The way in which we hold wealth is changing. Alongside more traditional assets, we are seeing an increasing number of estates which include digital assets. These may range from cryptocurrencies such as Bitcoin and Ethereum to online accounts, digital investments and cloud-based storage.
Despite this, digital assets are not always considered when putting Wills and Lasting Powers of Attorney in place.
In practice, these assets can be problematic as unlike more traditional assets, access depends on having the correct passwords or private keys. Without this information it may not be possible for executors or attorneys to realise the value of those assets, and in some cases they may be lost entirely.
What are Digital Assets?
Many people may not realise how many digital assets they own. Digital assets have no legal definition currently in English law, and the terms itself is incredibly broad – it is generally understood to include assets accessed on digital devices, such as laptops, mobile phones, tablets, computers, intellectual property rights.
Typically these are run by third-party providers like Facebook, Apple, Microsoft, Google. Generally digital assets can take many forms, including cryptocurrencies (such as Bitcoin and Ethereum), crypto-tokens, in-game digital assets, digital files, your mobile phone, digital photographs, social media channels and profiles, email accounts and cloud-based storage to name a few.
Often a vast amount of information, logins, passwords and access permissions to these digital accounts are stored on your mobile phone; but if no one knows the passcode to your mobile how would they access this? Lack of access to these accounts is a real hurdle for Executors and Attorneys, even where they know the assets exist.
Protecting Your Digital Assets in Your Estate Plan
When preparing a will, it is important to ensure that any digital assets are considered. However, it is generally not advisable to include detailed access information within the Will itself, as a will may become a public document.
A more practical approach is to maintain a separate, secure record of your digital assets and details of how it can be accessed. It is important that your executors know where to find this information.
It is also worth considering digital assets in the context of a Lasting Power of Attorney. Attorneys may need express authority to deal with online accounts or other digital holdings during your lifetime. It is possible to include appropriate wording within an LPA to assist with this, although it is sensible to consider in practical terms how those assets can be accessed if required.
This is an area which continues to develop as the way we hold assets evolves. Keeping your arrangements under review can help ensure that your estate planning remains effective.
If you would like to discuss how your digital assets fit within your wider estate planning, please do get in touch with myself or a member of our Wills, Probate and Estate Planning team, who would be happy to assist.