Estate Administration / Probate and Digital Assets
In the past couple of months, it is likely that you may have come across the ubiquitous success of Bitcoin in the news. Launched in the US around 2009, the cryptocurrency peaked in value in the tune of just under $20,000 in December 2017. Like all success stories, this paved the way for others and apparently, there are currently over 100 types and alternatives of this virtual money on the rising digital market.
With technology shaping our lives at an unprecedented pace, it has now become necessary to consider the myriad of digital assets an individual owns, which forms part of their estate . Digital assets can be defined as the intangible things owned with a value attached. With these assets being non-conventional (yet) and its non-physical presence, individuals can be forgiven for overseeing them as ‘assets’ and how to deal with them on death. For instance, what would happen to the money in a PayPal account, a library of hundreds of songs in iTunes, the vast number of loyalty points in a Boots or Tesco reward card or a coveted domain name for a website or a patent? Not to leave the social media sphere out, Facebook even provides its users to memorialise their account by appointing a Legacy Contact in the profile setting!
So, if you are thinking of preparing (or updating) a will, it is clear from this that extra consideration needs to be given with regards to any substantial digital assets an individual may own. For example, a testator may want to stipulate a specific bequest in their will leaving the manuscript of their yet unpublished book to a niece or credits in online accounts such as Snapfish to a friend. However, where it will prove more challenging is at the administration of estate or probate stage when solicitors need to identify and value all the assets. The solicitor administering the estate of the deceased would require the personal representatives (PR) and/or family members to assist in ensuring all assets are included in the estate for the purposes of assessing inheritance tax (IHT) liability as well as any relevant tax reliefs and exemptions.
As a way of pre-empting any challenges the PRs may face in identifying any digital assets, it would be prudent for individuals to start building a safe database of digital assets and how to access these; particularly details of account numbers and passwords etc. Of course, needless to say, protection of this information would be paramount. Most importantly, individuals would need to tell PRs or family members where to find the database for the when the time comes, without which, the whole exercise would be pointless.
All would agree that the digital world is a growing industry and here to stay. Why not make a list today and see what proportion of your estate is made up of these hi-tech and innovative digital assets- it may leave you surprised!