In our increasingly digital age, where a rapidly growing number of people in the UK are purchasing smartphones, laptops and other mobile devices, the average person now owns more and more digital assets.
A digital asset is any digitally stored content which is owned by an individual, including images, music and online accounts such as social networking profiles.
This increase in digital assets is creating complications when the owner dies, leaving their Personal Representatives (PRs) to deal with these assets. Often, PRs will not have regard to digital assets at all, let alone give proper consideration as to how they should be distributed.
The Current Legal Standpoint
Pursuant to the Administration of Estates Act 1925, PRs have a duty to collect and administer the assets of the Deceased’s Estate, this includes digital assets. Failure to dispose of digital assets correctly could amount to a breach of that duty. Aside from the legal requirement to administer these assets in the proper fashion, PRs will want to protect the Deceased’s information which could otherwise be easily deleted or lost. Understanding the importance of distributing these assets in the correct way is key.
The issue of digital assets is made even more complicated by the fact that there is currently no legal protocol in place to assist PRs with the correct way to examine and distribute these assets.
The Society of Trust and Estate Practitioners (STEP) are currently drafting a protocol. STEP intend to create a best practice policy for online providers to adopt. In the meantime, PRs often turn to their solicitors for advice on how to administer these assets. Below is a checklist which will assist in explaining how to deal with different types of digital asset.
Checklist for administering Digital Assets
Whereas computer usage and internet access used to be largely confined to desktop computers, increasing numbers of other devices are now being used in the average UK household to access and store digital assets. According to OfCom, in 2014, 61% of adults in the UK were using smartphones and over four in 10 households owned a tablet. These figures have risen 10% and 20% respectively since 2013, showing a steady increase in the ownership of devices capable of storing such assets.
PCs, Laptops, Mobile Phones and other devices
- Firstly, check the ownership of the device itself. If it was supplied to the Deceased by his employer, you will need to contact the employer to find out how to return the device as it may contain confidential information. This is of vital importance as a PR may infringe the employers’ rights if he disposes of a device which contains confidential information.
- If the Deceased owned the device, check what digital assets are stored on it. For example, music downloaded from the iTunes Store or digital images downloaded from a website. Although the Deceased owned the device, this does not necessarily mean he owned the rights attached to the information stored on it.
- Determine whether the Intellectual Property (IP) rights associated with the digital asset are owned by the Deceased. It is useful to check the terms and conditions of the digital assets to determine the protocol following death of the account holder. For example, if the digital asset is music downloaded from iTunes, Apple restricts the use of the content solely to Apple devices used by the account holder (the Deceased). The right to use the content is lost upon death.
- Take any appropriate action before distributing the device, which will usually include copying the information stored on the device before wiping the hard drive. For mobile phones, PRs should download any information, such as images and remove the SIM card. It is also important to check with any relevant mobile phone contract provider to see whether the contract terminates on death or any outstanding payments need to be paid.
Intellectual Property created by the Deceased
- Check whether the Deceased personally owned the rights associated with the digital assets on his device. This may be because the Deceased created the work and it was protected with IP rights. For example, the Deceased may have created literary or artistic work that he then copyrighted.
- Ascertain whether the Deceased created the work in the course of his employment. If so, the PR will need to check whether the employer owns the IP rights, pursuant to the Designs and Patents Act 1988.
- If the Deceased owned the rights, the PR will need to create a secure backup copy of the work before deleting it from the device which is to be distributed or sold. The PR should always check the terms of the Will as the Deceased may have explicitly provided for a gift of the digital asset to a beneficiary, separate from the device itself.
- In the absence of an express reference in the Will, digital assets with little or no IP value are likely to form part of the residual Estate. It is important to note that where the Deceased died intestate, digital assets will not fall within the statutory definition of ‘personal chattels’. Therefore, digital assets will not automatically pass to the surviving spouse under the intestacy rules.
Digital assets are often accessed through the online accounts set up by the Deceased, such as email and social networking accounts.
- Check what online accounts the Deceased held.
- If the PR does not have the login details to the accounts, the relevant Internet Service Provider (ISP) such as Google, Apple or Twitter may be able to assist in allowing the PR to gain access to the accounts and download any information needed to administer the Estate.
- The ISP will also be able to provide information on what happens to the digital assets stored on an account after the death of the account holder. Often, the account will be terminated and permission granted to the authorised PR to access the content.
- Another option which is often used for social networking profiles is “memorialisation”, whereby the ISP preserves the online content created by the account holder to honour the memory of the holder following their death. Facebook profiles are often memorialised to allow friends and family to post comments on the Deceased’s profile before it is permanently removed.
When a PR is faced with distributing or selling a Deceased’s personal belongings, it is likely this will include digital devices. Clearly a brief inspection of the devices’ contents before simply disposing of it will not suffice. Rather, it is essential that a full and proper inspection of the digital assets is carried out and any appropriate action taken depending on the individual IP rights associated with the assets.
PRs have an overriding duty to exercise “reasonable care and skill” when carrying out the administration of the Deceased’s Estate (Trustee Act 2000). Seeking guidance on the correct actions to take when faced with the Deceased’s digital assets is undoubtedly a reasonable step that all PRs should take.
For more information, please contact Tony Cockayne, Partner and Head of the Disputed Wills and Trusts team at Michelmores LLP.