Estate administration: the digital assets dilemma

Estate administration: the digital assets dilemma

Directors decision making: considerations for virtual meetings

The rapid increase in the range and prevalence of digital assets over the past few years is creating an ever-widening gap between the technologies available to the public and the lumbering legal systems struggling to catch up.

Legislation governing vital legal considerations relating to those assets – such as, ownership, access and succession – has yet to arrive.

In the void, personal representatives (PRs) and their legal advisers administering the estate of a deceased person are left trying to navigate uncharted territory and fulfil their traditional duties and responsibilities, without the necessary legal framework in place to enable them to do so.

One of the areas in which the lack of digital asset legislation causes the most practical difficulty, is in relation to accessing online accounts after death. With no legal framework in the UK requiring a deceased person’s PRs to be permitted access to their digital assets, access is currently governed by the terms and conditions of the service provider of the relevant digital asset.

This is problematic for two reasons. First, these terms and conditions were usually not written with the death of the account-holder in mind and often do not provide adequately (or at all) for the situation.

Secondly, digital assets service providers are often based in the United States, which has stringent privacy laws. In fear of falling foul of these laws, service providers are often loathe to allow access to anyone other than the original account-holder, with the vast majority prohibiting the customer sharing their account password or assigning their rights under the contract.

This can cause real practical difficulties during an estate administration. Section 1 of the Computer Misuse Act 1990 makes it an offence (amongst other things) to access an online account after someone’s death without authority.

In the case of online accounts, this authority must come from the service provider and, for the reasons outlined above, this is not usually forthcoming.

In some cases, the situation is improved where the deceased has been able to engage with these issues during their lifetime.

Although there is no legislation to assist, some of the bigger providers such as Google, Facebook and Apple have put in place their own measures to facilitate the situation post-death. However, these often do not go far enough and are not available at all when it comes to many of the smaller service providers.

Where lifetime planning has not been able to satisfactorily deal with access issues post-death (or has not been undertaken at all), PRs are placed in a difficult position.

Section 25 of the Administration of Estates Act 1925 places a duty on PRs to collect in all the assets of the deceased (including digital assets) and administer them according to law, but how can they do this when access to the account is forbidden?

There is often no physical evidence that a deceased held certain digital assets and accessing a digital bank account or an email account may be essential to fully understanding what is in the estate at all, let alone then collecting in those assets.

The choice for PRs then becomes an unpalatable one: break the law; fail to administer the whole estate properly (and thus open themselves up to potential claims from beneficiaries); or seek access to accounts by way of court order which would be disproportionately time-consuming and costly, given the digital assets held in most estates.

This is an incredibly unsatisfactory situation, both for the PRs and those who advise them.

There may, however, be some hope on the horizon. In January of this year, Ian Paisley MP introduced a private members’ bill, which aims to address the question of access to an individual’s digital assets after their death.

The bill’s second reading is scheduled for 6 May. As currently drafted, the bill proposes that the default position would be that a deceased person’s next of kin would have automatic access to any digital platforms held on the deceased’s devices.

While this proposal could be problematic without proper safeguards – in terms, for example, of protecting the deceased’s privacy after their death – it is nevertheless reassuring (and overdue) to see this issue receiving some parliamentary time and attention.

Whether or not the bill will eventually become law, and in what form, remains to be seen, but everyone with digital assets, not to mention the lawyers trying to advise them, would be better served by a comprehensive set of legislation governing this area – sooner, rather than later.

This article was first published on Legal Futures and can be read online here.

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