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Digital Assets and Death: A Legal Vacuum in Indian Succession Law?

Vidhi Chetnani
India's succession laws fail to address digital asset inheritance leaving cryptocurrencies and online accounts in legal limbo Digital assets including cryptocurrencies, social media accounts, cloud storage, and digital content present significant legal challenges in Indian succession law. Current legislation including the Indian Succession Act 1925 and Hindu Succession Act 1956 fail to address digital property inheritance, creating uncertainty for executors and heirs. Platform Terms of Service often prohibit account transfers even to legal heirs, while courts lack precedents for digital asset succession. Unlike jurisdictions such as the United States with RUFADAA and European countries recognizing digital inheritability, India has no framework for posthumous digital asset access. The legal vacuum leaves valuable digital properties vulnerable to loss or misappropriation upon death. Urgent legislative reform is needed to classify digital assets, establish succession rules, override restrictive platform terms, and provide valuation guidelines while protecting privacy rights. (AI Summary)

Introduction: The Digital Transformation of Wealth

Living in the era of the speedy development of digital technology, wealth is not restrained to be either physical or classical financial. Nowadays people possess a whole collection of digital assets digital currencies, blogs, social media profiles, clouds, where people store intellectual property rights, cryptocurrencies, as well as digital wallets and NFTs. These properties may be both financially and sentimental. However, in case a person dies, his or her digital assets face a haze of legal ambiguity in India.

Digital property brings complex issues that can hardly be satisfactorily handled by the succession laws in the country which are rooted in the colonial jurisprudence and the post-independence jurisprudence of early post-independence days. Executors, legal heirs and fiduciaries wade through platform terms of use, rights of privacy, and even whether digital assets can be considered property at all in India, in the absence of clear law. This article explores a pre-existing legislative gap, practical implication, comparative international practices and a legal reform roadmap.

Understanding Digital Assets

Digital assets are widely considered as any content, file or right that is in the digital form and are owned or under control of a person. These are of two types:

  • Digital gadgets/devices: Bitcoin (BTC), Ethereum (ETH), Non-fungible tokens (NFT), digital, wallets, Stash Object accounts (NeoBank).
  • Intellectual digital asset: Blogs, YouTube channels, digital artwork, pod-cast revenues.
  • Gmail, WhatsApp, Facebook, Instagram, Twitter, Communication and social network profiles.
  • Authentic digital content, digital content, Kindle ebooks, streaming from Spotify libraries, playing games.

Stored data Stored data: Google drive, dropbox, cloud-based databases.

These resources can be commercially important (it could be a monetisable blog or some sort of online shop), sentimental (familial photograph albums on Google Photos) or secretive (legal docs or business plans saved on a cloud). The dilemma is the problem of not identifying these assets effectively, reaching them and distributing them to the rightful heirs in case of death of the owner.

The Glaring Statutory Silence in Indian Succession Law

The Indian legal system on succession consists of Indian Succession Act, 1925, Hindu Succession Act, 1956, Muslim Personal Law (Shariat) Application Act, 1937 and traditional laws of other groups. All these laws do not explicitly support or regulate digital assets. Their offerings are erected on the basis of physical, portability material, land, shares, gold, or moveable tangible objects.

An example is the Indian Succession Act, which only broadly describes property yet fails to explicitly state digital property. Statutory guidance extends to no advice on whether an email account (or a cryptocurrency wallet or a monetised YouTube account) may be bequeathed through a will, or how it shall pass in intestacy circumstances.

This quiet causes problems of interpretation. The justice system that governs our country provides minimal help in this issue by just regulating some of the aspects of the electronic governance and data protection even the Information Technology Act, 2000 does not devour the post mortem devolution of the digital asset. As such, the statutory process of managing digital estates does not present a coherent mechanism to be followed- this leaves the executors and heirs to find their way in the uncharted legal waters.

The Challenges of Testamentary Succession

India has testamentary successions mainly through Wills. Nevertheless, majority does not consider their digital footprint during the process of drawing wills. Even in the case of digital holdings, it is unclear how to provide access, despite terms that are specific to a platform, encryption, and indeed, a lack of any legal reciprocity.

In real life even a properly prepared will tends to fail due to:

  • The testator cannot even specify digital assets.
  • Encryption keys, 2FA devices and passwords are not permitted to share legally.

Service users (e.g., Google, Meta, Apple) do not allow anyone to access their network without their permission as a part of their Terms of Service Agreements (TOS).

The question of whether TOS can be overridden by an Indian probate by virtue of an executor was not clear in the eyes of the law.

Practically, a will would not be an effective gateway to the transfer of a Gmail account, access to crypto wallet, and dominance over an Instagram handle especially where such platforms exploit the jurisdiction clauses or privacy protection features. Executors do not know where they are legally because they can be sued over unauthorised access or misuse of data.

