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Gone are the days of bestowing your worldly possessions and wads of cash to your successors. Instead, the internet has heralded in a new, often terrifying world of intangibility and digital assets.
Okay, while we may have exaggerated ever so slightly, as technology has progressed, digital assets have become more commonplace, but the knowledge of how to deal with them after death has lagged behind.
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What are digital assets?
You don’t have to be a famous YouTube influencer or Tikwhatever star to have built up a significant digital footprint. If you’ve got a computer or a smartphone, it’s likely you’ll own digital assets in the form of photos, documents, or other content that you’ve created or that’s held online.
While not everything you own will be of interest (let alone of value) to your future beneficiaries, some professions make extensive use of digital storage and cloud service platforms to stash away their prized portfolios, including:
- Artists, photographers, videographers and graphic designers
- Musicians or sound effect creators
- Games designers
- Financial technology creators
- Social media influencers or persons with significant online followings
These things don’t technically exist as objects that can be touched or felt as per items traditionally passed down in wills, but they do have sentimental and monetary values.
Even if you don’t come under any of these categories, you should consider whether there’s anything of value held on your Facebook, Instagram or other such social media account that you’d like to pass on.
You’ve also got to consider things that might exist physically today, like paintings, manuscripts or book but which may eventually be digitally stored.
It’s also important to distinguish between a digital asset, and a digital device used to access digital. The latter, including things like laptops, tablets etc would be classed as a physical asset rather than a digital one and subject to normal rules around tangible personal property.
Do cryptocurrencies count as digital assets?
Cryptocurrencies… every private client solicitor’s worst nightmare. While technically a digital asset, cryptocurrencies are treated completely differently to other ‘traditional’ digital assets.
The likes of BitCoin and Etherium have caused headaches for both regulators and investors alike, which is in part down to their governance – or lack thereof – and whether or not they are considered an asset. Most cryptocurrencies are also not based in any one country, which makes deciding which jurisdiction they fall under difficult if not impossible.
It’s typically not enough to distribute cryptocurrencies in a will. This is because most cryptocurrencies are accessed using a digital wallet that is, in turn, managed by a third party whose Terms of Use must be abided by. If an executor were to access the deceased’s digital wallet, this could hold them in breach of these terms, as well as any local computer misuse laws.
Cryptocurrencies are a complex area of wills and estate planning and if you’re lucky or shrewd enough to have significant wealth built up in them, it’s worth having a look at our dedicated cryptoassets article.
Planning for the distribution of digital assets
Although counter-intuitive to digital safety policies, the best way to ensure your digital assets go where you want is to ensure that they are accessible by your personal representative or executor of your will.
To do this, you’ll need to do the one thing we’ve always been told not to do: write down a list of all your accounts and passwords.
You can then store these either digitally on an external hard drive, or print them out and have them stored in a safe place. Be mindful of two things though:
- Keeping your account and password information up to date at regular intervals
- Never including sensitive information like account names and passwords in your will. Once a grant of probate is approved for your will, the contents of the will become public and anyone can see them.
It is, however, fine for the details to be stored with your will.
Just like any other personal property within a will, your executors will need to value the contents of your digital estate for inheritance tax purposes, so it’s essential they can be accessed.
If you do have a large number of valuable digital assets, or they make up the bulk of your estate, you should also bear in mind the capacity of your executor to deal with them. If (like me!) they aren’t particularly tech-savvy, you should consider whether someone else, or even a professional executor, may be better suited to valuing and distributing your assets.
Will my digital assets be taxed?
The short answer is yes… and no.
This will depend entirely on the nature of what digital assets you have. If you’re only passing on sentimental items like photos on Facebook or access to digital records like your email, you’d need to declare these but it’s unlikely they’d hold any value.
However, the taxman never misses a trick and digitally stored items such as business logos that hold a commercial value, photos that have been sold, or even items that are held digitally but purchased with money, like significant values of in-game currencies, may be subject to inheritance tax calculations.
Even if your executor is a tech savant, it’s unlikely they’d be able to attribute an accurate valuation to each and every one of these things, which is why many people will turn to professional digital asset valuers.
And then there’s the topic of cryptocurrencies again. These have a defined value that must be declared both for inheritance tax purposes and capital gains tax. Thankfully, valuing cryptoassets is much simpler than other digital assets due to them having a market value.
So do I really need to bother with planning my digital assets?
Truthfully, the majority of people won’t need to. But like with any estate, you’ll need to plan in accordance with what you have, what’s important to you, and what you want to pass on.
Even if you’re not a BitCoin tycoon, you may wish to include provisions in your will to pass on access to your Facebook account to ensure the images you’ve curated over the years are passed on to your loved ones.
Conversely, if your entire livelihood has been fuelled by your followers on social media and advertising revenue, or investments in cryptocurrency, it wouldn’t be a bad idea to seek legal advice on planning how these will be distributed on your death in an area of law that is still being defined.
How can Britton and Time Solicitors help?
Britton and Time’s expert private client solicitors can help plan your estate and draft your will, however complex they may be. That’s why our initial consultations with our private client solicitors offer you:
- Unlimited time to go through the details of your case and ask any questions you may have
- An overview of your legal standpoint and your available options
- A precise time and fee estimate for your case
To arrange your initial consultation with one of our solicitors, simply call us on 020 3007 5500.
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