The Law Society is urging people to leave clear instructions for their intellectual property and digital media in case of death.

Most of the digital legacy people leave behind when they shuttle off this mortal coil has sentimental value – it is not something that can be appraised or valued in hard cash.

Social network accounts, images, music, emails and backups of all of the above constitute the majority of our digital legacy. Families may want to access such information and preserve it for posterity. As more and more people store their data in the cloud and use their social accounts as repositories for photos and videos, digital legacy is slowly becoming as important as family photo albums or diaries.

Gary Rycroft, a member of the Law Society Wills and Equity Committee, warns people should not assume family members know where to look online and therefore need to make details of their digital life absolutely clear.

However, a lot of business is done in a purely digital form nowadays, hence an average person’s digital legacy is increasingly likely to contain some valuable information, projects, intellectual property and in some instances digital currency.

Gaining access to a family member’s bank accounts after death is usually easy. Bankers and legislators have been dealing with the problem for decades and it is usually hassle free, as it is in nobody’s interest to antagonise grief stricken families. Every jurisdiction has a clear set of rules governing the matter and unless a dispute arises (usually between the family members), the process should be straightforward.

However, what if the deceased had a few bitcoins stashed away?

This is where it can get very complicated, especially given the basic idea behind bitcoin. Many people use it because it is pseudo-anonymous and many bitcoin operators are more than willing to cater to their needs, with multiple layers of encryption, authentication and a range of other services and security measures.

Furthermore, families usually can’t pay a visit to a bitcoin operator. The local bank branch is usually down the street, while bitcoin exchanges and wallet companies can be on a different continent.

The Law Society insists people leave clear instructions for their digital legacy. The instructions need to include a list of all frequently used online accounts that contain important personal information, or valuables. Ten years ago this wouldn’t have been much of a problem, as most people were content with an email address or two and an instant messaging account. Nowadays it is quite different.

The Law Society points out:

"Having a list of all your online accounts, such as email, banking, investments and social networking sites will make it easier for family members to piece together your digital legacy, adhere to your wishes and could save time and money.

Not making your digital legacy clear could mean important or sentimental material – such as photographs on social networks – is never recovered."

The problem is that passwords should not be recorded, not even in wills. In some jurisdictions, including Britain, wills are considered public documents and they can be published. Even if they are not, there is always a chance that the user will change the passwords years before the will is executing, rendering the effort useless.

Having the account names is usually enough, as services like Facebook, Twitter and YouTube are used to being contacted by families of deceased users. However, in the case of bitcoin wallets, this can be a lot more difficult. Sometimes there is nobody to contact at all and sometimes bitcoin operators do not have access to login info.

In addition, simply ascertaining whether or not a person had any bitcoins or a bitcoin wallet can be a daunting task. If there is no will and no instructions, if family members did not even know about a person’s bitcoin holdings, they can easily be forgotten or destroyed. Bitcoins can be stored on all sorts of digital media, as well as physical wallets, they can be online, in the cloud, or on an inconspicuous paper wallet. They are easy to overlook.

If, on the other hand, the family realises some transactions were made to bitcoin exchanges, that might not be enough in the absence of clear instructions. Simply figuring out what happened to the money and whether there’s any bitcoin left could be a daunting task. Finding a bitcoin wallet won’t be of much help if it’s properly encrypted and no instructions are left behind.

If the bitcoin wallet was left “open” and if the family knows about it, getting the money out is just a matter of a few clicks. However, this is only the case if the family is aware of its existence. If they are not, chances are the wallet will be overlooked.

Families may inspect smartphones or computers for valuable data, but very few people will look for bitcoin wallets if they are not specifically told to do so. What’s more, bitcoin wallets are tiny so they can be anywhere, from memory cards and USB sticks to network attached storage and cloud services, not to mention physical wallets.

Passwords that allow direct access to valuable information should not be kept in wills, but that does not mean that this cannot be done indirectly. The passwords can be stored somewhere safe, while the will can be used to pass down instructions.

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The will can lead to another document containing the passwords, it can name a person entrusted with holding useful information. Alternatively it can contain a password needed to access an encrypted document with detailed instructions, a document that can only be found by family members with access to the deceased’s personal belongings.

Back in December, we examined the possibility of using bitcoins to hide assets in case of divorce. Like any other asset, bitcoins can be hidden, although their usefulness for such shady practices could be limited due to volatility. Few people would be willing to store a substantial portion of their life savings in bitcoin.

However, legal experts caution that the number of estate issues involving bitcoins is likely to increase as more people start using digital currencies. People have been hiding assets for different reasons for centuries and digital currencies can be misused to that end like any other asset.

There are already a number of services and resources designed to handle digital legacy issues. These include digital will services like Entrustet, along with post-mortem messaging services and services that can store and encrypt data that can be released in case of death.

Needless to say, bitcoin users need to do their own research before entrusting their information with any service or drafting their digital will.

Will image via Shutterstock.