Digital assets come in many forms and are often overlooked when considering estate planning.
In a recent survey, by the Law Society, over 93% of people had not included any digital assets in their Will, and only 7% of those surveyed fully understood what happens to their digital assets when they die.
Digital assets can take many forms but, essentially, they are intangible assets that can have monetary and/or sentimental value.
This can include:
- Cryptocurrency
- Cloud service providers
- Photos and videos
- Emails
- Social media accounts
- Internet domain names
- Online banking
In a report The Law Commission states, ‘the law recognises that a digital asset can be property and that a digital asset can be “owned”. However, The UK Jurisdiction Taskforce observed that “cryptoassets cannot be physically possessed: they are purely “virtual””. Therefore, a cryptoasset cannot be a thing in possession under the law of England and Wales. The Law commission felt this idea was equally applicable to all digital assets.
STEP recently carried out a survey in which they asked estate practitioners about their experience with digital assets in estate planning and management.
Some of the issues that practitioners have encountered are:
- Lack of cooperation from third-party service providers like Apple and Facebook.
- Difficulty obtaining technical control over cryptocurrencies.
- Emotional distress as clients could not access the pictures, videos, and sentimental data of their loved one.
How you can include digital assets in your personal planning?
Some platforms, and providers, allow you to set legacy contacts. This means, on your death, your legacy contact can access your account and some of your data. These facilities can simplify your estate management after death.
Other platforms can only be accessed with your credentials and without them there will be difficulty accessing your digital assets.
The best advice is to have some sort of password storage system. This can be a USB drive or a document. In this document you should include usernames for your relevant accounts and passwords. This will simplify access to your digital assets when your estate is being administered. The document can be stored with your Will, or securely at home.
There are some ways to simplify this further by filling out legacy contacts with your provider. But not all of them have this facility.
Facebook
Facebook have a legacy contact facility which any user can set up. This will enable the contact to extract photos and videos if you give them permission, but not your messages. They can also memorialise your page and moderate posting and content.
Apple
On a recent update Apple have set up a legacy contact facility for your personal data by providing a Pass Key. This does include:
- Messages
- Mails
- Photos
- Videos
- Documents
- Notes
- Contacts
- Calendar events
According to their terms of use it seems that this will not include your downloaded music and subscriptions. Furthermore, there is a time limit in which the data needs to be extracted.
Google and YouTube
Google own YouTube, the provider has an inactive account manager facility. You can set up an inactive account contact and choose to share data with them, they will receive this via an email link when your account has been inactive for the specified amount of time.
Microsoft
If you have not left a list of your credentials to get into your Microsoft account then Microsoft require a valid court order to consider whether it is able to lawfully release a deceased, or incapacitated, user’s information. This includes
- email accounts
- OneDrive storage
- any other aspect of their Microsoft account.
They will close an account if you report someone as deceased, but either way an inactive account will be closed after 2 years of inactivity.
Other Social Media
- Instagram does not have a legacy function, so this will have to be dealt with in your Will. Instagram do have a function to memorialise your profile. This would be applied for by your executors but can be done by anyone.
- Twitter has just one way of handling a deceased user’s account. A friend or family member must contact Twitter and provide ID, as well as a copy of the user’s death certificate, Twitter will deactivate the account. In special cases, the site may also remove certain imagery by request.
- Snap Chat can only be deleted by someone logging in and deleting it.
- LinkedIn have a deactivation request form.
- Pinterest require proof of death and proof of relationship to close an account.
Do you hold cryptocurrency like Bitcoin?
Cryptoassets are counted as property for the purposes of Tax.
The valuation of cryptoassets is often difficult as they are not valued in Pounds Sterling. The HMRC state that reasonable care should be taken to arrive at an appropriate valuation and details of the valuation method should be kept. The Shares Assets and Valuation department of HMRC can help with the valuation for tax purposes, but asking a specialist accountant instead, or getting professional advice, may be better in these circumstances.
Passkeys are essential to be able to access cryptocurrency. Having a list of these passkeys, or a digital inventory, kept with a Will is a good way to make sure the correct Inheritance Tax is paid on the estate. The list should be kept separate and secure, with the password and username list, so as not to be made public record after probate.
What if your digital assets relate to a business?
If someone has a significant digital asset, there must be an inventory of that asset. An example of a significant digital asset could be a celebrity’s social media page or a company’s interactive website. There could be multiple accounts and websites linked together. You need to make sure the licence for the asset is correct. If an asset makes money as a business, but is listed as being for personal use, it can breach the licensing terms of the platform. You do not want to breach terms of agreement and potentially lose a valuable asset.
Furthermore, using a business account means you will have better access and can delegate access to other administrators. This means, upon your death, someone else already has access to the account and can help to manage it.
Getting financial advice regarding intangible assets, and protecting them after death, would be sensible in these circumstances.
How we can help you
With the changing nature of how people hold their assets practitioners need to be forward thinking. We pride ourselves on being innovative and thorough when it comes to our clients' needs. We can discuss all aspects of your estate including your digital assets. We can help you to manage the future tax implications of having digital assets, and deal with all your traditional estate assets.
As an independent firm we pride ourselves on being unbiased when it comes to our advice and will help our clients to receive the best guidance possible.
If you feel you need to include digital assets in your Will, or need a new Will, please contact our Private Client Team and we will be happy to offer you some advice when it comes to keeping your Will and estate up to date.
