What are digital assets?
Digital assets are becoming an increasingly important part of our everyday lives. From online bank accounts and investments to photographs stored in the cloud, many of the things we own, access, or value now exist digitally. But what happens to these assets when someone dies? And how can you make sure your digital assets aren't overlooked when planning your estate?
What is a digital asset?
A digital asset is something that exists in a digital format and has financial, practical, or sentimental value.
Some digital assets are owned outright, while others may simply give you a right to access or use a service. This distinction can be important when someone dies, as not everything held within an online account can necessarily be passed on to someone else.
Digital assets can include:
- Online bank and savings accounts
- Online investment accounts and ISAs
- Cryptocurrency and digital wallets
- PayPal and other online payment accounts
- Photographs and videos stored digitally or in the cloud
- Email accounts
- Social media accounts
- Websites and domain names
- Online businesses and income generation accounts, such as Etsy or Vinted
- Digital documents
- Loyalty points and rewards
- Gaming accounts and virtual items
- Music, films, eBooks, and other digital content
As more of our lives move online, the number and variety of digital assets we accumulate is likely to continue growing.
Are digital assets valuable?
Digital assets can have financial, practical, or sentimental value. Some have an obvious monetary value. Examples include cryptocurrencies, investments held through online platforms, and income generated through a website or online business. Others may not have a significant financial value but could be incredibly important to family and friends. A cloud account containing years of family photographs and videos, for example, could hold irreplaceable memories.
There are also digital accounts that contain important information an Executor may need when administering an estate, such as emails, electronic statements, or records of online investments. This is why it can be helpful to think about your digital estate as a whole, rather than focusing only on assets with a clear financial value.
What happens to digital assets when you die?
What happens to digital assets after death depends on the type of asset, how it is owned, and the terms and conditions of the provider.
Some digital assets may form part of your estate and can potentially be passed to beneficiaries. Others are licences or accounts that cannot be transferred. Individual platforms may also have their own processes for dealing with an account following the death of a user.
For example, some technology and social media providers offer legacy or inactive account features that allow users to specify what should happen to their account or who should be able to access certain information after their death.
For more information about protecting photographs, social media accounts, and other online memories, read our guide to digital legacy planning.
Can digital assets be included in a Will?
Digital assets with financial value may form part of your estate and can be considered when making a Will. However, it is important to distinguish between leaving an asset to someone and giving them the information they need to locate or access it.
A Will becomes a public document once a Grant of Probate has been issued, so passwords, PINs, cryptocurrency private keys, and other sensitive security information should not be written directly into it. Instead, you should keep a separate, secure record of your digital assets and make sure your Executors know how to locate it.
If you have digital assets of significant value or are unsure how they should be dealt with in your Will, consider seeking professional legal advice.
How can Executors find digital assets?
One of the challenges with digital assets is that they can be difficult to see.
An Executor dealing with someone's home may find bank statements, share certificates, or other paperwork that points them towards traditional assets. With digital assets, there may be no physical record at all.
An individual could have investments held entirely through an app, cryptocurrency in a digital wallet, or an online account that their family doesn't know exists. This can make identifying the full extent of an estate more difficult.
Keeping an up-to-date inventory of your digital assets can therefore be useful. This might record:
- The types of digital assets you own
- The companies or platforms they are held with
- Relevant usernames or account references, where appropriate
- Where important documents or information can be found
- Any legacy settings you have put in place
This information should be stored securely and reviewed regularly.
What about cryptocurrency?
Cryptocurrency requires particular consideration because access is often controlled through private keys, passwords, or recovery phrases. Unlike a traditional bank account, there may not always be a central organisation that can simply restore access if this information is lost.
If nobody knows that cryptocurrency exists, or the information required to access it cannot be recovered, there is a risk that the assets could become inaccessible. Anyone holding cryptocurrency should therefore consider how their Executors will identify and deal with it after their death, while taking care not to compromise the security of the asset during their lifetime.
Professional advice may be appropriate where cryptocurrency forms a significant part of an estate.
How can I prepare my digital assets for the future?
Digital estate planning doesn't have to be complicated. A useful starting point is simply understanding what you have.
Consider:
- Taking an inventory: Make a list of your important digital accounts and assets, including those with financial or sentimental value.
- Keeping information secure: Don't leave passwords or sensitive security information somewhere they could easily be found or accessed.
- Checking account settings: Some providers allow you to nominate a trusted contact or specify what should happen to your account after death.
- Speaking to your Executors: They don't necessarily need access to everything now, but it can be helpful for them to know that you have a digital asset inventory and where it could be found.
- Reviewing your arrangements: Digital lives change quickly. Review your inventory periodically as you open and close accounts or start using new platforms.
Why should digital assets be considered as part of estate planning?
Digital assets are easy to overlook because many leave little or no physical paper trail. However, failing to consider them could mean Executors have difficulty identifying assets, accounts take longer to deal with, or valuable and sentimental items are lost.
Recent research commissioned by The Investors Centre found that 57.5% of UK adults surveyed held financial assets digitally. Among digital investors surveyed, 69.2% had no documented access pathway for their heirs.
As digital ownership becomes increasingly common, considering digital assets alongside property, savings, investments, and personal possessions is becoming an important part of planning for the future. Taking some simple steps now could make it easier for your Executors and loved ones to understand what you own and what you would like to happen to it.
Need help with estate administration?
Digital assets are just one part of an estate that Executors may need to identify and administer after someone dies. At Kings Court Trust, we specialise in estate administration and can provide support tailored to the needs of an estate, from obtaining the Grant of Probate through to full estate administration.
Speak to our team to find out how we can help.
