Since pre-history human beings have yearned for immortality. A will does that for you. Your treasures are passed on, securing the memories of you and the welfare of others. With a will, you institutionalise your memory. This article, co-written with lawyer Todd Graham, takes you on a journey of how that is done in legal work. However, a will is only part of the story.
Written records of human thought date back almost 4,000 years to the clay tablets used in ancient Mesopotamia. Into wet clay Sumerians wrote in a type of writing known as cuneiform using wedge-shaped writing tools. People used tablets to communicate to an angry acquaintance, discuss the assignment of a guest-house and request a loan to buy a garden.
The Epic of Gilgamesh expressed that Mesopotamian ruler’s yearning for immortality. Gilgamesh (pictured right) attained immortality with that writing on clay tablets. His epic remains the oldest recorded story in human history.
Yearning for immortality remains a constant today. Authors and artists yearn for it in creative work. All people can achieve it by preparing their will and related documents. Consider them as a way to institutionalise memory.
People institutionalise their memory using digital technology. They do it with word-processed records, stored emails, photo and music collections, documents filed on cloud storage platforms and posts in social media.
Individuals, families, family businesses, family offices, corporations and foundations all need to institutionalise their memory. Guidance is needed to do it better. There’s only some legislation that helps, especially for the management of digital assets. But there is a wealth of knowledge in other areas for the management of records, documents, content, and customer relationships.
However, most people and organisations are woefully unprepared for safely and effectively preserving and institutionalising their memory. This article considers that need for individuals, families (including family businesses) and organisations (including companies and foundations).
Institutionalising individual memory
Estate planning is the exercise of documenting and implementing processes during a person’s life for their representative to manage personal and financial affairs following their death or disability.
The consequences of inadequate planning for management of digital assets post death or incapacity are increasingly evident. For example, for the maintenance of online presence after death solutions are provided by Facebook, Google and Yahoo!.
Before death, the usual legal solutions for individuals involve the items in the table below.
|INDIVIDUAL ESTATE PLANNING|
|Will||Used by a representative (executor) to distribute assets and administer testamentary wishes of a person after their death.|
|Enduring Power of Attorney||Used by a representative (attorney) to manage financial affairs of a person without capacity to make their own decisions.|
|Power of Enduring Guardian||Used by a representative (guardian) to manage medical and health affairs of person without capacity to make their own decisions.|
|Memorandum of Wishes||Used to record non-binding wishes and testamentary intentions not specifically stated in a will that assist an executor with distributing assets after death.|
|Records Data Form||Used to record all account names, passwords, domain names, cloud storage and any other digital asset information necessary to assist a representative to locate and access digital information and assets.|
An individual with a bank account, credit card, mobile device or data in the cloud is holding the keys to digital assets. This was illustrated in our article on the sudden death of a photographer, Assets loaded but locked in the cloud.
Cryptocurrency is a special area of risk as is evident from the 2014 opinion of the Australian Taxation Office and 2019 events involving a cryptocurrency exchange in Canada.
In December 2014 the Australian Taxation Office issued the opinion that it would treat Bitcoin as an asset for which capital gains tax can apply. Crypto currencies have exhibited acute volatility as a result of increases in popularity and speculation. The fact that bitcoin peaked at US$20,000 in 2017, and as at April 2019 fell to US$5,250. This is one of the many reasons why record keeping is prudent.
In February 2019 news spread internationally when Gerald Cotton, aged 30, chief executive of QuadrigaCX (Canada’s largest cryptocurrency exchange) died suddenly leaving an estimated CAN$136 million in cryptocurrency and fiat money, and no password or recovery key for his successors to manage the cryptocurrency digital wallet for the customers of QuadrigoCX.
The QuadringoCX problem would have been minimised had there been: (1) proper record keeping (see questions 2, 3 and 4 at the start of this article); and (2) a document like a will with a digital assets clause, a sample of which is set out below.
This digital assets clause empowers a deceased’s representative (eg an executor) to do a range of things with a deceased’s digital assets.
“My Attorney may, to the maximum extent permitted by law:
(a) use, access, modify, control, delete, assign, transfer or dispose of any of my digital assets; and
(b) obtain, access, modify, delete, and control my passwords and other electronic credentials associate with my digital assets.
