Our personal and financial lives are increasingly online, making planning for your digital assets an essential part of estate planning. These assets, which range from online bank accounts to social media profiles, are more than just digital footprints; they represent significant parts of our identity and wealth and can often hold a great deal of sentimental value.
Despite their importance, digital assets are often overlooked in wills and estate plans, potentially leading to confusion and complications for those we leave behind. As such, a 21st century will must take more than money and physical property into account; it must also ensure that our digital life is handled according to our wishes.
This guide aims to shed light on the critical role digital assets play in modern estate planning. We’ll explore what digital assets are, how to include them in your will effectively, and the importance of getting expert legal advice in this complex area. Understanding and incorporating digital assets into your estate plan should be seen as an essential step to ensure that your legacy is complete and secure.
Understanding digital assets
Digital assets include any piece of content or online rights you own that exist in a digital format. These can be personal, like your photos stored in the cloud, or financial, such as your online banking accounts.
Here are some of the most common categories of digital assets that you’ll need to remember to include:
- Financial assets: these include any online accounts with financial institutions, digital wallets, loyalty points or cryptocurrency holdings. They represent a significant portion of your financial legacy and need careful handling in your estate plan.
- Social and personal assets: your social media profiles, emails and blogs are a reflection of your personal life. They may hold sentimental value for your loved ones and require clear instructions for management or preservation after your passing.
- Business and creative assets: if you run an online business, or have digital intellectual property like artwork, music, or written content, these are valuable assets. They may generate income or hold significant market value and should be included in your estate planning.
- Recreational assets: digital assets can also include your online gaming accounts, software libraries or digital collections. These can also hold monetary or sentimental value and should not be overlooked.
Your digital assets are an important part of your legacy and, without proper planning, can be lost or fall into the wrong hands after your passing. Including them in your estate plan ensures that they are managed according to your wishes and that their value, both monetary and sentimental, is preserved for your beneficiaries.
How to include digital assets in your will
Incorporating digital assets into your will requires a clear and structured approach. It’s about ensuring that your online life is accounted for just as meticulously as your physical possessions. Not all digital assets can be inherited, and some are governed by the terms and conditions of that particular asset or platform.
Here’s how you can systematically include your digital assets in your estate planning:
Create a comprehensive inventory of your digital assets
- Start by listing all your digital assets. This includes everything from online banking and investment accounts to social media profiles and digital photo libraries.
- For each digital asset, record the necessary access information like usernames, passwords and answers to security questions. Remember, this information is sensitive and needs to be stored securely and updated regularly.
Clarify your wishes for each asset
- Think carefully about what you want to happen to each digital asset after your death. Do you want certain accounts to be closed, contents archived, or particular assets transferred to specific individuals?
- Reflect on the emotional significance of your digital content, such as personal photos or messages, and how you want these handled.
Navigate terms of service agreements
- Understand the terms of service for each digital platform. Many have specific policies for handling accounts after the owner’s death.
- Make sure your wishes align with these policies to avoid complications for your executors and beneficiaries.
Appoint a digital executor
- Select a digital executor who is technologically savvy and trustworthy to manage your digital assets. This should be a person who is competent to manage your digital assets in an effective and sensitive manner.
- Ensure your will provides explicit authorisation for your digital executor to handle your digital assets.
Keep your digital estate plan updated
- The digital world is ever-changing. Regularly update your digital asset inventory and access information to reflect new accounts or changes.
- Make sure your executor knows how to securely access the updated information about your digital assets.
- Do not include sensitive information, such as login details or answers to security questions, within your will itself. On death, your will can become a public document, so it is best practice to keep such information within a separate document which is accessible to your chosen digital executor.
By methodically following these steps, you can ensure that your digital assets are well accounted for in your estate plan. This brings clarity and order, making the management of your digital legacy straightforward for your executors and offering you peace of mind.
The responsibilities of your digital executor
As an executor, managing the digital assets of a deceased individual involves a set of specialised duties. The digital world presents unique challenges and responsibilities that require careful attention and specific knowledge.
Here are the key duties that an executor needs to perform regarding digital assets:
- Ensuring that all digital assets are secure from unauthorised access or theft. This may involve changing passwords or taking control of the assets as soon as possible.
- Gaining access to digital accounts and files, reviewing them to understand their content, value and relevance to the estate. Digital assets with a financial value may need to be included when considering the estate’s Inheritance Tax liability.
- Following the instructions specified in the will regarding each digital asset. This may involve transferring ownership, closing accounts, or archiving digital content.
- Handling social media accounts and online profiles according to the wishes of the deceased. This might include memorialising accounts, closing them, or passing them on to heirs. Specific attention must be paid to the terms and conditions relevant to each social media platforms.
- Managing assets with monetary value, like online banking accounts or digital currencies, in line with the estate’s financial interests, including transferring, liquidating, or using them to settle debts.
- Managing and transferring any digital intellectual property according to the terms of the will and any applicable laws.
- Protecting the privacy and confidentiality of the deceased by securely managing or disposing of personal data found in digital assets.
The role of an executor in managing digital assets is integral to the smooth administration of a modern estate. It requires a blend of technical knowhow, legal awareness, and a sensitive approach to handling the digital legacy of the deceased. As such, it’s usually important for the executor to seek the advice of a solicitor to make sure this process is handled properly.
The importance of including digital assets in your will
Incorporating digital assets into your will should be considered an essential component of a comprehensive estate plan, for the following reasons:
- Digital assets can represent a considerable portion of your financial wealth, especially with assets like online businesses, intellectual property, or cryptocurrency holdings. Including them in your will ensures these assets are recognised, valued and distributed according to your wishes, safeguarding your financial legacy.
- These assets also often carry sentimental value, encapsulating precious memories and personal moments. By including them in your will, you provide clear instructions on preserving, archiving or sharing these memories.
- Detailed instructions on managing or deactivating your digital presence can protect against identity theft and misuse of your accounts, preserving your personal legacy and protecting your loved ones from fraud.
- Uncertainty around the management of digital assets can lead to legal disputes and emotional distress for your family and beneficiaries. Clear directions in your will can help prevent such conflicts, making the estate administration process smoother and less burdensome for your loved ones. .
In these ways, the provision for your digital assets in your will can be seen as a critical step in ensuring that your estate plan allows you to take full control of your digital life, making sure it is handled with the same care and respect as the rest of your legacy.
Why seek legal advice?
The role of professional legal guidance in this process is often vital. Securing your digital legacy involves navigating a complex interplay of laws, digital policies and rapidly evolving technology, and expert legal advice from an experienced wills solicitor can greatly aid this process.
Legal professionals can offer you personalised guidance to ensure that your will reflects your specific circumstances, and cater for the specific nature and scope of your digital assets, providing a bespoke solution for your digital legacy. They can also make sure that the plan complies with current laws and platform policies, safeguarding your assets and your beneficiaries’ interests.
Additionally, a qualified solicitor can help to prevent any ambiguities or omissions in your will that could lead to disputes, loss of assets, or privacy breaches, easing the administrative burden on your executors and bringing clarity and precision to the whole process.
In these ways, the guidance of a seasoned legal professional can be seen as a fundamental part of ensuring that your digital legacy is as well-protected and respected as every other part of your physical estate. With the right planning and professional guidance, you can navigate the complexities of digital estate planning with confidence, ensuring that every aspect of your legacy – both online and offline – is preserved and protected according to your wishes.