Digital Assets and Intestate Succession: A Greater Problem

The problem is even more complicated in case of intestacy. Unless there are clear instructions, the digital assets can be overlooked or declare as missing. The fact is that members of the family may not know that there are some accounts and may not have the technical knowledge of retrieving the accounts. In addition to this, digital assets have not been interpreted yet by courts whether it comes under the section of movable property or rather is to be dealt with under different section.

To add to this, there is a deficiency of valuation norms. What is the value of a blog, or Twitter account with 100k followers? What is the treatment of over-weekly recurs in podcast sales or YouTube transmissions? It is possible to rank a Facebook account among the sentimental properties along with family heirlooms?

Moreover, there is a potential of misappropriation. Without clarity, even close friends or business partners who have access credentials have a chance to take control of the digital property either willingly or unwillingly without foundation in the law.

Terms of Service (TOS): A Hidden Barrier

Majority of the internet documents have provisions that bar the use of the accounts by a third party to them even after death. Such TOS tend to include a clause that the accounts are not transferable and any access by someone other than the owner, even an heir or executor, is a violation. For instance:

There is an Inactive Account Manager on Google but this should be preset by user.

Under its Digital Legacy Programme, Apple demands a court order in certain jurisdictions.

Facebook also gives an option of memorialising an account, where content access is not possible unless the user authorizes it beforehand.

Such conditions in the contract usually supersede national succession laws unless proved wrong or limited by the law. Indian executors are, therefore, left with a paradox of being in possession of probate orders which might not be legally enforceable against a platform governed by U.S. laws.

Global Comparative Jurisprudence

A number of jurisdictions across the world have realised the criticality of this problem and implemented legislative measures:

  • United States: The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) was enacted in many states and granted somewhat more extensive access to digital assets to the fiduciaries, as long as the user had agreed to the same grant of access in a will or a trust.
  • European Union: Countries such as Germany and France have interpreted digital assets as inheritable and have provided heirs with an ability to access data by requesting it out of service providers even though the General Data Protection Regulation (GDPR) does not deal specifically with death.

United Kingdom HMRC treat cryptocurrencies and digital content as part of the estate, on which inheritance tax is payable. As long as it depends on platform usage, crypto access has been recognized to be transferable property by courts.

  • Singapore and Australia: There is no Law, but the courts have spoken in a very pragmatic way, regarding digital assets as any other property where possession and appreciation can be clearly demonstrated.

These jurisdictions have examples that India can take inspirations out of, which combine fiduciary access, robust privacy protection, and user intent declaration.

The Indian Judicial Silence

The Indian courts have not developed any decisions regarding the possibility of the inheritance of digital assets so far. Although the judiciary has happened upon the wider topic of digital rights, including the right to be forgotten, intermediary liability and data protection, there is no precedent with posthumous access or digital succession of any kind.

When executors and heirs have no means of action, this deprives them of any judicial redress. The absence of court directions also influences the position of service providers which follows the giving away route in the presence of legal doubt.

The Road Ahead: Time for Legislative Reform

India requires a unified regime of digital asset succession on urgent basis. It may be in the shape of a stand alone legislation or an addition to an already existing statute like Indian Succession Act or the Information Technology Act. The new regime has to:

1. Designate digital assets specifically and classify them as transferable and non-transferable.

2. Represent the ability of testators to set out digital executors having clear powers and responsibilities.

3. Put in place default rules applying to situations of intestacy, similar to residuary clauses, but adapted to the digital medium.

4. Preempt any discriminatory TOS, which is to be done with due protection and fiducial responsibility.

5. Introduce valuation guidelines on either revenue-generating or sentimental digital asset.

6. Combine with the principles of data protection so that the privacy and autonomy are not violated.

This would not only help in addressing the existing gap but will also give confidence to families, platforms, as well as the courts.

The Role of Tier 1 Law Firms

The change must be pioneered by leading law firms, particularly those with flourishing Private Client, TMT and Dispute Resolution practices, to lobby and influence such changes. On the advisory level, estate planning lawyers will have to start adding digital asset provisions, safe protocols of sharing passwords with trusted parties, and digital inventories to the wills templates.

Corporate advisors as well as litigators must find a solution to the platform conflicts, pre-death asset access negotiations, and client education in the management of digital wealth. Companies such as CAM, AZB, SAM, Trilegal, Khaitan, and others are in an exclusive place to modify legislations as well as implementation of the laws by the court, namely through thought leadership, whitepapers, client training, and PILs as and when necessary.

Conclusion

India is on the brink of digital legacy crisis. Digital assets, some of them extremely valuable, can go missing when their creators or owners die without a legislative intervention or court action. This is not some futuristic issue and it is a real, growing and urgent issue. Now a human being has to work on the development of progressive legal framework that will stay in pace with the digital life and digital death.

In the meantime, there is no law of the land that provides a framework by which the digital afterlife can be dealt with, but it has been left up to unread TOS agreements and foreign jurisdiction contracts, which leaves the Indian heirs in the hands of zero clear step to follow after getting their rightful digital inheritance.

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