Digital Assets and Estate Planning

By Eleanor Gadd, Senior Associate, Private Client, Knights

Traditionally, when it comes to estate planning and writing your Will, most of us tend to only consider our tangible assets, such as our home or the bank accounts that we hold. There is often very little thought given to digital assets.

However, as digital assets are becoming increasingly prevalent in our lives, it is important that we account for them to ensure that those dealing with our estates are not met with administrative difficulties or disappointment.

What are digital assets?

Whilst not legally defined under English law, the term broadly covers anything personal to you that only exists in digital form. Digital assets are not limited to things with monetary value, such as cryptocurrency or NonFungible Tokens (NFTs), they can be things with sentimental value, such as photographs and videos, or social media content. Other examples of digital assets include:

• Online investments;

• E-commerce accounts

(i.e. eBay, Amazon, PayPal);

• Digital media files;

• Emails and other digital communications; and

• Cloud storage.

What Issues might your relatives face?

With the most expensive NFT sale coming in at approximately $91 million, you may be wondering - who owns your digital assets and account, and what happens to them following your death?

Whilst physical assets, including electrical devices, can normally be passed on under a Will, it has proven difficult for relatives and executors to access digital assets due to data protection laws. Even if your executors are aware of all of them, without access to accounts or passwords, you run the risk of losing these assets entirely. In addition to any potential financial loss, it can have a deep emotional impact, for example, if people are unable to retrieve photos and memories from a loved one’s phone.

When it comes to your social accounts, generally speaking, the terms and conditions of the service providers (such as Google, Microsoft, Apple and Amazon) mean that any digital accounts you create, or content that you download, are not owned by you. Instead, they provide you with a licence to use the platform, and often, the terms would state that the service terminates on the death of the user.

Ultimately, therefore, it will be the service providers who determine whether you are able to transfer your digital assets on death.

Many service providers will prohibit your executors from accessing your accounts. However, some have post-death policies in place, for example, Facebook allows users to set up a legacy contact to memorialise the account, or request for the account to be deleted.

What should you do to reduce the risk of losing your digital assets?

Digital assets are still assets, so, when you make a Will, it can be helpful to include instructions on how to access them on your death and who you would like them to pass to.

Additionally, it is advisable to create an inventory of all your digital assets and accounts which will help your executors identify what assets you have and be able to obtain a valuation for them.

It is important to keep the inventory up to date and ensure that it is stored in a safe place, where the data is secure, but your executors can access it. You may wish, for example, to keep it with your Will.

Due to the difficulties that your executors can face when trying to access your online content, it would also be practical to back up your digital assets, for example, by storing photos and videos on an external hard drive.

Whether your digital assets have financial value or sentimental significance, with the development of digital assets in Wills, it would be appropriate to take legal advice on how best to protect these assets.

If you would like advice on estate planning and how to protect your digital assets, our experts in the Private Client team at Knights are happy to help.

Eleanor.gadd@knightsplc.com 01293 603615 www.knightsplc.com