As we inch forward in the 21st century, our lives are becoming increasingly entwined with the digital realm. We have seen an extraordinary rise in the significance of digital assets – from social media accounts and blogs, to online businesses, and cryptocurrency holdings. This evolution has expanded the concept of 'wealth', mandating a rethinking of traditional estate planning norms and business succession planning.
The real question is, how do we adequately address digital assets in our estate plans to ensure they are accessible to our executors and available to be safely transferred to our designated beneficiaries? This blog aims to provide some practical advice on how to navigate this relatively uncharted territory, offering insights into the increasing importance of digital assets in estate planning.
Understanding Digital Assets
Before delving into the practicalities, it's important to understand what 'digital assets' entail. They include:
Any online accounts or files stored on a digital platform. This covers social media accounts, blogs, email accounts, online photos and videos, digital music, e-books, and computer games.
Digital business assets such as:
Domains and websites
Blogs and online content
E-commerce accounts
Social media profiles
Email accounts
Online banking accounts
Digital payment accounts
Digital currencies
Digital Intellectual Property (IP)
Online customer databases
Software and licenses
Financially valuable digital assets can be cryptocurrencies like Bitcoin or Ethereum, digital stock portfolios, online banking accounts and non-fungible tokens (NFTs).
The Growing Significance of Digital Assets in Estate Planning
The value of digital assets isn't solely financial. For example, your social media accounts or personal blogs may have sentimental worth, capturing cherished moments and reflections. In contrast, an online business or a cryptocurrency portfolio may hold considerable financial value.
Whatever the type of digital asset, it's clear that these assets form an increasingly vital part of our lives, necessitating inclusion in our estate planning. Failure to do so could result in loss of access to these digital entities upon your demise, leaving them in a state of digital limbo.
Inventorying Your Digital Assets
The first step in incorporating digital assets into your estate planning is to create an inventory. Make a list of all your digital assets, which should include:
All social media accounts (Facebook, Twitter, Instagram, LinkedIn, etc.)
Online businesses and related assets (websites, blogs, e-commerce platforms, etc.)
Digital financial assets (cryptocurrencies, online banking accounts, PayPal, digital stocks, etc.)
Digital media (photos, videos, music, e-books, etc.)
Any other online accounts or digital files with sentimental or financial value
It's crucial to keep this inventory updated regularly to reflect any changes or new assets.
Securing Your Digital Assets
Securing your digital assets involves safeguarding them from potential threats, such as hacking or unauthorized access. Ensure you have robust security measures in place, such as strong, unique passwords for each account and two-factor authentication where possible.
Consider using a secure password manager to store your login credentials. This can assist in keeping track of passwords and ensure they remain confidential.
How to Transfer Digital Assets
Transferring digital assets can be a complex process, mainly because different platforms have unique policies regarding account ownership and access after death. Here are some general steps to help you:
Designate a Digital Executor: Appoint a trusted individual who can manage and distribute your digital assets according to your wishes. This should be someone technologically savvy, capable of handling digital complexities.
Provide Access Information: Ensure your digital executor or a trusted individual has access to your digital assets. This includes usernames, passwords, PINs, and answers to security questions. Keep in mind that different digital assets may have different rules and regulations regarding the transfer of control, so it's crucial to investigate these rules during your estate planning process. You might share this through a secure password manager or a legally compliant digital legacy tool.
Detail Your Wishes: Specify in your will or estate plan how you'd like your digital assets managed. For instance, you might want your social media accounts memorialized, deleted, or handed over to someone.
Understand Platform-Specific Policies: Some platforms like Facebook and Google have built-in tools for managing your account after death. It's important to understand these policies and make necessary provisions in your planning.
Legal Consultation: The legal aspect of digital assets in can be quite complex in estate planning, particularly where business assets are involved. This is because digital asset laws vary by jurisdiction and are rapidly evolving. Engaging an estate planning solicitor who specialises in digital law can be invaluable to navigate these complexities and ensure your digital assets are correctly integrated into your estate plan and/or business succession plan. This will also ensure that your wishes are practicably enforceable.
Conclusion
In this digital age, estate planning is not just about physical possessions anymore. Digital assets hold immense value, both sentimental and financial. Effective estate planning must now consider the protection and transfer of these digital treasures to safeguard your digital legacy.
Remember, when it comes to the intricate legalities of estate planning, it's always wise to seek professional advice. A solicitor can provide you with the necessary legal guidance and support to ensure that your digital assets are appropriately handled in your estate planning.
In an era of growing digital interconnectivity, make sure your estate planning is digitally inclusive too. Your digital assets are an extension of your life's work and should be treated with the same level of importance. Plan wisely. Secure your digital legacy.
Article by Sean Powell
Partner | Wills & Estates | Litigation & Dispute Resolution