As many Australians are confined to their homes for an indefinite period of time due to COVID-19, we are now more than ever communicating, shopping, playing and doing our business online.
With this increased reliance upon the digital world, it is important that we carefully consider what happens to our digital assets upon death or incapacity.
What are digital assets?
Digital assets can include cryptocurrency, email, intellectual property rights, social media accounts, digital book and music libraries, sports gambling accounts, frequent flyer points, cloud storage, and even confidential business data.
Who controls your digital assets after you die or lose capacity?
In Australia there is currently no statutory scheme that provides a legal representative with the right to access and deal with digital records. That is, an Attorney (upon incapacity) or an Executor (upon death) do not have an ‘automatic’ authority to access digital assets.
The right to access digital assets is governed by the specific terms and conditions of the organisation/ account. For example, Google and Facebook have different policies about what happens to a user’s account upon their death or incapacity.
In 2018, after a 3-year dispute, a German court granted access of a 15-year old girl’s Facebook account to her parents, ruling that online data should be treated the same as private diaries or letters, and pass to heirs. Australian courts have yet to ‘test the waters’ on digital assets.
Other quirks include that digital book and music libraries are often forfeited upon death as the account holder holds a non-transferable license in the asset and does not actually own any of the content.
Similarly, most (but not all) Frequent Flyer points are non-transferable after a carrier is notified of the death of the member.
Cryptocurrency and digital wallets are usually secured by password, which may not be able to be retrieved.
In 2019, the founder of Quadriga (a cryptocurrency trading platform) died and was the only person with the password to access the platform, resulting in millions of dollars in cryptocurrency being frozen and unable to be retrieved, affecting over 100,000 users.
How to protect your digital assets after you die or lose capacity
As the rights from one provider to another vary so drastically, you need to consider how you would like each of your digital assets to be dealt with, as part of your estate plan. You also need to ensure that access to those digital assets can occur on death or incapacity. Creating a password memory bank is one way of ensuring a smooth transition.
More information
For more information, or advice on protecting digital assets upon death or incapacity, please contact a member of our Estate Group below.
| Sam Frey, Principal Lawyer and Head of Estate Group D +61 3 8600 8885 E sfrey@kcllaw.com.au | Jennifer Maher, Principal Lawyer and Accredited Wills and Estates Specialist D +61 3 8600 0710 E jmaher@kcllaw.com.au | Paul Beasant, Special Counsel D +61 3 8600 8817 E pbeasant@kcllaw.com.au |
| Hayley Hunter, Senior Associate D +61 3 8600 8806 E hhunter@kcllaw.com.au | Ainsleigh Lugger, Associate D +61 3 8600 8826 E aluggere@kcllaw.com.au |
Note: This update is a guide only and is not intended to constitute legal advice.