When people consider the assets they might leave behind to loved ones in a will, digital assets are commonly overlooked. Many would-be will makers do not even consider their online footprint when making provisions for after their death, but forgetting to do this can cause issues further down the line.
A recent survey commissioned by the Law Society revealed that a staggering 93% of people who have made a will have not included any digital assets in it, while only 25% of respondents know what will happen to their digital assets after they die. Worryingly, only 7% of respondents said they fully understand what happens to digital assets after they die.
While it is commonplace for wills to refer to assets such as personal belongings, jewellery, cars and property, it is rare for them to include reference to the distribution of digital assets. Such assets have become an integral part of modern life over the past 20 years, and it is becoming increasingly important to include such provisions covering the distribution of digital assets.
Here, we will explain everything you need to know about digital assets and estate planning, helping you to make sense of this increasingly important consideration, and offer tips on avoiding issues.
What are digital assets?
A digital asset is anything that is stored in a binary format and comes with a right to use. This encompasses any accounts that you open online, such as:
- Email accounts
- Social networking profiles – such as Twitter, Facebook and Instagram
- Photo sharing websites
- Any websites and domain names that you own.
The term digital asset also refers to items stored on your computer, as well as on your online accounts, including:
- Family videos
- Word documents
- Instant messages
- Other property you create or store digitally
Most online accounts you have will be password protected, meaning only you have access to them. In some cases, only you will be aware of their existence.
Why do I need to consider my digital assets?
Many digital assets, such as the balance on your PayPal account, or any cryptocurrencies you own, will have monetary value. For this reason, you should make provisions for the executor of your will to have access to those funds in the event of your death. Some other accounts, such as Amazon or Spotify, may not have any monetary value, but you may wish to pass these on to a loved one who can continue to utilise them.
Social media accounts also hold a lot of memories that you may want your family members and friends to keep hold of after you die. You may wish to decide in advance how those accounts should be dealt with. In some cases, you may believe that these accounts hold a lot of information, which you may wish to remove following your death. You should take steps to decide who should have access to them, and for what purpose, after you die.
If you fail to leave instructions, your executors or family members may know about your more obvious digital assets (such as social media accounts) and would be able to wind them up. However, lesser known assets – including cryptocurrencies – are more difficult to make arrangements for, and your family members may not know how to find them unless you make specific arrangements.
Any domain names you own can cause particular headaches for executors, particularly if you die shortly before any hosting fees are due. It is of the utmost importance that information on how to resolve this is readily available to your executors so that any issues can be dealt with efficiently.
What steps should I take to avoid issues?
The first step you should take when making provisions for your digital assets is to keep a record that can be utilised by your executors in the event of your death. It is now possible to set up an online ‘safety deposit box’, where usernames and passwords can be stored. This can be made available to a nominated person after you die.
Alternatively, you can keep a written list of accounts and access details in a safe place. However, it is important that when selecting either of these options, you keep your list of passwords up to date at all times.
It is also important to identify which digital assets have monetary value and which have sentimental value, while making plans for both types of assets. If you do not gift your digital assets with monetary value as part of your will, they will fall into the control of the state, which may not be what you intend. In some cases, if you do not leave instructions, they may be lost forever.
For this reason, you should take the time to document these assets and decide how they will be distributed.
Items with a sentimental value, such as family photos and videos, can be left as part of a gift of personal property, but you will need to make provisions in your will to cover this. In many cases, people choose to leave access to their social media accounts to a loved one, who may wish to post memorial messages from time to time.
Some accounts allow you to specify a contact who may have control of your account in the event of your death, while others allow an executor to request that the account is removed. You should write up instructions on how these should be dealt with after you die.
As part of your estate planning, you should consider which family members you would like to deal with your online presence in the event of your death. You may want to include a digital assets clause in your will, which will give your executors the discretion to decide who should benefit from any digital assets with monetary or sentimental value. Alternatively, you could leave certain digital assets to named beneficiaries. You can also decide whether you want your social media accounts to be shut down or memorialised.
It is extremely important that steps are taken to account for your digital assets in your will. Doing so will save a lot of time and stress for your family members.
By Jodie Wielgus, Partner, Ramsdens Solicitors