Special Counsel, Lucy Ferreira discusses the importance of managing digital assets.
In today's digital age, the scope of a person's estate extends beyond traditional assets like real estate, bank accounts, and personal possessions. Increasingly, a significant portion of wealth and personal information is held digitally.
Digital assets include everything from online bank accounts and investment portfolios to social media profiles and digital photo collections. As more aspects of our lives move to digital platforms, incorporating digital assets into a comprehensive succession plan is becoming essential.
"Incorporating digital assets into a comprehensive succession plan is becoming essential."
What are Digital Assets?
Digital assets are any online or electronic records owned by an individual. These can broadly fall into three categories:
- Financial Assets: Online bank accounts, investment platforms, and cryptocurrency holdings.
- Personal Assets: Social media accounts, photos, emails, and cloud storage accounts.
- Intellectual Property: Domain names, digital copyrights, and trademarks.
Why Should Digital Assets Be Part of Succession Planning
The nature of digital assets presents unique challenges during estate administration. Unlike physical property, digital assets can be difficult to locate and access, and without proper planning, these assets may remain inaccessible or lost altogether. Furthermore, many digital accounts are protected by passwords or terms of service agreements. Ensuring a smooth transition of these assets requires proactive planning.
Incorporating digital assets into succession planning ensures that:
- Assets are identified – by listing digital accounts and assets, you provide clarity to the executor.
- Access is granted – without clear instructions, executors may be unable to retrieve essential digital records or may face legal problems in accessing certain accounts.
- Assets are protected – some digital assets, such as cryptocurrency wallets or intellectual property, may hold significant value. Succession planning ensures they are managed or passed on correctly.
Key Considerations for Digital Asset Succession Planning
1. Inventory and Documentation
The first step is to create a comprehensive inventory of all digital assets. This should include financial accounts, personal content, and business-related digital holdings. Each entry should list:
- The type of asset
- The platform or service provider
- Account login details (username, password)
- Any security keys or 2-factor authentication devices
This inventory should be securely stored, such as with your lawyer or in a digital vault, to ensure executors have easy access and that it remains protected during your lifetime.
2. Legal Access and Terms of Service
Different platforms have different policies regarding access to digital assets after death. Some accounts may be transferred or accessed by your family members, while others are strictly non-transferable. Reviewing these terms of service agreements is important to understand how each digital asset will be managed.
It is also essential to provide legal consent and access. Without specific permission, privacy laws may prevent even your digital executor from accessing your accounts.
3. Appoint a Digital Executor
Appointing a digital executor, namely a person responsible for managing digital assets after your death is best practice. The digital executor may differ from your general executor, particularly if they have the technical expertise to navigate online platforms and recover digital assets.
Ensure that your digital executor understands their role and has access to the necessary documentation and legal authority to act on your behalf. This may require specific clauses in your will to be included or involve the creation of a separate digital asset trust.
4. Cryptocurrencies
Since cryptocurrencies are often held in private wallets without a centralised governing body, failure to share keys or passcodes could result in permanent loss. Succession planning for these assets should include storing private keys securely, and ensuring your digital executor knows how to access and transfer these assets.
5. Regular Updates
Like any estate plan, the digital asset plan should be updated regularly. As new accounts are created or existing ones are closed, it is essential to keep your inventory and instructions current. Passwords, in particular, may need frequent updating.
6. Consider Privacy and Legacy
Some digital assets, such as personal emails or social media accounts, hold sentimental rather than financial value. Consider the legacy you wish to leave behind with these accounts. Would you prefer to have certain accounts memorialised, deactivated, or deleted. Many platforms like Facebook and Instagram offer settings to manage accounts after death, including options for memorialisation or deletion.
Conclusion
As the world becomes increasingly digital, ensuring that digital assets are explicitly and properly managed in your succession plan is important. A well-considered approach not only safeguards valuable financial holdings but also protects your personal digital legacy.
Checklist for Managing Digital Assets as Part of Succession Planning
Checklist for Managing Digital Assets
- Create an inventory of all digital assets
- Include financial accounts, personal content, and business-related digital holdings
- List type of asset, platform/service provider, account login details, and security keys
- Store inventory securely
- Store with a lawyer or in a digital vault
- Review legal access and terms of service
- Understand policies for access to digital assets after death
- Provide legal consent and access in your will
- Appoint a digital executor
- Choose someone with technical expertise to manage digital assets
- Ensure they understand their role and have legal authority
- Succession planning for cryptocurrencies
- Store private keys securely
- Ensure digital executor knows how to access and transfer them
- Regularly update your digital asset plan
- Keep inventory and instructions current
- Update passwords as needed
- Consider privacy and legacy preferences
- Decide how personal emails and social media accounts should be managed
- Choose memorialisation or deletion settings for platforms like Facebook and Instagram
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.