Digital Assets: a key theme for Dying Matters Awareness Week
To open up conversations about death, dying and bereavement, one of the key themes of ‘Dying Matters Awareness Week’ is digital assets/digital legacies.
The campaign, which runs from 10th – 16th May, is a chance for coalition partners, organisations and individuals to come together and break the taboo around confronting death.
Since 2018, a growing number of clients have been including digital assets into their wills. Naturally, these assets are more common in the younger generation, however everyone should consider the implications of not including these details in their will – as we have all seen in the national media, when things go wrong with digital assets, they can have catastrophic repercussions too.
Dying Matters Awareness Week have published their own findings which reveal nearly 90 per cent of people have not made any plans for their social media accounts to remain once they die – and over a third of people have confirmed that no-one, other than themselves, know the password to their mobile phones.
Furthermore, Hargreaves Lansdown conducted their own research recently, to coincide with the campaign, on parents which have shown that they are not prepared for the worst and their families could inherit a headache. The results reveal only two in five people (42%) are certain their parents have a Will and fewer than one in ten (9%) think their parents have a register of assets (details of accounts, investments, pensions and insurance policies) to make it easier for those they leave behind to untangle their finances.
Plus, one in five say their parents definitely have not drawn up any documents relating to their death and a third of people who know their parents have a Will, do not know where to find it.
Earlier this year, The Law Society have been stressing the importance of including ‘digital assets’ in Wills by urging people to include emails and photos when dealing with their affairs, after research reveals that three quarters of people do not know what happens to their online presence after they die.
Today’s Wills and Probate approached industry practitioners and organisations to ask what they were advising their clients in relation to digital assets/digital legacies and whether they mention digital assets and the repercussions of not documenting them properly. Plus, are they finding more people wanting to record their wishes and leave a trail for executors to follow when they have passed away.
Ruth Pyatt, Director of Solicitors for the Elderley (SFE), the membership organisation for specialist lawyers who support older and vulnerable people and Senior Associate at Nicholsons Solicitors, explains why she advises clients to consider making provision for digital assets in their wills:
“More people need to be aware of the consequences of not considering what would happen to digital assets of both monetary and sentimental value on their deaths. PayPal balances, winnings on gaming accounts and currency such as bitcoin could be lost if nobody knows they exist. Important family items such as photographs stored digitally could also be misplaced if nobody knows how to access them.
“Clients also need to think about the personal information that is held on social media accounts and what they would want to happen to that. I encourage my clients to think in advance what information their executors would need but also keep their personal data safely stored to help reduce emotional distress for loved ones.
“Alarming research by The Law Society earlier this year showed that 93% of people they surveyed had not included any digital assets in their will. With many of our day-to-day activities taking place online, it’s essential for people to consider the implications of not providing access to digital assets.
“Keeping your records up to date can avoid complications for friends and family when you die. It also helps ensure the process of dealing with end-of-life admin is quickly and efficiently finalised.”
Sally Cook, Principal Associate at Weightmans said:
“The development of technology is ahead of law and policy in the area of digital assets. It is important that clients understand the access, management and control issues that this will pose to their Personal Representatives or Attorneys when they die or if they lose mental capacity.
“An executor using a password or PIN to access an account after a death may be guilty of a criminal offence under the Computer Misuse Act which was passed in 1990. In some cases, it is also against the Terms and Conditions of a social media account to give a password to someone else. Because many of the provider companies are based in jurisdictions outside the UK, laws around data protection may vary significantly. It is possible that some companies will close an account but not disclose any content of any kind to immediate next of kin or an executor for any reason. If a social media account has unique material contained in it, this will be permanently lost.
“Clients should review, and keep under review, the terms and conditions of all social media accounts they hold to update the consents/elections appropriate to them. It may also be appropriate for clients to keep a digital log of all accounts they hold.
“In the case of digital assets such as cryptocurrency, it can be more difficult to plan without compromising the security of the investment. That notwithstanding, it is vital that executors and attorneys are aware of these assets and that they know how to access them in the event of death or incapacity. If the private keys to a cryptocurrency wallet are lost, then the cryptocurrency is also lost forever.
“There are some practical steps that can be taken to make sure that valuable crypto assets are not lost after death.
“• Make sure that clear instructions are given to the person who you wish to have access to your crypto assets after your death or on incapacity.
