Think Digital Assets: A Solicitor's guide to your Will, Cryptocurrency and Digital Assets
- AuthorHannah Rees
Those who were lucky, or forward-thinking enough to have jumped on the cryptocurrency bandwagon early may now be reaping the benefits. Certainly, as those who grow up in the modern digital age grow older, it is becoming increasingly important for Solicitors writing Wills to ensure they advise their clients fully about digital assets.
Digital assets could include cryptocurrencies, such as Bitcoin (arguably the most famous of the cryptocurrencies), or property rights held on cloud accounts, smartphones, pcs etc. What, therefore, should you do to ensure your loved ones have access to or inherit your digital assets?
Often, a cryptocurrency owner will have a ‘digital wallet’ holding computer files for their digital currency. The files, in turn, are stored on their computer/tablet/smartphone etc. Valuable cryptocurrency has been lost on the death of the owner (or even fund manager) due to the family not having access to the deceased’s ‘crypto key’ passwords.
How would your family gain access? Who have you told about your cryptocurrency and where have you stored the details? For example, will they need your computer password?
Be careful, however, as some accounts, online payment service accounts or online gaming platforms prohibit the use of a password by a third party and this could be a breach under the Computer Misuse Act 1990.
Moreover, some social media platforms state in their T&Cs that by uploading content you relinquish your right to intellectual property rights. Some platforms, such as Facebook, may allow your family to create a bereavement page from your account on your death, but that may not be what you would want. You may also want to ensure any sentimental photographs, for example, are stored in an accessible way, not just on social media and download any online data regularly to keep your records up to date.
Think security and confidentiality
If you have prepared a record of your digital assets, is that list itself secure and are your passwords secure? If you separate from your partner or go through a divorce, change your passwords. Keep your log up to date.
Consider whether what you are considering gifting is, in fact, an asset that you can gift in your Will: the access may be for you alone and die with you! Digital property rights include intellectual property rights (such as for patents, trademarks or copyrights). Digital interests in property could include, for example, cryptocurrency or online tokens. These rights and interests could be left in your Will to your nearest and dearest, however gaming and cloud accounts that only issue licenses often stipulate that they are for the original user only and cannot be transferred to third parties.
Your Executors will also need to consider any liabilities relating to your digital assets e.g. does the Paypal account owe any money? What if your Executors put a stop on the payment card when they notified the bank of the death. Again, check with the online service provider that access is not prohibited if the debts need to be checked and settled.
Tell your Solicitor about your digital assets. If you have acquired assets since making your Will, update your Solicitor. Your Solicitor can then check whether it is appropriate for you to sign a Codicil or make a new Will (or at least keep a note with your Will about your new assets). If you wish to gift your digital assets, your Solicitor should consider a specific digital asset clause in your Will.
You may even want to write up a guide telling your Executors how to access your digital assets. Not everyone is familiar with digital assets and this may save time.
Would you want your Executors to handle your digital assets? What if your Executor is elderly and not particularly computer literate? You could check that their computer skills are developed enough to handle this task or consider appointing someone else purely to manage your digital assets
Everyone should consider putting in place LPAs, but especially if they own arguably more complex assets such as cryptocurrency. In an LPA the ‘Donor’ appoints an ‘Attorney’ (or ‘Attorneys’) to act on their behalf if they lose mental capacity (unlike a Will, which only comes into place on death). There are 2 types: Property & Financial Affairs, and Health & Welfare, which, as suggested either deal with the Donor’s finances and property, or health decisions.
LPAs replace the old style Enduring Powers of Attorney (‘EPAs’), although an old-style EPA can in some circumstances still be valid for the Donor (seek advice from your Solicitor). Without the legal authority to manage your affairs should you lose capacity, access could be denied and your family would need to appeal to the Court to put in place a Deputyship order to manage your affairs (a more lengthy and expensive process than for LPAs).
Each LPA has a ‘preferences’ and ‘instructions’ box in which you can provide guidance or instructions to your Attorneys in specific circumstances. You could use this to provide directions regarding your digital assets, to ensure your Attorneys don’t come up against problems should you lose capacity.
Dealing with your digital assets may come under the Property & Financial Affairs LPA, but your Health & Welfare attorneys may also need directions as regards your digital assets, for example if your leisure and social activities largely included computer use, you may want this to continue in some form should you lose capacity.
As you can see, owning digital assets could cause a bit of a headache for your family, Attorneys and Executors. It would indeed be a shame if, on your death, valuable or sentimental assets are lost to the family. To mimic the boy scouts, therefore, “be prepared!”
For further advice, please contact our specialist Lifetime Planning Solicitors in:
- Swansea: 01792 773773
- Cardiff: 02920 225472
- Carmarthen: 01267 234022
- Caerphilly: 02920 860628
- Cowbridge: 01446 771742
- Haverfordwest: 01437 764723
- Fishguard: 01348 873671
- Pontypridd: 01443 408455