The widespread popularity of social media, and more recently, cryptocurrencies like Bitcoin and Ethereum has given the owners of these digital assets something else to consider when drafting their Will.
Traditionally, family members and fiduciaries could administer a loved one’s estate by sorting through their mail and personal records in the event of their death. However, the digital age has made this process much more complex, as there can be administrative issues relating to the access and ownership of digital assets.
To ensure these assets are disposed of correctly, it is critical that individuals engage in digital estate planning – keeping a comprehensive inventory of usernames and passwords along with detailed instructions on how they should be managed.
To ensure assets are properly accounted for, individuals must familiarise themselves with the laws surrounding digital assets and how they are handled within Wills.
What are digital assets?
Whilst they are not currently defined in English law, digital assets include any online account or file stored on an individual’s computer or server. This includes social networking and email accounts, digital music libraries, eBooks and cryptocurrencies.
Simply put, any online account that contains economically or sentimentally valuable content and is protected by a username and password is considered to be a digital asset. As such, the physical devices used to access these assets, like computers and phones, are not categorised in the same way.
Meanwhile, subscriptions and digital downloads will only qualify as assets if the terms and conditions allow it. If you own the item outright, it will pass according to the instructions of the Will, but licenses that are personal to you will expire when you die, and any attempts to include them as gifts will fail too.
There are some assets, like cryptocurrencies and domain names, that may need to be professionally valued before they can be included, as they attract tax based on their worth. In such scenarios, it is best practice for individuals to seek legal support, as experienced lawyers will make the necessary arrangements to ensure that nothing is missed or forgotten.
Without this, you run the risk of valuable assets being lost forever, with no way of recovering certain details through the provider’s customer support.
Manage your assets accordingly
When creating your succession plan and deciding how best to pass down digital assets, there are a number of important steps that must be considered. To avoid any administrative issues, you must first conduct a complete inventory of all digital accounts and assets, allowing your estate administrator to gain a better understanding of value and liability.
Once this step has been followed, you must assemble a comprehensive list of usernames and passwords and store them in a safe location. If you have privacy concerns surrounding this step, then it is possible to make arrangements for your trusted executor to take appropriate action after your death. This can be achieved by attaching a letter to your Will with the condition that it is only opened upon your death.
Given that a Will becomes a public document if a Grant of Probate is obtained, login information should never be included in the Will document itself. Instead, a separate record containing this information should be kept and stored in a secure location like a locked draw or safe.
Finally, select a trusted fiduciary to carry out these requests in the event of your death. By giving them the necessary instructions and authority, you can guarantee that digital assets are managed in accordance with the Will.
Making plans with legal guidance
Although it may seem straightforward, deciding which assets to include as part of your digital estate can be confusing, especially if there is uncertainty over whether it can be validly gifted.
For some individuals – like those who have invested in cryptocurrencies – these digital assets could be worth a significant amount. However, the very nature of cryptocurrency means that lost passwords to online wallets cannot be recovered – if the password holder dies and does not disclose the login information, then the valuable assets are lost too.
Similarly, if an individual has purchased online music and eBooks throughout their life, then they may want to give these to a friend or relative, the details of which should be included in their Will.
Whatever the situation may be, it is always best practice to seek expert legal advice when managing a digital estate, as it ensures no stone is left unturned throughout the process.
