14th April 2022

Dealing with digital assets on death

We live in a digital world and this is unlikely to change. Over the past two years especially, we have relied on technology more than ever before, from ordering our food shop online to communicating with our loved ones over various video platforms. With our lives consumed by social media, it would be fair to say that the majority of us have an online profile in one way or another. However, have you ever thought about what happens to your digital assets when you die? Can they simply be dealt with in the same manner as your home or bank account, for example?

What is a digital asset?

It may surprise you to find out that there is no set legal definition of a ‘digital asset’, however we can infer that a ‘digital asset’ is anything stored online. For example, social media accounts; photographs and videos stored online or on a digital camera/laptop/smartphone; emails; online gaming accounts; and Cryptocurrency, to name a few.  

There is also, surprisingly, no set legal rule as to how digital assets should be dealt with on death.

Are digital assets of any value?

With that being said however, it would be unwise to assume that digital assets have no value. I am not suggesting that your Facebook or Instagram accounts are worth a great deal of money, these are perhaps more of sentimental value.

But what if, for example, you had invested in Cryptocurrency? The value of your investment in Cryptocurrency could be quite considerable at your date of death. If so, your Executors would have an obligation to obtain a valuation of your Cryptocurrency investment at date of death and ensure that this is noted in the application for Confirmation. This is important, as HM Revenue & Customs (HMRC) have issued guidance naming Cryptoassets as property for Inheritance Tax (IHT) purposes.

It is not just individuals who are affected by the possibility of their digital assets being left behind after they die. A lack of estate planning regarding digital assets can also affect the owners of online businesses so it is important that business owners take advice on estate planning to ensure their business can continue to operate after they die.

Steps to take to ensure your digital assets are dealt with after you pass away.

As with all assets, careful consideration and advance planning are required.

The most effective way to plan is by making a Will. The obvious advantage of having a Will is that you can specify exactly how you wish your estate (which includes digital assets) to be distributed by your nominated Executors. It is becoming increasingly common for individuals to insert clauses into their Wills relative to digital assets. Such a clause would provide your Executors with the authority to manage and deal with your digital assets, which may include implementing a legacy of a specific digital asset to a beneficiary. You may also wish to nominate a separate individual to deal with your digital assets, someone who has more technological knowledge perhaps. Your Will becomes a public document once Confirmation has been granted, and so it would be unadvisable to specify any usernames, passwords or cryptocurrency keys in your Will.

It would be helpful to conduct a review of your digital assets and make a handwritten list of all accounts held by you. It is also helpful to your executors to have access to the usernames and passwords and in the case of cryptocurrency especially it is critical that they have the access information including private key, otherwise it may be lost.  However, noting log in details down obviously gives rise to security issues so you should consider carefully how and where you store this information. You should also review the information regularly, every few months perhaps, and keep it up to date.

In terms of social media accounts, how these are dealt with may largely depend on the Terms and Conditions of each social media platform. There are platforms, such as Facebook, which give you the option to set up a ‘Legacy Contact’ on your account. The ‘Legacy Contact’ will have the power to request the removal of your account or ‘memorialise’ it. Apple have also recently introduced the ‘Digital Legacy’ feature, which allows Apple ID users to nominate certain individuals and provide them with access to their account after they die. The nominated persons will be able to access the deceased’s Apple ID account and retrieve any data stored on iCloud.

In summary

Digital assets are not usually the first to be thought of when family members of a deceased individual are identifying the extent of the estate. They are, however, just as important as a property or bank account for example. The rules regarding succession and digital assets are not set in stone, however with advance planning, you can certainly make life somewhat easier for your Executors when it comes to dealing with your digital assets.

If you require any advice on this or any other matter involving estate planning or executry administration, please contact the Blackadders Private Client and Executries Teams, working in Aberdeen, Dundee, Edinburgh, Glasgow, Perth and across Scotland.

Blythe Petrie

Blythe Petrie, Solicitor
Private Client
Blackadders LLP

www.blackadders.co.uk

 

 

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