Digital assets find their way into estate planning

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Digital assets find their way into estate planning

PETALING JAYA: Digital assets will increasingly find their way into inheritence plans in the next few years as people are acquiring more of such instruments and investing in cryptocurrencies, according to estate planning group Rockwills International Bhd.

Currently, digital assets and digital legacy tend to be neglected by many Malaysians in their estate plans, hence resulting in the potential loss of valuable assets and information, with money and time spent to track them down.

Group CEO Azhar Iskandar Hew (pix) explained that digital assets are a collection of binary data rather than actual physical objects. Things that are created, stored, recorded in the form of digital devices or online services, for example, websites, social media sites, emails, cloud services, mobile phones, laptops, hard drives and computers.

“The most well-known digital asset is digital currency. Other digital assets of monetary value are e-wallets, e-commerce accounts, internet domain names, online storage such as google drive and dropbox. For creative professionals, their works such as photography and artwork that are stored digitally in various online platforms and the royalty generated from their accounts are digital assets,” he told SunBiz in an interview.

Hew said clients have been including digital assets in estate planning for the past few years.

“There are cases involving wills that include digital assets in one form or another but primarily they are cryptocurrencies which clients want to give away to their beneficiaries. For every 100 wills, there are two to three wills that include some sort of digital assets.”

He added that in Malaysia, the top three digital assets people include in wills are cryptocurrencies, e-wallets, and electronic trading accounts.

Hew said if an estate plan did not account for digital assets properly, the beneficiaries would not be able to access them. Family photos and videos would be lost forever and the heirs might not receive all the money that the deceased would like to leave to them.

“To gain access to a digital asset, you need usernames and passwords. Many people do not bother to organise digital assets meticulously to pass them on to the next of kin. For investors using online trading platforms, if they do not leave instructions on how to access the accounts, their families will not know how to access them.”

He recommended that the owner of a will make a thorough inventory of all online accounts and their passwords but not to include them in the will. Also, they should update the inventory regularly.

“Make a list of your digital assets and passwords so other people you trust will know where to find them. Back up data stored in the cloud to a local computer or storage device. This inventory can then be stored in an encrypted file, safe or even with a lawyer,” Hew said.

He advised people to get preparation and execution of estate plans from lawyers or professional companies because it is a specialised area.

Hew said gaining access to digital assets such as social media and online trading accounts can be tricky. Each online service has its privacy or end-of-life policy and a simple court order will not count.

“Even if the local court where the owner of the will resides grants the families access to the digital assets, the laws where the company resides could prevent the families from getting access to them.

“The laws that govern digital assets vary from country to country, and online sites have wildly different terms and conditions that sometimes lock out executors. You do not even know in which country to apply for the court order to let the company allow your heirs to gain access.

“Writing a will alone will not be sufficient as there are additional steps to be taken to retrieve digital information. It is impossible to recover digital assets without proper instructions on where to find the password,” he said.

Hew said Malaysians age 18 and above who reside in Peninsular Malaysia and Sarawak are eligible to set up a will, while people in Sabah are required to be 21 and above. Estate planning for digital assets starts from RM480 and the price will increase according to the complexities and the number of items and instructions of the will.

He said as digitalisation and its adoption continues, planning will become more important.

According to the UK-based Digital Legacy Association, when making plans for digital assets that are of sentimental value, it advised people to establish a social media will that should only contain non-sensitive information. Digital assets that have financial value should be included in a will.