Ghost in the Machine… Do Your Digital Assets Die When You Do?

In these digital times, where do our digital assets go when our analogue bodies and minds fade?

Photo by Markus Spiske on Unsplash

Our Digital Lives

In our age of data and digitalism, most of us are holding more and more digital assets without realising it. These are assets that have a digital or electronic form, whether stored on a smartphone, laptop, digital wallet, flash drive, or in the “cloud”. They include content, data, files, and user accounts with Facebook, YouTube, Twitter, Instagram, Google, Carousell, eBay PayPal, Weibo, WhatsApp, WeChat, Tumblr, Flickr, and cryptocurrencies such as Ether, Litecoin and Bitcoin, in-App credits with Grab, Fave and Foodpanda, and digital contracts.

They are often forgotten when people make a will, a lasting power of attorney, or when a person passes away or loses mental capacity, or when the family administers and distributes the estate. This potentially represents a huge loss of financial value if you generate income and capital through creative or intellectual work, or if you have acquired a significant amount of cryptocurrency.

Furthermore, many of these digital assets create income or grow in value even after our death. There is also the loss of emotional value as most of us now express ourselves and communicate with others through social media. By not doing any estate planning or leaving digital assets out of your estate plan, you are essentially pouring your wealth, legacy, and values down the toilet.

That, or the inheritance of your digital assets depends on who has the keys to your house: your domestic helper, the lady who comes in to clean your place once a week, or the distant brother you haven’t seen in 5 years. Basically, any person lucky enough to come into possession of your stuff — including your cryptocurrency — becomes the owner. Alternatively, your grieving spouse or parent throws out all your “junk” — including the USB drive, hardware wallets, or paper wallets used to store your cryptocurrency fortune.

How will my digital assets be treated after I die?

As digital assets are so varied, how they are treated on one’s death varies on the type of asset, and what terms and conditions you agreed to when subscribing for or acquiring the asset from the issuer. The following are examples of how common digital assets may be treated on one’s death.

Social media and Online Content

User accounts with social media and content storage platforms such as Facebook, Pinterest, LinkedIn, Imgur, Tumblr, Instagram, Twitter and Google are governed by the terms of the contracts we enter into with them. Maybe one in a million people reads the lengthy terms and conditions when signing up for an account; most people just scroll down and click “I Agree”.

Clicking “I Agree” means that you consent to the platform’s terms of use or service. Therefore, how the account and the data and content in it are treated on your death depends on the specific terms of the platform, whether or not you bothered to read them.

For example, Facebook’s Terms of Service provide for a friend or relative to request that your account be “memoralised” by submitting proof of your death or incapacity. Your account will then become frozen in time, as some sort of memorial.

You may designate someone to manage your account if it is memorialised, and only this person or someone identified in a valid will or lasting power of attorney may disclose your Facebook content on your death or incapacity.

Digital Content and Media

Digital content or media, such as music, film, and electronic book files you buy from iTunes or the Kindle store, are provided under a licence (a right to access and use) by the holder of the rights in the digital media, rather than as property you own. Under the terms of these platforms, the licences are usually non-transferable. In other words, your right to access and use the digital media dies with you and does not pass on to your family.

For copyrighted material you own, such as text, videos, or photos created by you and uploaded online to content storage platforms or social media platforms, the usual rules regarding the inheritance and succession of copyrighted works apply (they pass to your beneficiaries based on your will or the Intestate Succession Act if you die without a will). Your personal representatives will have access to the material, and your estate will be free to commercialise the material for 70 years following your death.

Cryptocurrencies and Mobile Wallet Credits

Given that there are now thousands of digital tokens or cryptocurrencies, we will focus on the more prevalent ones in Singapore, which are Bitcoin, Ether, and credits bought on mobile wallet payment platforms and solutions such as those operated by Grab.

Bitcoins and Ether, like other cryptocurrencies, are generally not backed by any government, and most of them (with a few exceptions) are not backed by assets, and unlike cash and securities, are not held by financial institutions such as banks or securities depositories such as the Central Depository.

Instead, they are stored in encrypted digital wallets, which involve two types of keys that allow an owner access to and the ability to send and receive cryptocurrency from and to the wallet:

• a public key that anyone can see
• a private key which only the owner has.

The private key is essentially a random set of numbers and letters that acts as a password, and can be stored by a cryptocurrency owner either:

• offline, in paper wallets, hardware wallets, and USB drives, which is popularly known as “cold storage”.
• online, with cryptocurrency exchanges, or offline.

Storing cryptocurrency online is very risky and therefore inadvisable, as exchanges can suddenly shut down (Mt. Gox), suffer technical issues (QuadrigaCX), or be hacked into (Cryptopia and DragonEx), leading to the cryptocurrency being stolen or becoming inaccessible.

While storing in cold storage is more secure than storing online, the risk is that if you die without sharing your private key with your personal representatives or recording it for your personal representatives (the people who will administer your estate), they may locate your wallet but not be able to gain access to the wealth inside it. In other words, your cryptocurrency-based wealth would vanish into the erm, Ether. Or, your family members or even you yourself may simply never find the wallet, or worse still, mistakenly throw away the wallet. Throwing away a wallet is basically throwing away your cryptocurrency.

Those of you who have purchased GrabPay credits from Grab, you may be comforted to know that your credits are transferable to other GrabPay users. In other words, if your personal representatives want to distribute your credits to your beneficiaries, but did not have access to your account, they could technically write to Grab to request the transfer to take place.

However, as GrabPay credits expire 1 year from the date of purchase or last spend, whichever is later, if your personal representatives do not act or are unaware of them promptly, your GrabPay credits will expire. You can expect similar results for any other credits issued by other electronic payment platform operators.

What If I Do Nothing?

By now, it should be clear that if you do nothing, your digital assets — and wealth — basically get wiped out or lost in the mists of time on your untimely demise or intellectual disability. If your loved ones and the charities you care for are lucky, they will simply go on blissfully unaware of the financial or sentimental wealth they have lost. If they were to find out about your digital assets and try to do something about it, they are going to have to deal with the heartache on top of their grief.

As we live more and more of our lives online, it may be that the value of our digital assets to those we leave behind is measurable less in financial terms but more in emotional or sentimental terms. Our digital assets, especially those that are in the form of social media accounts and the content and data held through them, often reflect much of our personality and values, and can act as a powerful legacy and mementos for those we leave behind.

What Should I Do?

In part 2 of this article, we explore what each of us can and should do about our digital assets in order to preserve and leave them behind for those we care for.

For example, we will discuss the inventorising or listing of your digital assets and the log-in details and passwords, and how you can store and secure them, and which digital assets can be passed down to your beneficiaries and which ones cannot.

We will also explore how the world of inheritance law, which stretches back centuries, if not millennia, interacts with the world of digital assets, most of which have existed for less than a decade, and how trusty, analogue instruments like the will, lasting power of attorney, and trust, get along with digital assets.