Navigating Digital Assets in Estate Planning & Disputes

By Nanae Yoshiwara , Senior Associate Argon Law | Litigation & Dispute Resolution

In an increasingly digital world, more individuals hold substantial assets in the form of cryptocurrency, social media profiles, and other online properties. As a result, estate disputes have become more complex, with digital assets adding new layers of legal and practical difficulties for executors and beneficiaries alike.

What are Digital Assets and How Do They Come into Dispute?

Digital assets are frequently overlooked in estate planning, and their unique characteristics – such as requiring specific login credentials or access codes – make them particularly prone to disputes. Common digital assets and their areas of contention include:

• Cryptocurrency Ownership and Access: Without clear instructions or access keys, estate disputes may arise between executors and managers of the cryptocurrencies (if there are any), and among beneficiaries regarding the deceased's cryptocurrency assets, such as Bitcoin or Ethereum.
• Social Media Accounts and Digital Legacy: Family members may have differing views on how to handle social media accounts, particularly after the passing of a loved one, with some wanting memorialisation and others preferring deletion. Furthermore, digital assets tied to these accounts, such as photos or videos, may hold sentimental or even financial value.
• Online Business Assets: Disputes can arise over control and revenue from online businesses, e-commerce stores, or YouTube channels, especially if the deceased had no clear succession plan.
• NFTs and Digital Collectibles: With the rise of NFTs and other digital collectibles, disputes may arise regarding the valuation, ownership, and distribution of these often complex assets.
• Intellectual Property and Digital Content: Blogs, e-books, and digital courses may continue generating revenue after the deceased's passing, creating disputes over ongoing income and ownership rights.

It’s important to note that even when family members or executors have legal authority, accessing digital assets can be complicated by data privacy laws and the policies and terms of service agreements imposed by major platforms such as Apple, Google, and Facebook.

These companies often require court orders or other legal documentation to grant access to accounts, and some platforms may refuse to transfer ownership or provide access due to strict privacy policies. This can delay or hinder the resolution of estate matters, especially if no prior arrangements, such as legacy contacts or digital asset planning, were made by the deceased,

Challenges in Managing Digital Assets within an Estate

Dealing with digital assets presents various legal and practical challenges:

• Ambiguity in Estate Plans: Many estate plans do not adequately address digital assets, leaving executors uncertain about the deceased's intentions.
• Access and Control Issues: Without access to login credentials or digital keys, certain assets can become inaccessible, leading to frustration and, in some cases, loss of valuable property.
• Legal Uncertainty: Queensland law, like many other jurisdictions, is still evolving when it comes to digital assets, with no comprehensive statutory framework for their administration in estates.
• Data Privacy and Platform Restrictions: Social media platforms, cryptocurrency exchanges, and other digital service providers may have strict terms of service, making it difficult for executors to gain access to or transfer ownership of accounts.
• Valuation Difficulties: Determining the value of volatile digital assets like cryptocurrency or NFTs can be difficult, leading to disputes over fair distribution among beneficiaries.

Examples of Digital Asset Disputes

Accessing Cryptocurrency in Estates

Disputes over cryptocurrency often arise when the deceased’s private keys are lost or inaccessible. Without the necessary credentials (e.g., private keys or recovery phrases), the cryptocurrency may be effectively irretrievable. While the assets technically remain part of the estate, they become inaccessible for practical purposes and thus cannot be distributed to beneficiaries.

A real-world example is the case of Gerald Cotten, the CEO of the Canadian cryptocurrency exchange QuadrigaCX, who passed away in 2018. Cotten was the only person with access to the exchange’s private keys, and as a result, approximately $190 million in cryptocurrency was rendered effectively ‘lost,’ becoming inaccessible to users and investors, and unavailable to be distributed to his beneficiaries.

Court Orders for iCloud Access After Death

Similarly, many families have faced legal challenges in accessing the iCloud and other digital storage accounts of deceased persons due to strict terms of service. For instance, Apple has strict policies that often require court orders for access to a deceased’s iCloud account, creating difficulties for executors when no prior arrangements, such as legacy contacts or instructions, have been made.

Nichol [2017] QSC 220

In this Queensland case, the court ruled that an unsent text message could be admitted as a valid will under section 18 of the Succession Act 1981 (Qld). The message was found on the phone of the deceased, who had taken his life.

It referred to itself as “my will” and included details of asset distribution and instructions regarding the deceased's remains. Despite not being sent, the court accepted it as a valid testamentary document. The informal nature of the text did not prevent it from being recognised as a will, as it demonstrated the deceased's testamentary intent at the time of writing.

This case highlights the Queensland court’s willingness to accept informal communications as valid wills and serves as an important reminder that digital communications, not just assets, can be critically significant when it comes to digital estate planning.

How Can Executors and Beneficiaries Avoid Disputes over Digital Assets?

Incorporate Digital Assets into Estate Planning

It is crucial for estate plans to specifically address digital assets, including a detailed inventory of these assets and clear instructions on how they should be managed or distributed.

This should go beyond merely listing the assets – it is also essential to securely store access information, such as passwords or private keys, in a safe and encrypted format. Storing this information outside of the will is recommended to ensure privacy, as wills can become public documents during the probate process.

Utilise Digital Legacy Tools

Platforms such as Google’s Inactive Account Manager and Facebook’s Legacy Contact offer mechanisms to manage accounts posthumously, helping to avoid disputes.

Engage Digital Asset Experts and Advisors

For complex assets like cryptocurrency or NFTs, it is essential to consult experts in digital assets to ensure proper valuation and management.

How Argon Law Can Assist With Digital Estate Planning and Disputes

At Argon Law, we understand the complexities that digital assets introduce into estate administration. We offer:

• Comprehensive Estate Planning: Our team ensures that your digital assets are fully covered in your estate plan, minimising future confusion, and ensuring your wishes are carried out.
• Expert Guidance for Executors: For estates with digital assets, we provide clear advice on how to access, value, and distribute these assets, liaising with digital platforms and experts as needed.
• Litigation Services: At Argon Law, while digital assets are an emerging issue, we have extensive expertise in estate litigation and are fully up to date with the latest legislative and case law developments in estate administration. Our team is well-equipped to navigate these new challenges, ensuring that executors and beneficiaries are fully supported, whether through negotiation or litigation.

With the rise of digital assets, it is more important than ever to ensure that they are properly accounted for in your estate. Contact Argon Law today for a complimentary 15-minute introductory consultation.

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