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From Likes to Legacy: Succession Planning for Influencers
Digital estate planning is an essential aspect of modern estate planning, especially as we spend more time online and accumulate valuable digital assets.
For some individuals, the digital world has evolved into a space where they have been able to grow their own personal brand and following, and platforms to generate substantial wealth through influencer marketing, brand deals and sponsorships, as well as their own business ventures.
Content creators and influencers have valuable intellectual property (IP) tied to their social media presence and digital content. For this growing group of individuals, digital estate planning is becoming increasingly important, to ensure their digital assets are properly managed, protected and passed on after their death.
What is Digital Estate Planning?
Digital estate planning refers to the process of managing and organising an individual’s online assets, digital accounts, and IP in the event of their death or incapacitation.
This process is especially important for influencers and content creators, whose livelihoods are deeply intertwined with their online presence.
The unique business model and asset profile of an influencer presents specific challenges for estate planning, including the non-transferability of digital assets, the need to clearly identify digital assets, the structuring of IP and brand ownership to avoid legal disputes, and creating clear guidelines and restrictions for posthumous content use, if desired.
Management of Digital Assets
With the growth of numerous social media networks and online revenue streams, content creators and influencers often manage multiple online platforms, each with unique policies regarding account access and transferability after death.
Importantly for digital estate planning, digital property cannot vest with the executors or personal representatives of an estate if it cannot be identified, accessed and retrieved. Accordingly, there are crucial steps that should be taken, particularly by those whose digital assets hold significant financial value, to ensure that their digital assets, which are often intangible, pass safely to the intended beneficiaries.
A frequently updated list or inventory of digital assets and accounts serves as the foundation of an individual’s digital estate plan and is essential to ensure that digital assets are accounted for and not overlooked. For content creators and influencers, this includes, but is not limited to, their social media accounts, IP, revenue-generating sources like ad revenue from YouTube or TikTok, affiliate marketing or income from digital courses or products, as well as digital collectibles such as NFTs or cryptocurrency.
Compliance with account access and terms of service agreements is crucial when managing digital assets, and advice concerning the Computer Misuse Act 1990 ought to be taken.
Legal and Financial Clarity
An influencer’s name, logo, and digital content can constitute and amount to a financially valuable estate, and can continue to generate revenue even after death. However, if the ownership of the IP rights is not clearly defined and legally structured, disputes may arise between beneficiaries, business partners, and brand managers, potentially complicating the administration of the estate.
Standard personal possession legacies in Wills are often phrased in terms of the statutory definition of personal possessions, or personal chattels, under the Administration of Estates Act 1925. The definition, however, does not include property interests in digital assets that, by their nature, are intangible.
For Wills that do not specifically bequest an individuals’s digital assets, the digital assets form part of the residue of an estate and will pass to the residuary beneficiaries. This, however, may not be in line with the individual’s wishes.
For individuals with valuable digital assets, a separate digital assets clause is therefore essential, and should be drafted to include instructions and guidance on the access and management of the digital assets it disposes of. Careful consideration should be taken with respect to the wording of this clause, to avoid the inclusion of digital assets that an individual may wish to dispose of separately, either via a separate gift or Will trust.
Thought should also be taken if appointing a digital executor, to ensure they have the required technical knowledge to administer the digital estate. A digital executor’s responsibility may include gaining access to accounts and revenue sources, deciding whether to continue, sell, or shut down the brand, negotiating brand deals on behalf of the beneficiaries, and protecting IP from misuse.
Posthumous Control
For content creators and influencers, their digital content is often deeply personal, and reflective of their own creativity and individual journey. For some, it is important to plan for their IP’s future use, to ensure that their digital legacy aligns with their values and wishes, even after they are gone.
For those who wish to control how their content is used post-death, it is essential to define ownership, put in place the appropriate structures, and specify any limitations on how that content can be used. This can include limiting commercial exploitation, restricting artificial intelligence (AI) modifications, controlling brand collaborations, or setting timelines for the use or licensing of content.
