Digital Assets - What are they and what do they mean to me?
Due to the substantial expansion in the use of information communication technologies in the last two decades, digitals assets are now more prevalent than ever before. However, they are often not considered when discussing estate planning.
With the substantial increase in our use of technology and digital assets, it is important that we understand what exactly digital assets are, how they differ from each other and how they should be administered upon death.
What can be identified as a 'Digital Asset'?
It is important to understand what can be considered as a 'Digital Asset' and the differences between the different types.
A 'Digital Asset' can be defined as anything that is stored in a binary format and has a right to use, this will include accounts that you access online such as email, social media accounts, currency transfer services, online banking accounts and also websites or domain names. This will also include other assets stored on your computer's hardware or online cloud storage services and forms of software, for example photographs, family videos, emails, video games, databases and potentially cryptocurrencies.
How are 'Digital Assets' administered upon death?
It's often difficult to identify how each asset is dealt with upon death. To understand how a digital asset can be disposed of or continually maintained, it is necessary to clarify the agreement entered into with the internet service provider (ISP). All ISPs have different Terms and Conditions that will affect the way you leave these assets. In respect of ITunes or Amazon Kindle accounts, any content you have purchased is leased and not owned by the user and therefore cannot be left to an individual as the account and coinciding agreement will terminate upon death. Other ISP accounts may be dealt with differently. Facebook allows you the ability to nominate an individual during your lifetime to administer a memorial page, allowing Facebook users to leave comments and celebrate your life after your death. Other accounts such as Twitter do not give you this ability, but will instead close the deceased's account and give their family an archive of public tweets.
Cryptocurrencies may be easier to administer, providing that the correct pre-emptive precautions are carried out by you. By doing this you will aid the executors in locating and effectively dealing with these assets. This can be done by storing your cryptocurrencies by either the use of an online wallet service known as a 'Hot Wallet' (for example online cloud wallets or software wallets), or, a 'Cold Wallet' (for example hardware wallets and paper wallets) and making your executors aware of the information required in order to access these accounts after your death.
Other hardware and online cloud storage based digital assets such as photographs, family videos, documents, databases and video games can also be dealt with relative ease as long as your executor is aware of their existence, location and has the necessary information required to access these assets.
Digital assets may be very difficult for your executors to administer if you do not make the appropriate precautionary measures, particularly if the executor of the estate is not able to identify where these assets are held or if they even exist. If you have substantial digital assets, it may be appropriate to appoint a 'Digital Manager' as an executor. The digital manager should have experience in dealing with digital assets and will ensure that the estate is dealt with effectively and in its entirety. You could assist your appointed digital manager or executor by producing a "Digital Inventory" which clearly identifies all of your digital assets and any necessary passwords or usernames to centralise all of this information and to ensure your digital assets are administered properly in accordance with your wishes. Such information should not be included in the provisions of your Will as this may become a public document, and must be kept in a safe place known to your executors – for example with your Will in a safe or solicitors' strong room.
Several providers offer an online 'Safety Deposit Box' whereby you may store all of your usernames and passwords for digital assets owned. This information is then made available to a nominated person upon death. It is important that if you hold such an account, this is also made known to the executors of your estate.
Should you require any further Information about digital assets, or require any other Private Client Advice, please contact a member of our Private Client Department.