“• If you do own cryptocurrency then make sure your advisors are aware of this when you prepare your Will. The Will itself should not include an inventory of the cryptoassets but the Will or an accompanying letter of wishes could include instructions to the executors on how an individual would like their digital estate to be administered.
“• Make sure that you have a Lasting Power of Attorney in place in the event of loss of mental capacity. If you have cryptocurrency, or may invest in it in the future, consider including explicit authority for your attorney(s) to deal with any crypto assets in the Lasting Power of Attorney itself.
“• It is important for your executors and/or attorneys to understand the importance of your cryptoassets and also to note that the value of cryptocurrency as at the date of your death will be liable to Inheritance Tax on your death.
“Given the rise in popularity of digital assets, we are actively producing information to share with clients, and heighten awareness in the public arena, to warn them of the issues that can arise if they do not plan ahead and document their own digital legacy carefully. Early on in their estate planning journey, we identify with clients whether or not they own digital assets so that we can incorporate any specific advice which may be relevant to them in respect of their Wills and/or Lasting Powers of Attorney.
“Despite growing awareness about the data we leave behind and the increasing popularity of cryptocurrency, we are conscious that very few clients have actively considered that they need to plan for this or how best to plan for this before they come to see us. We play an important role as trusted advisors in assisting clients with this task and starting the conversation with them about what they need to consider.”
Siobhan Smith, Lead Tutor for The Society of Will Writers said:
“We are seeing more and more testators with digital assets, especially with the surge of cryptocurrency investment in recent years. It is not surprising considering how much life and business is conducted online now, but what is surprising is the relative lack of guidance out there on how to deal with these assets.
“We advise on the importance of keeping a record of the digital assets for ease of administration and what can happen if they fail to document them (£4 million of Bitcoin lost for this exact reason!). Leaving instructions on how to access digital accounts and wallets after death is very helpful for the executors but obviously problematic from a security standpoint. We often recommend using encrypted digital storage facilities for this kind of sensitive information.
“We also advise will writers on how important it is to be clear when defining what a ‘digital asset’ actually is, and for this we find STEP Digital Assets Working Group’s suggestions incredibly helpful.”
Hardeep Nijher TEP, Senior Associate, Private Wealth & Succession Planning at Lawrence Stephens said:
“When clients come to see me about making a will I always ensure to ask them about their plans for their digital legacies. Surprisingly, even today when the vast majority of people in the UK own some form of digital assets, clients rarely remember to account for them in their wills and succession plans. It is also important to consider that some digital assets may hold a tax value and therefore it is crucial to provide for them in a will in order to avoid accumulating hefty inheritance tax deductions.
“We would advise our clients to make a comprehensive list of all their digital assets and ensure that passwords are kept in a secure place either digitally or on a memory stick. Having an open discussion with your loved ones about your digital assets is essential, and you should begin thinking about who you would like to entrust with details of your digital accounts now to avoid unnecessary complications with probate in the future.”
Ruth Heap (TEP), Partner and Head of Private Client Services at Hillyer McKeown added:
“Despite technology forming part of our day to day lives, we often find that digital assets are not at the forefront of our client’s minds when considering their lasting legacy.
“At Hillyer McKeown, we set out to advise our clients on what digital assets are, explain the difference between ‘digital records’ and ‘digital property rights/interests’ and highlight the importance of addressing these in their final wishes.
“When explaining the difference between ‘digital records’ (such as photographs, videos and emails) and ‘digital property rights/interests’ (such as copyrights, patents, trademarks and cryptocurrency), the main thing we set out to make clear to our clients is that, in accordance with s. 25 of the Administration of Estates Act 1925, digital records do not have a proprietary character therefore will not pass in accordance with a Will.
“Digital property rights/interests however will form part of an individual’s estate and therefore are capable of passing under their Will. In that regard, it is worth noting that digital property rights/interests can also be dealt with under a Property and Financial Affairs Lasting Power of Attorney, unlike a digital record.
“Clients often have not thought about what may happen to their digital assets upon their death and the consequences of not documenting their wishes properly. We therefore advise on not only the potential financial repercussions i.e. assets not being accounted for by their Personal Representatives, but also the risk of sentimental and confidentiality consequences, such as important records being lost or sensitive information falling into the wrong hands.
“Upon discussing the above, we are finding that more and more clients are wanting to record their digital wishes, whether it be within their Will or in a letter of wishes.
