint a ‘digital executor’ alongside a traditional executor when writing a will.

But at the moment a ‘digital executor’ is not a legally binding or enforceable designation in England and Wales and it is thought that one executor can deal with all estate assets. The American system provides that a ‘digital executor’ shall deal with only the digital assets.

The Law Commission has been studying Will reforms since 2015.

Its report is due to consider whether the law could be reformed to encourage and facilitate will-making in the twenty-first century, including whether it should be updated to take account of developments in technology. It is expected to produce final recommendations or a draft bill in early 2018.

Meanwhile the advice is to identify three areas to think about and prepare for when it comes to our digital and online life:

assets with financial value, such as online banking, PayPal, online shopping accounts and cryptocurrencies such as Bitcoin
assets with social value, such as Twitter, Facebook and LinkedIn profiles
assets of personal significance, such as Flickr, YouTube and iTunes.

Everyone has the legal right to pass on digital assets with financial value to their chosen beneficiaries. We also have the legal right to manage the deactivation, memorialisation or removal of our digital social life. But we still need to take steps to exercise our rights by making a will. It should include provisions for all digital assets to ensure our wishes are carried out after death. On top of this, we should have a digital directory that contains details of all of our online assets, social media accounts, logins and passwords, and keep it updated.

Published: 25 October 2017

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October 2017

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October 2017

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How should an executor deal with digital assets?

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