Author: Tanya Mathur, Student of Gujarat National Law University
In today’s digital age, the concept of digital assets has become an integral part of everyday life. Digital assets encompass intangible value items with a digital presence, such as social media accounts, digital content, cryptocurrencies, and cloud-stored files. Unlike traditional assets like property and cash, governed by well-established legal frameworks for inheritance, digital assets fall into a regulatory grey area. This oversight in estate planning has significant consequences, as many people risk losing access to valuable digital property or leaving behind complex challenges for their loved ones to resolve.
Addressing the issue of digital asset devolution is crucial as our reliance on digital technologies deepens. A recent survey on public awareness of digital assets and their inheritance revealed concerning findings. While Gen Z, accustomed to a digital-first world, demonstrates awareness of securing their online presence, older generations remain unaware of the steps necessary to manage digital assets after death. This knowledge gap poses a significant barrier to transferring digital property, leaving families locked out of sentimental or financial assets such as family photos, cryptocurrencies, or online banking accounts. The absence of awareness and a lack of clear guidelines underscores the urgency of addressing this issue in India.
Challenges in Digital Asset Devolution
Unlike physical assets, digital assets often lack documentation or centralized management systems. Inheritance disputes and accessibility issues arise because most digital platforms do not recognize heirs’ rights without explicit instructions from the deceased. The absence of legal frameworks in India exacerbates this problem, leaving heirs unaware of existing assets and how to access them. Even if families identify digital assets, the lack of legal avenues for retrieval compounds their frustration.
The burden extends to the judicial system, which is already overwhelmed with a backlog of over 50 million civil and criminal cases. Without clear legal precedents or guidelines, courts are ill-equipped to handle disputes over digital assets, further delaying resolution and increasing costs. Addressing this issue requires proactive legal and technological interventions.
Lessons from Other Countries
India can draw valuable insights from countries that have implemented frameworks for managing digital assets. For instance, the USA’s Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) grants fiduciaries, such as executors or trustees, legal authority to manage a deceased person’s digital assets. This legislation ensures that digital legacies are treated equally as physical assets, reducing disputes and safeguarding valuable possessions.
Similarly, the EU’s General Data Protection Regulation (GDPR) includes robust privacy protections that indirectly facilitate digital asset management. GDPR empowers individuals to control their digital footprint and establishes mechanisms for data security even after death. Although GDPR does not directly address digital inheritance, its principles lay the groundwork for secure and privacy-compliant tools to manage digital legacies.
In contrast, India lacks a comparable framework. The absence of such legislation means even aware heirs may face significant legal obstacles in accessing digital assets. This gap highlights the need for India to adopt global best practices and tailor them to its unique context.
Proposed Solutions for India
To address the challenges of digital asset devolution, India must implement a multifaceted approach:
Enact Comprehensive Legislation: Adopting a law similar to RUFADAA would provide fiduciaries with the legal authority to manage and distribute digital assets. This legislation should recognize digital assets as an integral part of estate planning, ensuring they receive the same legal protection as physical property.
Introduce Digital Executors: The concept of a digital executor—an individual appointed to manage digital assets after death—should be formalized in Indian law. This role would ensure that digital legacies are preserved and managed according to the deceased’s wishes.
Include Digital Assets in Estate Planning: Tools such as wills and trusts should explicitly include digital assets. Legal professionals must be trained to advise clients on securing these assets for future generations.
Develop Automated Digital Asset Management Tools: Leveraging technology, India can introduce systems to catalog, organize, and secure digital assets for seamless transfer after death. Such tools could simplify the process for non-tech-savvy individuals while ensuring compliance with privacy regulations.
Enhance Privacy Protections: Strong privacy regulations, akin to GDPR, are essential to protect individuals’ digital legacies from unauthorized access or misuse. Privacy safeguards must be robust enough to address India’s diverse demographic and technological landscape.
Foster Public Awareness: Public education campaigns highlighting the importance of managing digital assets are crucial. Awareness drives can empower individuals to take proactive steps in securing their digital legacies.
International Collaboration: Given the global nature of digital platforms, India should collaborate with other countries to establish international agreements on digital asset devolution. Such agreements would prevent jurisdictional conflicts and ensure smoother asset transfer across borders.
The Role of Automated Tools
Countries like the USA and the EU have laid the groundwork for managing digital assets through legislation and privacy measures. While automated digital asset management tools are not yet implemented nationwide, they represent a forward-thinking approach that India can adopt. These tools can catalog and secure digital assets, ensuring they are accessible to designated heirs while adhering to privacy standards.
India’s rapid digitalization provides fertile ground for adopting such technologies. According to the State of India’s Digital Economy Report 2024 by ICRIER, India ranks third globally in digitalization, following the USA and China. However, at the individual user level, India ranks 12th among G20 countries. This disparity underscores the need for targeted interventions to bridge gaps in digital literacy and asset management.
Automated tools would significantly ease managing digital assets, particularly for those unfamiliar with technology. By ensuring that vital assets like cryptocurrency wallets, social media accounts, and online subscriptions are organized and accessible, these tools can reduce the burden on grieving families. However, their implementation must prioritize data security to prevent breaches or unauthorized access. India’s experience with Aadhaar demonstrates the importance of balancing technological innovation with stringent privacy protections.
Conclusion
In the ever-evolving digital age, digital assets have become a critical component of modern life, yet their management and inheritance remain largely unregulated in India. While countries like the USA and the EU have made significant strides with frameworks such as RUFADAA and GDPR, India still lags behind in addressing the complexities of digital asset devolution. A comprehensive legal framework, the introduction of automated digital asset management tools, and public awareness campaigns are essential to address this issue effectively.
Adopting measures such as the appointment of digital executors, estate planning tools for digital assets, and international collaboration will streamline the process of securing and transferring digital assets. With its rapid digital growth and push towards becoming a digitally empowered society, India has a unique opportunity to lead in this field by integrating global best practices into its domestic legal system. Failure to act will not only complicate inheritance processes but also risk the loss of valuable digital property. The time to act is now, to ensure that digital legacies are preserved and managed responsibly for future generations.
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