If you do not use the directory synchronization (Azure AD Connect) to manage your user accounts in Office 365 (creation, update, deletion), this is for you.

The user account deletion process has been updated in Office 365 to give the opportunity to define what to do with licenses and data.

The next time (please keep in mind this update may not yet be deployed and available in your tenant), you will be ask your decision about the license, if you want to transfer (grant ownership) to another user; the actions available for the licenses depend of the license type you have (direct monthly, pool, trial…)

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When transferring the ownership of the mailbox, you can define you you want to keep the same display name or change it, define who can send email to the mailbox (external or internal only) or remove associated email addresses.

The user you are granting ownership will then receive a notification email with instructions.

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NOTE the user mailbox will be converted to a shared mailbox

Keep in mind that if you do not transfer ownership of the data (either OneDrive or mailbox, or both), you will have up to 30 days to recover it by recovering the delete user object; this has not changed.

Off course you still have the option to use the hold features but this process is also automatically granting permissions to the delegated user(s)