Families risk losing millions of pounds worth of inheritance because people are not thinking about how loved ones will be able to access their digital assets. An excerpt of this article appeared in the i newspaper on 5 June 2021.
Caroline Fraser, a Partner in our Private Client team, suspects growing numbers of people are in danger of not receiving money and sentimental items intended for them because they are stored digitally and have not been thought about. This could include cash held as cryptocurrency - such as Bitcoin - or photographs stored on social media.
To stem the number of problems exploding, she believes people must take greater measures to consider their digital assets - and how they can be accessed by those looking after a person’s estate - when setting up their Will.
Caroline said: “We are starting to see signs that if people do not start making provision for their digital assets in the same way that they do their physical ones that we are going to see widespread problems in years to come.
“The majority of people passing away at the moment do not have all that many digital assets. That’s a generational thing. However, we are starting to see a change in the work we need to do for these estates due to society being more paperless. The fact that people have accounts where the only regular contact is by email makes it more difficult to track assets down.
“As time goes on, that issue is only going to grow - and people would be well-advised to think now of what might happen when they pass away. I fear it’s inevitable that millions of pounds-worth of digital assets will be lost as a result of people either being unaware of their existence or not having the tools or information to access them. No-one wants that to happen.”
Digital assets can include online accounts such as email, social media, banking and shopping, as well as anything stored on your computer or in a cloud, such as photographs, videos or documents. With the digital drive in households accelerating during Covid-19 restrictions over the past 15 months - Ms Fraser believes now is a key time at which people should look at how their online personal affairs are arranged.
As important as saying to whom digital assets should go is, it's the need to leave information about how to get hold of the passwords required to access those accounts - with lawyers able to share information about doing that securely.
Caroline added: “Throughout the centuries, solicitors have drafted Wills for people dealing with their assets in the ‘real world’. However, it is important to recognise that estates now comprise assets in the virtual world too.
“With assets such as social media, the value may be mainly sentimental. But there are still decisions to be made about what happens to them on your death. For example, you may wish your loved ones to be able to download pictures, videos or music from your accounts including from a social media account.
“One of the main complexities with digital assets is that you may have to think about the laws of multiple jurisdictions, depending on where the service provider is based. It is so important to consider this aspect to ensure that you have your own digital assets in order.
“If you do not leave instructions in your Will, your executors may not know of all the accounts you hold and will therefore not be able to wind up these assets.”
While you should make arrangements for where your account passwords can be accessed, these should not be listed in your Will as they become public documents after death.
According to a 2020 study by the Cremation Institute, nearly 90 per cent of all cryptocurrency owners are worried about what will happen to their crypto when they die, but rarely make provisions for ensuring it is not lost.
Estate executors need to be mindful because they are legally obliged to identify all assets and pay Inheritance Tax on them, if necessary.
Protecting your digital assets: Top tips
- Consider appointing a ‘digital executor’ in your Will: This should be someone who you trust to deal with your online assets, and preferably someone who is ‘tech savvy’. When appointing a digital executor, you should detail in your Will what you wish to happen with specific assets, from social media accounts to photos or documents you store on cloud platforms such as Dropbox or Google.
- Create a digital inventory: It is helpful to keep an updated note of all your online accounts and passwords to ensure that your executors know about and can gain access to them. A simple handwritten or printed list kept in a safe place can suffice here, or you could use an online ‘safe box’ or password manager. Either way your executors need to know where to find it. But don’t include passwords or cybercurrency keys in the Will itself since it becomes a public document on your death.
- Policies: Check the policies of your online accounts, for example, Facebook allows you to nominate a ‘legacy contact’.
The latest edition of our regular magazine, Lindsays Life, included an article on this topic and you can read it here.