As our lives become more digital, it’s essential to consider what happens to our online and digital assets when we pass away.
What are digital assets?
Digital assets is a broad term commonly used to include any personal property stored electronically such as digital files, digital records, emails accounts, domain names, in-game digital assets, digital carbon credits, crypto-tokens, non-fungible tokens (NFTs), and even rewards programmes.
In terms of estate planning, the broad term ‘digital assets’ can be broken down into two key areas:-
- Those that have a monetary value, which can impact the tax due on your estate; and
- Those that have sentimental or non-monetary value, which do not impact the tax due on your estate but must be considered in the administration process.
“Digital assets” is the term often used by professionals to encapsulate assets that are owned and stored in digital form and have a monetary value. This includes PayPal accounts, cryptocurrencies such as Bitcoin, and non-fungible tokens (NFTS).
“Digital records” is the term often used by professionals to refer to things such as files, social media profiles, website copy, blogs, photos, and email accounts which do not have a monetary value. However, some digital records can become digital assets (i.e. have a monetary value) for example, where content/media is created that generates income and/or can be sold.
Whilst assets like online banking and cryptocurrencies have financial worth, and can be passed on as part of your estate under a will or the intestacy rules, personal accounts like social media profiles and photo collections carry sentimental significance, but don’t form part of your estate for tax purposes. Without proper instructions, your loved ones may struggle to access or manage your digital assets and records, leaving both your financial and sentimental assets in limbo. Many, however, overlook these in estate planning.
Including digital assets in your will
To ensure your digital assets are properly handled, start by creating an inventory of all your accounts – everything from investments to banking platforms and social media accounts.
To keep your passwords secure make sure they are either physically stored in a safe place with your will (often referred to as a “cold” record) or in an appropriately secure cloud-based storage system (often referred to as a “hot” record). If you opt for the latter, you may wish to break your passwords down and record only part on any one platform, requiring your executors to marry them up, for added security. Care should be taken either way.
Consider appointing a digital executor, someone specifically tasked with handling your digital affairs, separately from your primary executor. This person will have specific responsibilities, such as deactivating or memorialising social media accounts, transferring digital files, or accessing cryptocurrency wallets, according to your wishes.
Platform-specific challenges
Each online platform operates differently, and many accounts cannot simply be transferred after death.
Some social media sites offer options to memorialise accounts, while others may delete them without specific instructions. Reviewing the policies of platforms you use will help ensure your wishes around your digital legacy are properly carried out.
Cryptocurrency presents unique challenges due to its decentralised nature. Unlike traditional financial assets, there’s no institution that can assist with recovering lost digital currency. This makes it vital to securely store private keys or digital wallet information, ensuring they can be accessed when needed, whilst keeping them protected.
Keeping your details up to date
Like physical assets, your digital assets may change over time.
Regularly updating your digital asset inventory is key to ensuring everything remains organised and accessible to your personal representatives and/or loved ones when needed.
Getting specialist advice
“In today’s digital age, planning for what happens to your digital assets is just as important as managing your physical estate. Taking thoughtful steps now can prevent significant complications for your loved ones later and ensure that your wishes are carried out seamlessly. To find out more about the digital legacy services we have to offer, please call our Private Client team on 01512646588 and we will be happy to help”.
Carla Neal,
Solicitor
Get in touch with Paul Crowley & Co Solicitors today to ensure your physical and digital legacies are protected for the future.
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