It is becoming increasingly common for individuals to own not only physical, but digital and online assets. Digital assets are those things which are accessible on a digital device, such as a laptop or a smart phone. They only include those assets which can be accessed through a laptop or smart phone and do not include the physical laptop or smart phone itself. These assets could be anything from files or photos, to cryptocurrency or a social media account.
Scottish law is not altogether clear on how digital assets fit within the law of property and with the technology developing faster than ever, it may struggle to keep up. With a large variety of new technology and digital assets available to us, some which can have a significant value, it is important that we deal with these assets in an effective way and protect them as best we can for future generations.
Cryptocurrency, or crypto assets, are becoming more popular with more and more crypto assets now available to the general market. Bitcoin is the most well-known cryptocurrency, although we now have thousands of different cryptocurrencies, such as Ethereum, Neo and Dogecoin. Cryptocurrencies can be held in a digital “wallet” for which a private key is required in order to gain access. If an owner of a cryptocurrency does not make anyone aware of the existence of this asset there is a major risk that it may be lost when the owner dies. Physical assets such as properties or bank accounts are easily accessible to Executors and usually have identifiable paper trails. With digital assets, that is not always the case.
Making a Will is particularly important for owners of cryptocurrencies, as these can be owned and stored in a number of different ways and how they are stored will determine how a deceased owner’s Executors, looking to pass them to beneficiaries, can gain access to them.
Where digital access keys have not been shared with anyone or recorded anywhere there is a major risk that the asset will be lost. The best way to make sure that cryptocurrencies are made accessible to Executors is therefore to identify how they are stored and keep a record, somewhere, a means of accessing them. This could be in the form of a note kept by the Solicitor holding the Will.
An alternative to storing cryptocurrency in a digital wallet is to store it with a cryptocurrency bank. The bank will manage the key to your cryptocurrency on your behalf, but you will still need to leave details of the bank with your Executors and/or beneficiaries so they can be granted access.
Not all digital assets hold monetary value and some simply consist of an account on Facebook, X or Instagram. These platforms often hold pictures, files or information that will hold sentimental value to a deceased’s family members. These assets can often be overlooked when dealing with a deceased person’s estate. When we create an account on any of these platforms, we agree and accept specific Terms and Conditions. Some of these Terms and Conditions contain information relevant to what happens to the account on the death of the account holder. Some platforms allow the accounts of the deceased account holder to be “memorialised”, meaning that the account is frozen and only verified family and friends are able to interact with it. The ability to memorialise an account needs to be set up during the owner’s lifetime however and if not done, cherished photos, files or memories could be lost. Other platforms will permanently destroy or deactivate a digital account after a certain period of inactivity if someone, such as an Executor, does not intervene.
A practical step to take is the creation of a Digital Assets Inventory. This Inventory would ideally list all of your access keys for your electronic devices and depending on a device’s security settings many digital assets could be accessible just by having access to the device. The Inventory could also list all logins and passwords for online accounts, social media accounts, email accounts and such like and finally, lists all crypto assets, wallets and their private keys along with any crypto exchanges used and login details. This will all help to ensure that your Executors can access your devices and assets after your death.
The information should be kept as a hard copy, securely and up to date and, ideally, reviewed every 6 months or so. There are some commercial third parties that offer secure online storage for this kind of information and they will all have different terms, conditions and rules as to who can access it and when. Your Solicitor should be informed of the existence of the list and where to find it but you should not necessarily give a copy to your Executors, for obvious security reasons. It is paramount that the inventory is kept safe and secure and a Solicitor can help with this.
In summary, it is crucial when making a Will to consider digital assets, to ensure that they can be accessed after your death and that you leave clear instructions on how you would like them to be distributed to your beneficiaries.
Insight from Stuart Mackie, Private Client Partner. For more information contact Stuart on 03330 430150.