(c) “Digital Assets” means a record that is created, recorded, transmitted or stored in digital or other intangible form by electronic, magnetic or optical means or by any other similar means.
(d) For abundant clarity, Digital Assets includes e-currency as defined in the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and includes all forms of crypto-currency and tokens.”
As already observed legislative guidance regarding digital assets is virtually non-existent in Australia. Use of clauses such as the sample above avoids confusion about testamentary intent and succession on the death or incapacity of a digital assets holder. There’s no alternative easier and legally effective way to deal with the legacy of a person’s word-processed records, stored emails, photo and music collections, documents filed on cloud storage platforms and posts in social media.
If on your death there are no records required to access your digital assets, then there may be significant and unintended consequences for those assets. Not taking practical steps with documents could result in your digital assets being orphaned forever.
Institutionalising family and family businesses memory
Family businesses make up 70% of all business in Australia. In populations where people are living longer intergenerational transfer of family wealth and knowledge is a growing concern. Good record keeping minimises or removes the risks to digital assets carried by individuals, their family, friends and society.
The discipline that created a family business can be lost or destroyed as nominated successors prove incapable of retaining wealth or replicating past business success. Gifting appropriately can minimise or avoid that loss of wealth.
To facilitate the accumulation, distribution and succession of tangible and intangible assets one approach involves working with documents such as those in the Family and Family Business Estate Planning table below.
|FAMILY AND FAMILY BUSINESS ESTATE PLANNING|
|Trusts (testamentary, discretionary, fixed, unit)||Used to distribute estate assets to family and friends for tax benefits, managing distributions to beneficiaries and asset protection.|
|Trust Policy Statement||Used to direct investment strategy policy for trusts to align with family ethics and morals.|
|Shareholders’ Agreement||Used in addition to a will to manage company succession planning and transfer of shares.|
The management of assets of all kinds requires regular and constant decision making. Ageing populations worldwide increase the prevalence of the risks of diminished capacity and cognition for decision making. The accompanying graphic titled “The Shape of Vulnerability” illustrates the loss of cognition or emotional stability.
An individual’s capacity for decision making exists on a spectrum from highly capable to incapable. Institutionalising memory early with legal documents and related mechanisms can avert a crisis of capacity arising from negative lifestyle choices, such as substance abuse.
Family money, combined with youthful exuberance and a penchant for risk taking can lead to disaster. Establishing an enduring power of attorney and power of enduring guardian can protect family business structures and assist the decision making.
Family businesses cannot rely on technology alone. Understanding the extent of risk of loss of memory, how to improve digital literacy, and having a set of skills for knowledge management work hand in hand to manage and protect digital assets.
Institutionalising organisational memory
Institutionalising memory is equally important for organisations. Knowledge management in the 1990s fell out of popular professional discussion by the end of the decade. It has not been revived to the level of again being fashionable, yet the practice of knowledge management remains increasingly relevant.
Organisational memory (sometimes called institutional or corporate memory) is the accumulated body of data, information, and knowledge retained in an organisation. It’s what is held in archives, stored files, databases and the memory of individuals and groups working within an organisation.
Loss of organisational memory can result from staff retirement, employee dismissals, retrenchments, moves away from business that is known to the unknown, and sale of an organisation or its breakup.
Leading and managing any organisation is difficult. Doing so during periods of change, challenge or market transition is harder. Organisations spending little effort in capturing institutional knowledge are in danger of underperforming and even extinction.
Development of organisational memory involves training, systems and technology. Information management is greatly affected by legislation, as is evident from the Australian legislative framework list below, abridged and adapted from “Your Digital Life” (2018; pages 15-16) a paper by Michael Perkins and Jane Humphreys.
Information and Australia’s Legislative Framework
- Interpretations Act 1987 (NSW) – A “document” includes digitally stored information: “anything from which sounds, images or writings can be reproduced with or without the aid of anything else”.
- Contract law and service agreements – Preserving contract records is fundamental to the operations of all organisations. Service agreements fall within contract law and if not properly dealt with can impede access to the digital records in the event of death or disability of the person treated as the contracting party.
