The Story of David and Mary

David, an IT consultant, was deeply immersed in the digital world. His life was a rich tapestry of online interactions, from securing cherished family photos in the cloud to hunting for the best interest rates for his many deposit accounts. His wife, Mary, often marvelled at his digital know-how, contrasting it with the more mundane hobbies of their peers. David assured her several times that he would neatly wrap all his encryptions and passwords into one special account under a master password and place this in their family safe.

Tragically, David’s sudden passing in a car accident turned this hypothetical concern into a stark reality for Mary.

She initially struggled with grief while also trying to navigate David’s intricate digital footprint and discovered that David had failed to lodge any details of any master password, as he had said he would.

Mary’s Digital Odyssey: A Wake-Up Call

Mary now faced an uphill journey through the maze of David’s digital life, which was incomprehensible to her. She would need to get some assistance to deal with an unfamiliar world of passwords, online accounts, and digital assets that David had managed effortlessly but left uncharted for her.

This highlights a familiar problem that affects a high percentage of families, where one partner is used to dealing with and managing the financial arrangements and the other is happy to manage the home.

David had cleverly secured the links to their digital assets, leaving no opportunity for scammers or fraudsters to obtain access to their accounts.

As with many brilliant people whose heads are permanently in the clouds, David had failed to take practical steps to provide the family with any clue of how to proceed further.

His brilliance had set the family reluctantly on a seven-month odyssey of discovery and frustration.

Understanding Digital Assets

Digital assets encompass a wide range, from social media profiles and online banking accounts to digital music and photo collections.

While we often assume ownership of these assets, the reality is more complex. Many digital services are accessed under specific terms and conditions, limiting the survivor’s control over these assets after death.

For instance, digital music is typically consumed under a licence that expires upon death.

Similarly, some social media platforms claim ownership of content posted under their terms. However, digital files stored on personal devices are generally considered part of one’s estate.

Navigating Legal Complexities

Rather than traditional succession law, intellectual property law frequently governs the legal environment surrounding digital assets.

This distinction can lead to complex legal disputes regarding the ownership and transferability of digital content.

David’s Digital Checklist: Making It Personal

1. His list of digital assets: David had taken the trouble to list every digital account and asset, from social media to online banking, but had failed to disclose these details to anyone.

2. Decide on access permissions:

David failed to name those who should have access to his digital life after he’d gone.

3. Appoint a Digital Guardian:

David knew several computer-literate individuals that he could have requested to manage his digital accounts in the event of his death, but he failed to do so.

Digital assets, unlike physical ones, require careful consideration of ownership and access rights. Think about who should manage your online presence, from business accounts to personal emails, after you’ve gone.

The Password Conundrum

He had researched using a password manager but failed to take this simple step, which could have prevented the significant challenges the estate faced.

You may ask, Why?

We all live in an overconfident bubble, where bad things only happen to other people.

I ran seminars on wills and trusts in the Thames Valley for years. I am often contacted months or years later by an attendee who enjoyed the seminar but saw no need to take action until his next-door neighbour died of a heart attack or something similar.

Potential clients turn up at our offices with very basic wills and lasting powers of attorney and seem surprised when I inform them that they are not up to scratch. It is necessary to have several meetings to provide guidance and attention to detail that their family deserves, so they do not leave a legacy of bitterness and despair.

We have even had clients facing a massive pay-out to HMRC, quibbling over fees that are small compared to the money that will be snatched from their children’s grasp.

As with all matters related to estate planning and taxation, the devil is in the details, and inheritance tax planning carried out properly takes a great deal of work and time to get the right result.

Social Media and Your Digital Legacy

Each social platform has its own policies for managing accounts posthumously. Make your wishes known regarding how your digital social life should be handled.

Allocating Digital Assets: A Thoughtful Gesture

Your digital assets, whether emotionally valuable or financially significant, should be distributed thoughtfully. Ensure your beneficiaries know how to access these accounts, as they may contain some moments they treasure.

In 2019, Rachel Thompson, a woman from Chiswick, West London, won a significant legal battle against Apple over gaining access to her late husband’s iPhone photos. This case was notable for several reasons:
 
1. Length of the Legal Battle: The legal fight lasted for three years. Rachel Thompson spent a considerable amount of money and time on this pursuit.
 
2. The Importance of the Photos: The photos in question were of significant personal value to Mrs. Thompson and her daughter, as they contained treasured family memories, including many pictures of their daughter growing up.
 
3. Circumstances of Her Husband’s Death: Matt Thompson, Rachel’s husband, lost his own life in 2015. He did not leave a will, and Apple’s policy clearly states that user accounts are non-transferable after death.
 
4. Legal and Ethical Implications: This case highlighted the complex legal and ethical issues surrounding digital legacy and the rights of family members to access digital content after a user’s death.
 
5. Outcome: A U.K. court finally ordered Apple to provide Rachel Thompson access to her late husband’s iPhone photos. This ruling allowed her and her daughter to revisit the memories stored in those photographs. This case is a poignant example of the challenges faced in the digital age regarding ownership and access to digital assets after someone’s passing​​​​​​​​​.
 
Appointing Executors for Your Online World

Just as you appoint executors for physical assets, do the same for your digital ones. Choose someone who appreciates the complexity of your digital life.

Protecting Your Digital Realm

Secure your digital assets with strong passwords, backups, and cautious sharing, which is crucial both now and after your passing.

Crypto-assets and the law

Crypto assets have always been considered ‘risky’; losing your keys to your wallet would effectively lock you out of your finances. Similarly, if a bad actor fraudulently obtained access to your keys, they could effectively take all your assets, leaving you with no recourse.

There is nothing specific about digital assets that puts them outside of the existing regulatory framework, especially property laws. If you lose the keys to your car and I find them, that doesn’t make you the owner of your car.

Laws apply to digital assets in the same way, despite repeated attempts to create a separate regime outside of the law. If a separate regime is created, digital assets will never see mass adoption because governments, businesses, and consumers will be concerned about the risks involved.

Digital estate planning can be complex. Seek professional advice to ensure your digital assets are integrated into your overall estate plan and comply with legal standards.

Cloud Storage Considerations

Data stored in the cloud, such as digital photographs, requires careful planning for posthumous access. Consider granting access rights to family members or maintaining offline backups.

The Future of Digital Estate Planning

As the law evolves to address digital assets, challenges will arise, particularly for professional advisers. While many digital assets hold more sentimental than financial value, their legal and emotional significance cannot be underestimated.

Conclusion: Securing Your Digital Legacy

David and Mary’s story is a poignant reminder of the importance of digital estate planning.

To secure your digital assets and navigate the complexities of this modern necessity, professional guidance is invaluable.

If you wish to discuss securing your digital assets or any other aspect of estate planning, please get in touch.

Ray Best

Ray Best

Like his academic development, writing came late to Ray. He has written several published works, “Inheritance Tax Planning – My Way” and “Shareholder Protection & Partnership Protection” and has had four feature articles published in Tax Adviser magazine, but the publication he is most noted for is the joint collaboration with Tony Granger “Inheritance Tax Simplified”.

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