In the modern age, digital assets are now an essential part of estate planning. When considering and preparing your Will, you may have various digital assets that need to be dealt with once you die.
You may, therefore, decide to prepare a letter of wishes to go alongside your Will. A letter of wishes will advise your executors what wishes you have once you die and can cover a number of things such as personal items, funeral wishes and how to deal with any digital assets you may have.
Traditionally, Wills primarily focus on physical and financial assets. This has been the norm for many years. However, in a growing digital age assets are not only found in this format and many people now own, in some form or another, a digital asset.
From cloud-stored family photos to cryptocurrency portfolios, our Wills and Probate team can support you in making sure your digital assets are included in your estate plans and accessible to your loved ones. Please contact us on freephone 0800 011 6666 or at legal@timms-law.com.
What Is a Digital Asset?
A digital asset is personal property that is owned by an individual stored in digital form, either online or electronically. Digital assets can include both personal and financial assets and may include things such as images, multimedia, files or cryptocurrency.
Most people have some form of digital asset, so it is important to think about these carefully and ensure they are not forgotten. It is important that your executors are aware of any digital assets you have as they will need to be dealt with on your death and considered as part of your estate.
Types of Digital Assets You Should Consider in Your Will
Sentimental and Personal Digital Assets
Digital assets can come in the form of computers, external hard drives, laptops, tablets, smartphones, digital cameras, and similar devices. Any information or data that is stored electronically, whether stored online, in the cloud, or on a physical device is digital.
Some personal digital assets may be of sentimental value, such as family photographs stored in an email account, social media or in the Cloud. Other personal digital assets could include e-books, music libraries or personal digital content (such as videos).
Some of these things may be of sentimental value to other family members and they may wish to keep them once you die. This might be an old family photograph or the audio of a loved one’s voice. It is therefore important to consider this so that these items are not lost or forgotten once you pass away.
Financial Digital Assets
There may also be further assets that have a financial value such as:
- Online banking and payment accounts (such as PayPal)
- Online gaming accounts
- Online business
- Domain names and websites
- Digital investments and trading accounts
It is important that these are accessible by your executors particularly if they generate a revenue.
Cryptocurrency and Virtual Currency
Cryptocurrency has become increasingly popular. It is a digital or virtual currency that uses cryptography for security, making it difficult to counterfeit. One of the most common Cryptocurrencies is Bitcoin.
Estate planning for cryptocurrencies can be challenging due to a lack of transparency.
Bitcoin is not held in an individual’s name, meaning it can be difficult to both deal with and transfer to others on death. It can be stored in several ways that usually involves a unique code, or private key which matches another code or key.
If the unique code is lost, the Bitcoin is lost along with it. As Bitcoin is digital, if it is lost, it is untraceable without the code meaning that your executors may be unable to access the Bitcoin and ultimately your beneficiaries will not benefit from it
Crypto assets form part of your estate once you die and their value must be calculated as of the date of your death. Your executors will be responsible for dealing with your crypto assets and will have to access the assets to deal with closing them down or transferring them.
Why Digital Assets Should Be Included in Your Will
- There is an increased risk of your accounts becoming inaccessible after death
- Financial value of digital holdings
- The sentimental importance of online memories and data
- It can help avoid confusion or disputes for executors
What Happens If Digital Assets Are Not Included in a Will?
If your digital assets are not included in your Will then your executors may be unable to access your accounts.
Some platforms may restrict access due to privacy laws. This issue could possibly be alleviated by including your digital assets in your Will so that there is a lesser risk to losing valuable financial assets or personal memories.
How to Safeguard Your Digital Assets
There could be a risk of identity theft with any online asset. Most digital assets, however, can be protected by increased security measures such as password protection or two factor authentication. It is imperative that if you do have valuable or important digital assets that they are backed up regularly to mitigate the possible risk of losing them.