- Criminal law – Commonwealth and NSW state criminal law legislation prohibits “unauthorised access” to restricted data held in a computer (Criminal Code 1995 (Cth) section 478.1; Crimes Act 1900 (NSW) section 308H).
- Privacy law – Australian privacy law imposes certain obligations on some parties to protect personal information.
- Copyright law – The Copyright Act 1968 (Cth) relates to works and “other subject matter”, all of which must be in “material form”.
- Succession law – NSW succession law states that a person may dispose of property in their will to which they are entitled at the time of their death (Succession Act 2006 (NSW) section 4). However, whether a person owns a digital asset as their “property”, and whether they are entitled to it at the time of their death, typically depends on the terms of service agreements.
- Estate administration law (pre and post-death) – The NSW Probate and Administration Act 1898 imposes statutory obligations on executors and administrators to identify, collect and distribute a deceased person’s assets. Executors and administrators therefore need access to a person’s digital assets even if they are not heritable under a will or the rules of intestacy. However, they may be denied access by the terms of service agreements.
- Tax law – The Australian Tax Office treats cryptocurrencies (eg Bitcoin) as “property” for capital gains tax purposes.
Your next step – review your situation
Periodic review of mechanisms for the storage and use of digital assets ensures access to them during life and organisational operations and after death, disability or organisational or family dissolution.
Internationally digital vertigo is evident when there is delay or incompetence in the development, implementation and proper supervision of mechanisms for dealing with the ongoing shift from physical to digital records, from tangible to intangible assets. This puts at significant risk the welfare of individuals, families, family businesses and organisations.
Conflict, confusion and loss of assets is common. As discussed in this article it can be reduced with professional advice and implementation of practices, systems and mechanisms to institutionalise memory.
To decide your next step test yourself with these questions rating how prepared you are to institutionalise your memory.
- Backup? What are your digital assets backup practices?
- Are your assets identified and mapped? Where is your list of important assets? Are the items categorised or mapped so others can find and navigate them?
- Who has access? Who among your family, friends or executors has the keys or means to access your online and electronic account names and passwords if you are incapacitated or die?
- Who is authorised in writing? Have you authorised and empowered an executor in estate planning documents to access your digital assets?
- Do you review? Do you check your asset lists and records are up-to-date every few years to match any changed intentions and circumstances?
Photo credits: Yacht photo by Mael Balland via Unsplash. Adult with yellow T-shirt and children photo by Juliane Liebermann via Unsplash
 Brilliantly read by English actor Richard Pascoe in this audio recording on YouTube https://youtu.be/8O4JuWi3OQQ. For an academic analysis by a translator of the Gilgamesh text listen to this lecture by Andrew George https://youtu.be/Rd7MrGy_tEg.
 See the table in section 3 of this article.
 Michael Perkins and Jayne Humphreys, ‘Your Digital Life’, (Learning From Step Worldwide and Next STEPs 2018), 21 -22.
 Rod Genders and Adam Steen, “Financial and Estate Planning in the Age of Digital Assets: A Challenge for Advisors and Administrations” (2017), Financial Planning Research Journal, 78.
 Facebook recently announced it will allow users to select an executor, or “legacy contact” once a user is deceased or “memorialized” (which Facebook says involves having a “Remembering” word shown next to the deceased name). Similarly, Google allows users to designate a Trusted Contact (that may also be useful for a person’s digital afterlife) and in Japan a Yahoo! Ending death-planning service started in 2014.
 See Australian Taxation Office (ATO) Determination TD 2014/26.
 Australia’s ratification of the United Nations Convention on the Rights of Persons with Disabilities primes states and territories for a major policy shift in the coming decades. Such a significant adoption of international law into domestic legal infrastructure requires strong support from professionals in applying core principles of understanding and empathy that constitute the nature of the Convention. An “ethics of care” is being ushered into Australian society that assists the most vulnerable with decision making and articulation of aspirations.
 Organizational memory, Wikipedia page – https://en.wikipedia.org/wiki/Organizational_memory
 See 2016 lecture of Abby Smith Rumsey at the Long Now Foundation on the invention of writing by accountants: https://www.facebook.com/longnow/videos/10157225501267868/
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