Digital assets include your online accounts, electronic banking information, hard storage devices, smartphones, online subscriptions/memberships, social networking accounts etc., that contain data, which can be personal or financial.
One of the most important digital assets is a ‘digital wallet’ or an ‘e-wallet’. Nowadays, there are apps and mediums, such as Google Wallet, Pay Pal, and Apple/Android Pay that you can download and set up on your device to contain your driver’s licence and credit card details. Essentially, a digital wallet works like an electronic version of your current wallet.
Similarly, a cryptocurrency wallet is a type of secure digital wallet used to store, send, and receive digital currency like Bitcoin. Most coins have an official wallet. Some wallets are built for a single cryptocurrency, some can be used for more than one coin, some wallets you’ll manage yourself, and some (like those found on exchanges) will be custodial.
A digital wallet or crypto wallet is often protected by codes, keys and passwords which are used to protect your digital asset.
What are the risks of digital assets when reviewing your estate plan?
The major risk with digital assets is that the executor of your estate, or your loved ones managing your affairs after death, will often not know about your digital assets.
If your executor or loved ones do not know about your digital assets, they will not have access to them, or the information stored within. Not only does this mean that key information may be left unknown, but there also may be assets unaccounted for because simply no one knows about them.
Can my digital assets be recovered in the event of my death?
Unless the actual passcode or key to access the digital asset or whatever is used to store the assets are known, your executor cannot gain access to the asset.
Therefore, the most important aspect when dealing with digital assets, is to ensure your Will gives your executor clear authority to deal with your digital assets.
Should I list my digital assets in my Will?
If you wish, you may list your digital assets in your Will, and how you want them distributed. However, you should not list any passcodes, keys or codes in your Will. If the executor requires a grant of representation in relation to the Will, the Will becomes a public document. Therefore, no sensitive or private information should be stored in the Will.
We recommend your Will contains a specific clause, authorising your executors to access, handle, distribute and dispose of your digital asset and directing them to the handwritten list of passwords, keys and codes you prepare to be stored along with your Will (as discussed below).
What steps then can I make to make my executor aware of my digital assets?
Create a handwritten list
We recommend that you make a handwritten list stating what your digital assets are, where they are stored and the passcodes, keys or codes to access the digital assets as well as the totals of any digital currency owned, where they are held (e.g. in a digital or crypto wallet) and its value at the time. Once this list is prepared, we recommend that the document is placed in a sealed envelope and is stored with your Will for your executor.
Given its sensitivity, we recommend that the information is not prepared on a Word document, on a computer or sent in an email. By having only one handwritten document in existence, this ensures to the best extent possible, that the information will reach the executor.
Give your handwritten list to your solicitor to keep in safe custody in sealed envelope with your Will
We recommend keeping your handwritten list of every digital asset with the corresponding passwords, keys and codes with your Will, in a solicitor’s safe custody facility.
The advantage of storing the original documents in a solicitor’s safe custody facility is that if the law practice closes, the safe custody documents will be transferred to another nearby practice with a safe custody facility. The Queensland Law Society maintains a record of where the documents of a safe custody facility are transferred to, if a law practice does close.
If you have any questions regarding a digital asset or estate planning, please contact our team today.