As more of our financial, personal and business lives move online, digital assets have become an important consideration in modern estate planning.
Digital assets can include cryptocurrency, online banking accounts, social media profiles, digital photographs, domain names, loyalty program points and other information stored electronically.
Unlike traditional assets such as property or physical investments, digital assets can be difficult for family members and executors to identify and access after a person dies. Without proper planning, valuable assets may be lost, inaccessible or create unnecessary complications during estate administration.
Including digital assets in your Will and estate plan can help ensure your wishes are followed and provide your loved ones with clear instructions about managing your online affairs.
What Are Digital Assets?
Digital assets are items of value or personal information that exist in electronic form. They can include financial assets, personal accounts, intellectual property and online content.
Examples of digital assets include:
- Cryptocurrency, including Bitcoin, Ethereum and other digital currencies;
- Online banking accounts and investment platforms;
- Digital shares and trading accounts;
- Domain names and websites;
- Digital photographs, videos and personal files stored online;
- Online business accounts and intellectual property;
- Gaming and online marketplace accounts;
- Loyalty program points, such as frequent flyer rewards;
- Email accounts; and
- Social media accounts such as Facebook, Instagram and LinkedIn.
Some digital assets may have financial value, while others may hold personal or sentimental importance. Both should be considered when preparing an estate plan.
Why Include Digital Assets in Your Estate Plan?
Many people now manage important parts of their lives online. However, unlike physical assets, digital assets are not always easy for family members or executors to locate after death.
Without clear instructions, problems may arise, including:
- Family members being unable to locate important accounts;
- Executors being unable to access online information needed to administer the estate;
- Cryptocurrency becoming permanently inaccessible due to missing passwords or private keys;
- Online accounts remaining active and creating privacy or identity risks; and
- Disputes between beneficiaries about how digital assets should be managed.
A carefully prepared estate plan can provide guidance about your digital assets and make it easier for your executor to carry out your wishes.
What Happens to Cryptocurrency After Death?
Cryptocurrency presents unique challenges because ownership is usually controlled through private keys, passwords or access details rather than traditional ownership documents.
For example, if a person owns cryptocurrency but no one knows where the digital wallet is stored or how to access it, those assets may effectively become impossible to recover.
The well-known case involving cryptocurrency exchange QuadrigaCX highlighted the importance of planning for digital assets. Following the death of the company’s founder, customers were reportedly unable to access significant cryptocurrency holdings because access information was unavailable.
While cryptocurrency ownership and regulation continue to develop, the lesson remains relevant: digital assets need to be identified, documented and properly considered as part of an estate plan.
How to Manage Your Digital Assets
Taking practical steps now can help ensure your digital assets are properly managed in the future.
Create a Digital Asset Inventory
Start by making a list of your important digital assets and accounts.
This may include:
- Online banking and investment accounts;
- Cryptocurrency wallets and exchanges;
- Email accounts;
- Social media profiles;
- Online subscriptions;
- Digital storage accounts containing photos or documents; and
- Business-related online accounts.
Remember that your digital accounts and passwords may change over time, so this information should be reviewed and updated regularly.
Store Information Securely
Important account information should be stored securely and only made available to someone you trust when required.
You should avoid including passwords, PINs or private keys directly in your Will because a Will generally becomes part of the probate process and may become accessible to others.
Instead, consider keeping access instructions in a secure location and ensuring your executor knows where to find them.
Include Digital Assets in Your Will
Your Will should provide your executor with authority to deal with your digital assets and explain your wishes regarding important online accounts.
Your estate planning documents can include instructions about:
- Who should manage your digital assets;
- Whether certain accounts should be deleted or preserved;
- How digital photographs and personal files should be handled; and
- How valuable digital assets should be transferred or managed.
An experienced wills and estates lawyer can help ensure your estate plan properly addresses both traditional and digital assets.
Appoint Someone You Trust
Consider appointing an executor or trusted person who understands technology and can assist with managing your online affairs.
This person does not necessarily need to be highly technical, but they should understand your wishes and know where important information is stored.
What Happens to Social Media Accounts After Death?
Social media platforms have different processes for dealing with accounts after someone dies.
For example, some platforms allow users to nominate a legacy contact or choose whether their account should be memorialised or deleted.
You should review the settings and policies of your social media accounts and record your preferences as part of your digital estate plan.
Further information about managing accounts after death is available through individual service providers, such as Facebook’s memorialisation settings.
Planning for Digital Assets During Incapacity
Digital asset planning is not only important after death. You should also consider what happens if you become unable to manage your online affairs due to illness, injury or loss of capacity.
An Enduring Power of Attorney allows you to appoint someone to manage certain financial and legal matters on your behalf if you lose capacity.
Depending on your circumstances, you may need to provide specific instructions about accessing and managing digital assets, particularly where online investments, cryptocurrency or business accounts are involved.
Consider Digital Assets When Preparing Your Estate Plan
Digital assets are now an important part of many people’s financial and personal lives. However, without proper planning, these assets can be difficult for loved ones to locate and manage.
By creating an inventory, storing information securely and including digital assets in your estate plan, you can help your executor manage your affairs and reduce unnecessary stress for your family.
Get Advice About Digital Assets and Estate Planning
Estate planning should consider all aspects of your life, including assets that exist online.
Our experienced wills and estates lawyers can assist you with preparing a comprehensive estate plan that considers your property, financial assets and digital assets.
If you would like advice about protecting your digital assets, contact Somerville Laundry Lomax to discuss your circumstances.
This article provides general information only and is not intended to be legal advice. You should obtain professional advice relevant to your circumstances.