With rapid advances in AI technology, including AI content modifications, recreations and deepfakes, it is feasible, more so now than ever, for new content to be created in the style of the original creator, whether that be new audios or videos, that may not necessarily be in line with the deceased’s original intent or beliefs, leading to the possibility for an individual’s likeness to be exploited and their legacy tarnished, if not appropriately addressed before death.
Helping You Find the Right Solution
In the digital age, digital estate planning, particularly for those who have a significant online presence, is an increasingly important and complex aspect of estate planning. By taking steps to document your IP, and communicating your wishes early, you can ensure that your digital legacy not only passes to your intended beneficiaries, but aligns with your personal and professional values, even after you are gone.
To discuss your requirements and find out how we can help you, please get in touch.
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British Farmers Protest Inheritance Tax in Central London
Farmers from around the UK came to Whitehall on Monday to protest against changes to inheritance tax (IHT) reliefs. Ben Rosen TEP, Partner and head of the Quastels Private Wealth and Tax team, was in the heart of the action to find out just what they had to say.
Why Farmers are Protesting
The farmers at the protest told Ben that they were worried for the future of British farming if the government proceeds with its plans to limit claims for agricultural property relief (APR) and business property relief (BPR) to a rate of 50% on assets over £1 million. There were concerns that given the high value of farmland compared to the profits made from agriculture, farmers would not be able to afford to pay IHT on death without selling the farm.
This could mean families losing farms they have owned for generations. Farmers also thought it likely it would deter the next generation from pursuing a career in agriculture. Often the children of farming families have spent most of their lives working for little financial reward on the family farm, in the expectation that one day they will inherit it. If they think the farm is instead going to have to be sold to pay tax when their parents die, that will look a lot less attractive.
The Impact of These Changes
Farmers spoke of their anger at the proposed changes, and thought more direct action such as withholding food might follow if the government continues on its course.
The changes to APR and BPR mean that farmers, landowners and business owners are going to be more reliant than ever on expert advice to help them plan their succession in the most tax efficient way
The team at Quastels are here to help. Ben has been joined by Jack Burroughs TEP, previously of the Country Land and Business Association’s tax team. Between them they have a great depth of experience and expertise in advising farmers, landed estates and family businesses.
Get In Touch
For those worried about the impact changes to IHT reliefs could have for them, Ben and Jack will be able to help them understand their options and find the most tax-efficient solutions that meet the needs of their families and businesses. They also have colleagues at Quastels who specialise in helping farms, estates and businesses in other areas of law, including employment, property, commercial law and dispute resolution.
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Digital Assets: Some Long-Awaited Clarification on the Thingness of Things
Most people in their daily lives do not pay attention to the law of personal property in England and Wales. However, for those of us who do, the parliamentary progress of the Property (Digital Assets etc) Bill has been a source of some excitement. The Bill is a welcome clarification of the law in this area, but at first glance its impact isn’t obvious. This blog therefore considers why the Bill was introduced, what it does, and what it does not do.
Short But Sweet
The Property (Digital Assets etc) Bill runs a total of two sections. The first section reads simply: “Objects of personal property rights
A thing (including a thing that is digital or electronic in nature) is not prevented from being the object of personal property rights merely because it is neither—
- a thing in possession, nor
- a thing in action.”
The second section limits the impact of the change to England and Wales, and Northern Ireland.
But Why?
For those not familiar with the details of English property law and recent debates around digital assets, this might at first glance seem like quite a puzzling provision. However, in the context of the current state of the law, it makes a lot of sense.
Essentially, the Bill sets out to override a famous statement by Fry LJ in the 1885 case of Colonial Bank v Whinney: “All personal things are either in possession or action.” This itself might require some translation. By ‘personal things’ Fry LJ was referring to the division in English property law between ‘real property’ (i.e. land and buildings) and ‘personal property’ (i.e. everything else). He was saying that personal property included ‘things in possession’ (i.e. tangible property, that you can physically possess) and ‘things in action’ (i.e. legal rights that you can enforce against another person, such as a debt), but nothing else.
