Digital Assets – Estate Administration
With the rise of the internet, most people now have digital assets which form part of their estates. Like other assets, digital assets can be passed on to family members or friends on death and have to be dealt with in the administration of an estate.
What are digital assets?
Digital assets include all online accounts and digital files that you own. For example:
- Online banking, shopping and bill payment accounts.
- Online subscriptions.
- Email accounts.
- Credit balances held by internet companies (iTunes/gambling sites/Amazon/PayPal).
- Ownership of domain names.
- Shares held by an online share dealing platform.
- Social networking sites and blogs.
Discovering and accessing digital assets after death
The Government has not set out clear statutory rules on the subject. This means that issues of privacy and access to digital assets after death are stipulated by the internet companies themselves. The rules therefore vary from company to company.
As digital assets are usually secured by a user name and password, difficulties can occur when an executor of an estate does not have access to this information. Invariably, there will not be a paper trail as the digital assets are usually created by email.
A problem for your executors
Your executors have a duty to ascertain and collect in your assets, pay your liabilities (including any inheritance tax) and to distribute your remaining assets in accordance with the terms of your Will.
Where executors are unaware of digital assets, the administration can be made more complex, time consuming and expensive. For example:
- Your executors may find it difficult to find out what digital assets you own.
- If digital assets are discovered, your executors are unlikely to be able to access them without your user name and password.
- Even if your digital assets are ascertained and accessed, your executors will not necessarily know exactly how you want them to be dealt with on your death.
Your executors are also under a duty to declare the value of your digital assets to HMRC for it to calculate any inheritance tax due on your estate.
Addressing digital assets in estate planning
Digital assets should be no more difficult to deal with compared to other assets provided that they are given the same consideration as your other assets.
To avoid problems you should:
- Set out clear plans for your digital assets. For example, what do you want to happen to your digital assets when you die? Who do you want to access the information? Not all digital assets have a financial value. Instead, there will often be a sentimental value – photos and videos which you may want to pass on to your family.
- Provide your executors with the information, passwords and clearance they will need to deal with them efficiently.
We would recommend that you prepare an inventory of assets and passwords to be stored in a sealed envelope with your Will in a secure place, ideally with a solicitor or in a safe. This may need to be updated as passwords change or new accounts are created. Although we are always advised not to write down passwords, this is one occasion when it may be necessary.