Today, we are more digital than ever, and the majority of us don’t just leave behind cash, real estate or jewelry. We leave behind emails, social media accounts, online businesses, crypto wallets, and even memories stored in the cloud.
So what happens to all of these digital things after we’re gone? Are your family able to access them? And what does the law in India say? This is what we will address today.
Why digital assets are important
Digital assets are anything of value you own online, whether financial or sentimental. This might include:
- Cryptocurrency or NFT holdings
- Online personal business or e-commerce store
- YouTube channel or monetized social media
- Emails, cloud storage, and photo album
- Domain name or website.
Complicating matters, the vast majority of inheritance laws in India were drafted long before there was anything like the internet, so they don’t clearly state who has the ability to claim your digital assets. This means there may be confusion for any family member or executor trying to recover your accounts after you pass.
How the law is slowly catching up
India, as yet, doesn’t have a single law concerning digital inheritance. However, there are some noteworthy developments happening:
The courts are considering digital property
In a few cases, courts have recognized some online assets as property. This is a good sign. The courts are slowly using old laws to mimic or address digital assets.
The regulators are also taking notice.
For instance, crypto and virtual assets are being taxed in India. This is also a good sign, as it shows that the government recognizes the asset or value of the asset.
So while we still do not have a defined law, it is always better to be proactive to prepare to keep your family out of trouble later.
Steps to include digital assets in your will
If you would like to enable your family to easily deal with your digital life, you should:
Create a digital asset list – Document all accounts, cryptocurrencies, wallets, websites, and where passwords or keys are located. Avoid storing passwords in the will because once the will goes through probate, it can be disclosed to the public.
Name a digital executor – This would be someone you trust to deal with your digital items. Indian law doesn’t have a concept of “digital executors” but you can assign those powers to your named will executor.
Give clear instructions for access – Indicate to your executor where to locate wallets, back-ups, 2FA devices, or password managers.
Provide instructions for each account – Some platforms (like Facebook or Google) allow you to name someone as a legacy contact. Indicate which accounts should be deleted, maintained, or transferred to others.
Provide specific instructions for crypto and NFTs – Indicate whether they should be transferred, sold, or kept in the estate. Provide any wallet address, tax instructions, if needed.
Dealing with platforms and privacy rules
Even if you include everything in your will, there may be some entities that won’t easily transfer your accounts. Many organizations have their own policies and Indian privacy laws can restrict access.
So first is writing the will, and second is preparing your executor with:
- ID and Death Certificate
- Probate (if required)
- Court Orders if the platform refuses to provide access
This will really help make things a lot easier.
Tax Considerations
Some digital assets may be taxable. As an example, gains on crypto taxation or income earned from an online business. Indian tax rules apply to cryptocurrencies and virtual assets already. Your executor will want to plan for the valuation, filing taxes, and paying taxes before transferring assets.
How to avoid disputes
Specify precisely – Provide precise specifications for each account, wallet, or online enterprise.
Stored securely – Maintain a safe copy of your passwords or keys in a safe that is either rated for use in a bank or otherwise secured, preferably either in the custody of an attorney or a secure, trusted digital vault.
Updated regularly – Digital life happens quickly. Update your inventory on an annual basis or each time you add a new asset.
Letter of instruction – Include a letter that provides your instruction in layman’s terms to your executor.
Legally valid – Make your Will legally valid by enforcing signatures by the appropriate witnesses.
The future of digital inheritance in India
Attorneys and legislators are working on a proposal for clearer laws regulating digital property. Some proposals include:
- A legal recognition of digital property
- Laws for digital executors
- Rules to make platform cooperation easier
The only thing we can do until these laws are created is careful planning, clear instructions, and secure storage.
Final words
Digital assets have gone from optional in estate planning to essential. The law is slowly catching up, but until clear rules emerge about handling digital assets after someone passes away, planning ahead is the best way to protect your family and your digital legacy. A simple, clear and updated plan can alleviate your family members’ trouble after your passing.
If you’d like, my office can help you amend your current will, add digital asset clauses and recommend safe ways to store your passwords and keys.