In 1885 this was not really a problem, but unfortunately Fry LJ would never have the opportunity to discover cryptoassets, which didn’t really take off until Satoshi Nakamoto launched Bitcoin in 2009.
Cryptoassets are clearly not a form of tangible property. However, unlike previous forms of intangible assets that have been recognised as subject to property rights, it isn’t possible (at least in the simple case of an exchange token like Bitcoin) to identify any legal right enforceable against another person. It therefore isn’t really possible to say that cryptoassets typically are a thing in action.
This has presented a difficulty for those who seek to assert property rights in their cryptoassets, such as when their tokens have been stolen and they seek to recover those tokens. Situations like this have given rise to a number of claims in the last few years, and the courts of England and Wales have generally been open to the possibility that cryptoassets could be the object of property rights. However, Fry LJ and his famous quotation have continued to loom over the debate, and therefore when the Law Commission of England and Wales considered the topic, they recommended that the government eliminate any remaining confusion by passing legislation in the form of the current bill.
What It Means, and What It Doesn’t Mean
It’s important to notice that the legislation is drafted entirely in the negative. That is, it states that a failure to fit into the two existing categories is not a reason for something to not be the object of personal property rights. However, it deliberately does not state that any particular thing is in fact a type of personal property.
Clearly there will still need to be some limiting factors to determine the boundaries of personal property. After all, it isn’t possible to claim legal rights in a joke, or a fact, or a colour in the abstract. The law has recognised various criteria for property rights, but a significant one is that things must be ‘rivalrous’. That is, the use of a thing by one person necessarily prejudices the ability of another person to make equivalent use of it at the same time.
Therefore, you can own a diamond ring, because if you are wearing it then no-one else can also be wearing it at the same time. Similarly, rivalrousness is key to the design of systems like Bitcoin. You can own a given value of Bitcoin, because if you transfer it to another person’s address, no-one is now able to spend that specific value of Bitcoin other than somebody who controls the private key to that address. However, you cannot own pure information, because it is not rivalrous. If I tell you a joke, then you can pass it on to somebody else, without limiting my ability to tell it to others.
Therefore, just because the Bill will remove one reason why things could not be personal property, that does not mean that anything and everything will become personal property. This is a point that has been overlooked in some of the reactions to the Bill.
Confusion on this point can be forgiven. The name of the Bill refers to ‘digital assets’, a term which is perhaps unhelpfully broad and is used to describe anything from cryptoassets to the files on a computer. The Bill is however not intended to make all types of digital asset the object of property rights, as its explanatory notes make quite clear. Therefore, each variety of digital asset will need to be considered on its own merits to determine whether it is a form of property.
In the case of many cryptoassets, there is already a body of case law determining that they meet the necessary criteria and so can be the object of property rights. It therefore seems quite clear at this point that Bitcoin can be owned, and the Bill will remove any remaining doubt.
However, in the case of other digital assets, the position is much more uncertain. Digital files, for example, are not generally understood to be rivalrous. After all, if I email you a copy of a digital photo, then I still have the photo saved on my computer, and I can still look at it and copy it to other people. While there are some interesting conceptual arguments to the contrary, the conventional view remains that digital files cannot be the objects of property rights, and the Bill will not change that.
The Digital Estate
The question whether something can be the object of property rights has significance in various different contexts. One of these is in relation to the law of succession. Therefore, it is quite appropriate to make a Will leaving your cryptoassets to a chosen beneficiary. (That by itself is of course not sufficient, as you need to have a system in place for the chosen beneficiary to gain access to the necessary private keys- but that is a topic for another day.) However, you should not expect a gift in a Will of digital files to be legally enforceable. You can, and should, think about how you want your digital files to be handled after you are gone, but a Will is not a solution to this problem.
When it comes to digital assets, Quastels are the firm to turn to. Within the Private Wealth and Tax team, Ben Rosen TEP, Partner, and Jack Burroughs TEP, Senior Associate, are leading experts on the topic. Whether you need advice on the taxation of cryptoassets or help with your estate planning for cryptoassets or indeed for other types of digital asset, the team will be happy to help.
To discuss your circumstances and find out how we can help, please get in touch.
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