In the "Digital Age", the technology now in use has a direct bearing on some of the key issues surrounding wealth management, such as the safe transfer of assets across the generations, as well as client confidentiality.

We live in a digital age. Many aspects of our lives are conducted in a virtual, electronic world, but with this freedom come issues concerning the management of what are increasingly known as digital assets by personal representatives (PRs) or executors.

While many may not have embraced social networks such as LinkedIn, Facebook or Twitter, most of us have at least one private email account. Social networks are unlikely to have any intrinsic value unless the information contained in them has value to any biographer.  However, access to them may be required by PRs to be able to defend an estate against any claims for defamation, libel or breach of copyright.

Email accounts also have no intrinsic value. As we increasingly lead paperless lives, however, they may be the only source of important information concerning real assets. Unless this information is available to PRs in other media, access to accounts will be necessary.

This is not an issue that has been considered by service providers. Typically, their terms and conditions do not give customers any absolute right of ownership over the account. Most customers are required to keep the account details confidential.

In some cases, passwords must not be shared with any other person or the account transferred without the service provider’s written permission (eg Facebook). Although some do not expressly prohibit password sharing (as in the case of Twitter, for example), customers are made responsible for any use of their password (eg Twitter and Google Mail). 

Accounts with a monetary value

Online gaming or shopping accounts that require deposits or that may have loyalty or other discounts with some tangible value, or online "virtual worlds" where the currency of the virtual world is tradable or even convertible, have a clear monetary value. Again, there is little jurisprudence in this area, which means advisors must rely on the terms and conditions of the relevant accounts.

As with other accounts, customers must usually keep the account details secure and are responsible for any use made of the account. While betting sites that require deposits usually provide mechanisms to withdraw winnings back to the credit or debit card registered with the account, some sites do have restrictions on the transfer of any rights without prior written consent.

With virtual worlds, the terms and conditions are usually much more draconian. In Second Life for example, a virtual currency is defined, the Linden Dollar, but while users are free to transfer these within the virtual world, the terms and conditions state that Linden Dollars cannot be subject to any right of survivorship. Linden Dollars have a real tangible value (approximately L$261 to 1 dollar at the date of writing). The same restriction applies to virtual land in Second Life, even though virtual land licences in Second Life have reportedly changed hands for thousands of dollars.

Avoiding restrictions

There is no international law that deals with digital assets and their cross-border nature. For customers domiciled in a member state where European Union consumer protection legislation applies, PRs should be able to ignore restrictions that prevent them from accessing accounts to settle the estate.

The restrictions are, for the purposes of the Unfair Terms in Consumer Contracts Directive, contractual terms which have not been individually negotiated and cause a significant imbalance in the parties' rights and obligations arising under the contract to the detriment of the consumer.  As such, they are unfair and non-binding, even if the terms and conditions are stated to be subject to the law of a jurisdiction outside of the EU.

Elsewhere in the world there may be similar consumer protection legislation. However, in common law countries, it may be possible to obtain access to the relevant accounts in breach of the applicable terms and conditions, on the basis that if legal action were taken against the PRs, it can be argued that the service provider has not suffered any loss.

The question of legal title in the digital assets is also uncertain. However, it is highly likely that in most jurisdictions, given that copyright and associated rights can normally be transferred by any testamentary disposition, that standard residue clauses in wills, which usually describe “all my property both movable and immovable of whatever nature and wherever situated” should be sufficient to catch these assets.

However, all the advice above is redundant if the passwords are not available. Escrow services have begun to address this issue, but these are no more than password safe deposit boxes. Where passwords are missing, there is currently no jurisprudence to address whether service providers must disclose them. It is because of this uncertainty that questions on the location of account names and passwords may become more common in estate planning.