Protecting Your Digital Wealth

What does the term digital wealth actually mean? If you don’t already know, it might just pay to find out. When you are thinking about your personal or business assets and the digital footprint you currently have – you could be missing a large piece of valuable “property”. We usually think of “assets” as tangible items that we can see or touch or have an obvious value (i.e. bank accounts). But as our lives, businesses and the way we interact is become increasingly digital we also need to consider the assets we are generating in a digital environment. A recent survey found that over 80% of people don’t discuss what will happen to their digital assets when they die (or are incapacitated in some way), and only 3% have explicit directions in their wills. These statistics provide some interesting considerations:

• What is the value of digital assets to either a person or business?

• How do they get valued in any sale transaction, winding up proceedings, upon incapacity or death?

• Who gets to keep them?

Events don’t need to be catastrophic either – it could be as simple as being hospitalised for any number of reasons and all of a sudden no one can access your online accounts – which if you are running a business can put a halt to operations. 

Transferring of ownership:

There can be an issue with transferring the ownership of digital assets.  This can be a problem because a person’s digital social media accounts are often intertwined with their business – so how do you separate these in any transfer of business ownership? Remember to consider digital assets in both personal succession planning and business transactions. On the flip side, if you are buying a business you should consider which digital assets form part of that sale agreement. 

But I don’t have an online business?

Even if you don’t own a “digital business” per se – there is still the potential that you have created digital assets, which can generate income or be part of how you generate income and can therefore be sold or transferred. These might include:

• Copyrighted materials

• Trade Marks

• Code

• Social media accounts

• Blogs and domain names

• Music files

• Photographs

• Computer Software

• Cryptocurrency

• Information collected and stored in a database

How Do We Manage Privacy?

The concept of digital assets and wealth can open a Pandora’s box regarding privacy and data security. In the event of someone’s passing – who rightly owns the deceased’s digital assets? The person who has the login details (maybe the spouse)? Similarly, when a business is sold, unless these assets are detailed in a contract of sale – who owns them? Does ownership automatically transfer?  Sometimes the terms and conditions that relate to the digital product will dictate this and sometimes they won’t. For data that is keep in the cloud it is even more complicated as it can depend on which jurisdiction (i.e. country) the cloud provider or their server is located. Currently, Australia has no legislation on digital estate planning and transference of ownership. Without password and login details many of these assets could remain locked away indefinitely. In the event of a sales of a business – unless documented correctly, the digital assets may not automatically transfer to the new owners. This topic is good food for thought and again demonstrates that legislators have not yet caught up with how business operation is moving increasing online. 

For now – here are some steps you can take today to protect your digital wealth:

Questions?

Contact us if you would like to have more information. Our lawyers at You Legal will be happy to assist you in whatever way we can.