News and Insights
7 November 2023
In an increasingly digital world people naturally start to own more digital assets. Your Facebook account, your Netflix subscription, perhaps even digital art and investments. From the simple to the complex, most people will likely own some form of digital asset and leave behind a digital estate.
When it comes to estate planning, it is easy to consider the physical assets and forget the digital. Most people can imagine the importance of leaving a piece of jewellery or artwork with sentimental value to their loved ones. The assets are tangible, can be stored in a safe place and are by comparison to digital assets, easily identifiable.
More and more service providers are starting to consider how loved ones can access a deceased client’s digital assets. Apple released their Legacy Contact service in December 2021 but how long will it take for all other service providers to follow suit and how well can these services meet your wishes? This leaves the question of what can be done to prepare your digital estate for your loved ones to ensure they are not literally and metaphorically “locked out”.
Keep an inventory
The most simple step to preparing your digital estate is to itemise what the estate is comprised of. Your email addresses, cloud accounts, subscriptions, cryptocurrencies or any of the other various accounts we all inevitably create all form part of your digital estate. Once you begin your list, you may be surprised at how many digital assets you might own even if they are of no monetary value.
With that being said, some digital assets are now of considerable value and their value will need to be included on your inventory to assist your executor in declaring the value of your estate. With the highest value digital asset being an image by the American artist Beeple (worth $69 million), a questioning tax man may raise an eyebrow if your executor did not know of it’s existence.
Make an access plan
A list of assets is a good start but how can these assets be accessed. It is not advisable to keep the passwords for all of your digital assets in the same list that comprises your inventory. It would be prudent to keep your passwords in a separate document, either one kept securely digitally or in hardcopy in a safe. Your executors could be made aware of the location of your passwords as due to regulatory prohibitions, your solicitor would not be able to hold the passwords on file. It is important to note that no one else besides your executor should be permitted to access your passwords as they could intermeddle with your estate.
This might work for simple accounts where only an email and password is required, but what about complex assets. Crypto currencies are often stored in digital wallets or managed by online custodians. In some cases, the owner of the asset is also the custodian of their own access codes, effectively meaning that if they do not provide their executor with information on how to access the asset, it will become inaccessible after death.
Your executor will therefore require information of how to access the assets or the details of the custodians to determine how they can deal with the asset.
Making a will and a letter of wishes
As with all other forms of estate planning, a Will is important to clarify how you would like to leave your assets. You may wish to leave a specific digital asset to a specific individual or you may wish to leave all your digital assets to someone who will appreciate them the most. You can also inform the executor named in your Will of how they can access and administer these assets in conjunction with the aforementioned inventory and access plan.
A letter of wishes could be used to address other parts of your digital legacy. You may want your social media account to be memorialised and left active or by great contrast, you may want all of your digital accounts closed and as much of your online presence removed as possible.