Whilst you may think it is helpful to do so, you should not store your passwords as this could increase the risk of someone accessing them without your consent. It could also breach some terms of service. Instead, you may want to prepare a list of assets or usernames for your executors to review once you have died, but you must ensure to review and update this list regularly. You could also consider revising your Lasting Power of Attorney document should you wish to allow your Attorneys access to your digital assets during your lifetime. Adding in this authority could provide useful particularly if access is required for family photos or a social media account during your lifetime.
Using a Letter of Wishes for Digital Assets
A letter of wishes could be stored with your Will to outline what your wishes are to your Executors, as well as provide them important information when they are dealing with your estate. Within the letter, you could list your online accounts, devices, and key instructions.
A letter of wishes usually compliments a Will but it is important to remember that it is not legally binding and cannot be prepared in place of a Will. Letters of wishes can be particularly useful in providing guidance to executors on digital asset management post death.
Whilst the letter of wishes does compliment the Will, it is importance to keep it separate from the Will for privacy reasons.
Planning Ahead – Practical Steps
To assist with planning for the future, it is important to consider the following steps:
- Creating a list of all your digital assets (be careful not to include sensitive information such as passwords) and how they can be accessed by your executors.
- Ensure that any record keeping is up to date and safely secured.
- Discussing your wishes with your family or executors. This is especially important where sentimental digital property is held so that it is passed on to your loved ones and not lost once you die.
- Obtaining legal advice, where necessary, particularly for complex or substantial assets such as cryptocurrency or online businesses. You must ensure that these assets are considered as part of your estate planning as well as for tax considerations and ensuring that they are accessible to your executors and that they are aware of their existence.
- Identifying your financial and personal digital property.
Digital Assets – In Summary
Planning for the future means more than just thinking about physical possessions and financial accounts, your digital life matters too. From treasured family photographs stored in the cloud to cryptocurrency investments, digital assets are an increasingly important part of your estate. Without proper planning, these assets risk becoming inaccessible after death, potentially causing your loved ones to lose valuable financial holdings or irreplaceable memories.
By creating a comprehensive list of your digital assets, preparing a letter of wishes to accompany your Will, and discussing your intentions with family or executors, you can help ensure nothing is overlooked when the time comes.
How Timms Can Help With Digital Inheritance, Digital Assets & Estate Planning
If you haven't considered your digital assets as part of your estate planning, now is the time to start. Our Wills and Probate team can help you navigate the complexities of including digital property in your Will. Whether that's sentimental items like photo libraries and social media accounts, or more complex holdings such as cryptocurrency and online businesses.
For further information or to book an appointment, please contact me on 01332 364436 or at e.facer@timms-law.com. Get in touch today to discuss how we can help protect your digital legacy.
Frequently Asked Questions
1. What are digital assets in a will?
Digital assets are any online or electronically stored property you own, such as emails, social media accounts, online banking, photos stored in the cloud, and cryptocurrency. They can have either sentimental or financial value.
2. Do I need to include digital assets in my will?
Yes. Including digital assets helps ensure your executors know what you own online and how you would like those assets to be managed or passed on after your death.
3. Can I list my passwords in my will?
No. It is not recommended to include passwords in your will because it becomes a public document during probate. Instead, keep them in a secure, separate document or password manager.
4. What happens to my social media accounts when I die?
This depends on the platform’s policies. Some accounts may be memorialised, while others may be deleted. You can provide instructions in a letter of wishes to guide your executors.
5. What is a letter of wishes and why is it important?
A letter of wishes is a separate document that accompanies your will. It is not legally binding but provides guidance to your executors on how you would like your digital assets handled.
6. What happens to cryptocurrency after death?
Cryptocurrency can be difficult to access without private keys or wallet information. If this information is not recorded securely and shared appropriately, the assets may be lost permanently.
7. Can executors access my online accounts after I die?
Executors may face restrictions due to privacy laws and platform terms and conditions. Proper planning, including clear instructions and legal authority, can help them manage access more effectively.
8. How can I make sure my digital assets are protected?
You should regularly update a secure record of your digital assets, use safe storage for passwords, and include clear instructions in your estate planning documents and letter of wishes.
