No law for inheritance of digital assets or property, Judiciary reveals

The courts have warned of an obstacle to beneficiaries inheriting digital assets upon the death of tech-savvy proprietors, a worrying revelation given the digital economy is estimated to generate tens of billions of shillings annually.

The absence of a law in the country addressing the inheritance of digital assets/property affects valuable property including mobile money.

This means in case of a legal dispute over cash left on an online platform by your benefactor, the courts can’t help you access it.

“The prevalence of an individual’s online presence can increase the number of assets available for transfer to heirs, thereby affecting access to valuable property. In Kenya, however, there is no law addressing the inheritance of digital assets or property,” states a Judiciary report released last week.

Last year, mobile phone operators handed Sh500 million in mobile money deposits whose owners were not found.

The report observed that the legislation would, among other things, address the definition, scope and transfer of digital assets, and facilitate especially intestate (case where one dies without leaving a will) succession.

Inheritance practice

“This is an important emergent area of inheritance practice in Kenya,” read the report by the Family Division of the High Court.

Transacting billions

Such is the lack of knowledge in the area that although the country has at least 90 per cent of its mobile phone network subscribers transacting billions and more than 50 per cent being online, no one has ever sought to inherit the wealth through a court or even written a will on how it ought to be shared.

Money stored in M-Pesa accounts, music bought through accounts such as iTunes and even digital media stored online in blogs and servers remain unclaimed, with Kenyans opting to go for physical assets like land and money stored in banks.

The country has no universal definition of a digital estate and there is no set law on how heirs should claim intangible wealth stored in technological devices, according to the guidelines.

A report by business advisory firm McKinsey & Company in 2013 said Kenya’s annual economic output generated from internet connectivity is worth Sh99.8 billion, making it the second highest in Africa relative to total yearly production.

Some things being considered in digital asset mapping for estate planning in developed jurisdictions, according to the Judiciary report, include personal and business e-mails, attachments to e-mails, business websites, records of the sort that were formerly kept in a safe deposit box and are now stored online or digitally, digital pictures stored in your camera, on CDs or online, online brokerage or bank accounts as well as libraries of music, movies, games, and software.

Potential loss

The report warns that the potential loss of digital assets is a major concern.

“Individuals spend enormous amounts of money over their lifetimes purchasing files for their iTunes account, so a deceased’s iTunes account could potentially represent a substantial asset.

“However, iTunes files are non-transferable at a user’s death and therefore cannot be transferred. Lack of direct access to this type of digital asset could lead to a loss in a person’s estate since this type of asset will not be included in any estate planning as actual property,” states the report. 

It observes while service agreements made between service providers and users are important in determining who may get access to a digital asset, an internet business can change its service agreement with or without notice.

This creates “added complications for an heir attempting to access or even delete a family member’s account”.

Skype is cited as a service provider with a service agreement that does not provide users with the option to delete their accounts.

According to the report, Gmail has a policy through which anyone may access a deceased person’s mail if he or she can provide proof that the “user is known to be deceased”.

Yahoo’s terms of service explicitly state that an account cannot be transferred.

But the Judiciary, under Chief Justice David Maraga, thinks digital accounts such as emails ought to be inherited or be disposed of after death.

However, the challenge is not only on the digital sphere but also in determining who between nominees and estate administrators should have access to property in company shares, ‘chama’ savings, insurance and pension benefits.

When Carolyne Achieng’ died in 2004, she had Sh72,800 worth of shares in Huduma Savings Credit Co-operative Society.

 

She had named her children as nominees to take over the shares. But the children were still underage by the time she died.

Sole heir

Her husband had been given grant by the courts as the sole heir to manage her wealth.

Despite the orders, he could not access the money.

The Judiciary has noted in its new guidelines on inheritance and family law that Ms Achieng’s case, among others, has raised controversy touching on who between heirs and nominees should inherit ‘chama’ and sacco wealth.

Kenya’s current legal regime, the Co-operative Societies Act, states that shares held in co-operative societies do not form part of a deceased’s estate and can be transferred to a nominated person only.

This has been affirmed by the courts three times, including in Achieng’s case, where judges have found that nominees are given preference over the rightful heirs and that ‘chama’ shares do not form a part of the estate.

The report also notes that only one per cent of Kenyan women own land.

According to the guidelines, women are discriminated against by men despite there being a Constitution that emphasises equality for both genders.