Digital assets after death: a contractor’s overview to digital estate planning
In our increasingly digital world, your online presence and possessions as an IT contractor have become intertwined with your life, transcending physical boundaries.
So the concept of ‘digital assets after death’ has now very much emerged, as a reflection of the intersection between technology and mortality, writes Mel Hzeg and Ines Ben Hassine of digital law firm Gerrish Legal.
As a result, it is now important to look at the legal, ethical, and technological dimensions that shape the digital legacy you’ll leave behind -- particularly if you’re a crypto-currency holder or wannabe holder.
The expansive world of crypto-assets
It has been known for years now that there is significant value in crypto-assets. Today though, the global market cap of crypto-assets is over £900 billion, having previously surpassed the £2trillion milestone back in 2021.
The most widely known cryptocurrencies are digital alternatives to traditional money, such as Bitcoin and Litecoin, allowing peer-to-peer transactions without intermediaries.
Other crypto-assets can have other functions, such as security tokens, which extend the blockchain's potential to traditional assets, offering ownership shares in real estate and companies. There are also utility tokens, which grant access to specific blockchain-based services or functionalities.
The transfer of crypto-assets relies on the decentralised architecture of blockchain technology. If this is all new to you and you’d like to buy cryptocurrencies, they will be transferred to your digital wallet, and normally you will have the access keys to each crypto asset you own. Almost needless to say, this system has revolutionised the transaction and financial landscapes and the ways in which value can be exchanged and stored. But as us lawyers know all too well; new types of assets must always lead to new types of regulations!
Embracing the digital footprint: A new kind of inheritance…
As individuals accumulate a portfolio of digital assets throughout their lives, including cryptocurrencies, but also more typically -- social media accounts, digital photographs, in-game assets and just about any other type of digital file, the question of how these assets are managed and transferred after death is very important to consider.
Unlike traditional, tangible possessions, digital assets -- which even include your email account and your contractor company’s website domain name -- exist in a virtual realm. Their existence and format makes their management, transfer, and preservation a unique challenge.
Enter the UK Law Commission, thankfully
Fortunately, the UK Law Commission has written a report on digital assets, and it focuses on addressing the legal complexities surrounding digital assets after death. The report acknowledges the evolving landscape of digital assets and explores potential pathways for legal recognition and protection.
The commission would like to use the common law of England and Wales as well as perhaps introducing new statutes to create a sound legal framework surrounding crypto assets, and specifically a new named category of “crypto-assets" in the property sphere.
To help draw up these new statutes, the commission’s report calls for the establishment of a “panel” of industry-specific technical experts, legal practitioners, academics, and judges. The resulting panel would offer guidance on intricate factual and legal crypto issues, ensuring the consistent application of legal principles in digital asset systems, and ensuring security in crypto ownership and transfers.
This is a good sign. The topic of cryptocurrencies has been wrongly discarded by many lawmakers, often on the odd basis of them being scams or having no value. Conversely, the UK Law Commission has embraced this new technology -- to the extent that it wants it to be well-regulated to ensure that it is not abused.
Guardians of the digital afterlife: ‘Do Not Bot Me’ clauses
Now playing a growing role in digital estate planning, ‘Do not bot me’ clauses aim to prevent the use of automated bots or processes that mimic or pretend to be a person online.
In a world where technology can simulate interactions, these increasingly popular clauses seek to preserve the genuine essence of human engagement -- even after death.
The rise in popularity of these clauses in digital estate planning indicates people’s strong desire for authenticity and respect after one's passing.
And maybe it’s entirely understandable. You wouldn’t want just anything to happen to your physical body and physical assets after death, so why should your digital presence and digital assets be treated any differently?!
What ethical considerations will you make so your digital estate represents ‘you?’
In a more general sense, the life of digital assets after one’s death goes beyond pure legality and delves into ethical problems. In particular, the use of automated processes, such as "ghostbots," to simulate a deceased person's presence online raises questions about the sanctity of memory, privacy, and consent.
These processes are things that can be avoided however – should you want them to be avoided of course, by inserting “do not bot me” clauses in key contracts.
Ensuring a smooth, supported transition: crypto-token transfers in the afterlife
The digital legacy landscape is intertwined with the world of cryptocurrencies and blockchain technology.
The UK Law Commission’s report on digital assets is a major step, but once the solid characterisation of a framework around these assets is made, this does not mean that you can consider the job to be done!
Crypto-token transfers after death highlight the importance of proper estate planning and secure access to digital wallets. Without the necessary information and precautions, digital assets stored in cryptocurrencies can become inaccessible, leading to loss of significant value.
Estate planning for crypto-token transfers involves documenting private keys, wallet access, and providing clear instructions to beneficiaries. But the technological nature of cryptocurrencies requires individuals to bridge the gap between legal and technical knowledge, to ensure a smooth transition of digital assets to your loved ones. And because they are the people who matter most, don’t skimp on consulting a digital law adviser who can make that technical-legal bridge for you while being around when you’re not, to support and assist them at an emotionally challenging time.