“As we are unable to pass digital records within a Will, we actively encourage our clients to prepare a secure inventory of their electronic devices, email addresses, social media/cloud accounts, passwords etc. and ensure that all information is regularly updated and files are routinely backed up. We also offer to store such information securely alongside their Will or Lasting Power of Attorney in order to ensure the safety of such information.”
Emily Deane TEP, Technical Counsel, commented:
“STEP has initiated engagement with some of the big tech service providers this year discuss their digital estate planning services. Some of these platforms have legacy features already in place however advisors and families are largely still in the dark when it comes to passing on their digital legacies to loved ones. Lives are becoming increasingly dependent on cloud storage and digital platforms therefore we are urging people give more thought to their digital legacies like photos, social media, email accounts, passwords and medical records so that family members can have access to them after a loved one has died. It may not be appropriate to allow full access to a loved one but consideration should be given to which digital aspects could be left to ease the family’s burden with financial issues in addition to any sentimental items which might ease their suffering. STEP recognises there is an urgent need for service providers to provide further clarity on how people can ensure that their assets are passed on in accordance with their wishes. There are of course legal and technical challenges that will need to be addressed, alongside the requirement to ensure that the balance between access and privacy is maintained, but this is a growing issue in the private client industry that needs to be discussed.”
Megan Manganaro, a Paralegal from Boyes Turner commented. She said:
“Just because it is not a physical ‘thing’ you can touch or hold does not mean that a digital asset is any less valuable, sentimentally and/or in monetary value. At Boyes Turner, we make sure from first enquiry that digital assets form part of the conversation with our clients, whether they are looking to protect their wealth through making a Will, estate planning, or where we are instructed to assist in the administration of an estate. As a response to the coronavirus pandemic, we have seen more of our daily lives turn digital. We expect that, as a result, digital assets will less likely be overlooked by clients wishing to organise how their estate is to be managed. What we are intrigued to see is if, and how, some of the ways in which an executor/a personal representative can be restricted from gaining access to someone’s digital assets after they die (i.e. on privacy or confidentiality grounds, or due to a restriction in an online site’s T&Cs) will be overcome.”
Samantha Warner, Arken.legal’s Head of Product, explains how they help professionals in regards to digital assets. She said:
“Arken Professional makes it quick and simple for professionals to include clear notes and instructions as to the accessibility and handling of digital assets post-death.
“Not only will this ensure clients allocate their digital assets to their preferred beneficiaries, but it saves a substantial amount of time when it comes to the administration process, as without express instructions, gaining access to these accounts can prove tricky in many cases. And in worst case scenarios, assets can be lost if the details cannot be located. Leaving clear instructions in a Will takes this stress away at what is already a very difficult time for those who are grieving a loved one.”
Thomas Stansfield, Head of Growth at WillSuite, commented:
“As a software provider, it’s our responsibility to ensure that our clients have the most up to date software at their fingertips. With regard to the subject of digital assets we provide a number of solutions. Since the emergence of social media back in the early 2000s, people have been creating an online or digital legacy. We recognise that they would be likely to want to leave this legacy as a legacy, and ensure that loved ones can benefit from photos, memories and from online accounts. As a result, we built in the option for drafters to be able to grant power to executors to deal with digital assets. WillSuite is a comprehensive drafting tool for solicitors and estate planners producing over 100,000 Wills per year and is able to deal with both simple and complex planning. For the more complex estates, practitioners are able to appoint different executors to handle online or digital assets.
“When Crypto-currency was coming to the mainstream markets, WillSuite was already deep into the development of solutions to handle modern estate planning issues and back in 2018, we made it possible to include the provision for the gifting of crypto-currencies in Wills.
“Back then, we also worked with one of our partners providing support and guidance on the purchase of Wills using Cryptocurrency. Now, with over 7000 different crypto currencies in existence there is more of a need to plan to deal with these assets. Interestingly over 50% of the team at WillSuite have crypto currency in a digital wallet and have all included this within their Wills.
“With increased accessibility to financial technology and more specifically, with the ability to manage financial investments through apps etc. we can see how important it is to be able to manage digital assets when it comes to estate planning and this will only become more prominent.
“Finally, we are keen to give some perspective in relation to the percentage of Wills now detailing or making provision for digital assets. We provide an annual report detailing important statistics relating to our market have conducted recent analysis and are able to report that the figure stands at around 30%.”