Digital assets and your estate

Acquiring and owning digital assets is becoming prevalent in today’s society.

The Financial Conduct Authority estimated 2.3 million adults in the UK owned cryptocurrency in 2021. Likewise, it was reported that there were approximately 57.1 million Facebook users in the UK.

Consequently, it is likely many of us considering estate planning, or seeking professional advice to administer the estate of a deceased loved one, will question what happens to our digital assets on death.

Jennifer Robinson, solicitor at Wake Smith, looks at digital assets.

The article covers:

• What is a digital asset?
• Who would have access to my digital assets?
• Can I gift my digital assets?
• The Law

What is a digital asset?

There is no legal definition of “digital assets”, however in a broad sense “digital assets” are anything that exists only in digital form.

This could mean cryptocurrency, social media accounts, emails, digital photographs, digital music etc.

Who would have access to my digital assets?

There is no straightforward answer to this one.

Typically a person responsible for dealing with your estate when you have died and collecting in your assets is called an executor or an administrator.

An executor is someone who is named in the Will as responsible for dealing with the estate. An executor may have to apply to the Probate Registry for a “Grant of Probate” before they can deal with the estate. A Grant of Probate is the Registry’s official confirmation that the name executor is authorised to act and financial institutions can rely on their instructions. 

An administrator is someone who is authorised by the Probate Registry to deal with the estate. An application must first be made to the Registry for “Letters of Administration” before they can deal with an estate. Only certain people can apply to become an administrator and they would usually only apply under certain circumstances, for example, if there is no Will or the named executors aren't willing to act.

The difficulty with digital assets is that section 1 of the Computer Misuse Act 1990 makes it an offence for a third party to access computer material (including digital assets) without authorisation.

In most cases, it is the internet service provider, which manages the relevant online account, which need to provide authorisation and these providers often have strict privacy rules. For example, most online accounts prohibit sharing passwords or transferring the benefit of the right to use the service.

Some larger providers, such as Apple and Google, have acknowledged the difficulties this can cause and have introduced a scheme which enables a person to appoint certain individuals to access their account on death.

It is therefore for you, or your executor or administrator when you have died, to contact your service providers to identify if your account can be accessed after your death.

Can I gift my digital assets?

In principal, digital assets are similar to tangible assets such as property, cash, personal possessions etc) and could be distributed as part of your estate.

Therefore, you could gift a specific digital asset to someone in your Will and any assets not gifted would pass to your residuary beneficiary. This is the person(s) who inherit the remainder of your estate after the payments of any gifts, funeral expenses, debts and administration expenses.

However, as discussed above, it will ultimately be up to the internet service provider to determine if you are able to transfer your digital asset on death, particularly as many online accounts prohibit the transfer of benefit of the right to use the service. If you are not able to gift your digital asset, then the gift would fail in your Will.

Typically digital assets such as cryptocurrency investments, funds in a digital accounts, digital music etc. can be transferred.

Whereas social media accounts, emails, subscription accounts, such as Netflix, Spotify, Amazon Prime etc. cannot be transferred. This is because, strictly speaking, you do not possess the accounts, you simply use them.

You may also be able to transfer things like vouchers, discounts, exclusive membership points etc. but this is subject to service provider policies.

Ultimately, it will be for you, and/or your executor or administrator on your death, to contact the service provider to identify if the digital asset can be transferred through your estate.

The Law

Unfortunately there is little or no guidance on law surrounding digital assets at present, therefore it is difficult to ascertain exactly what will happen to your digital assets currently.

However, there are ongoing efforts by the Government to provide this guidance and create laws on dealing with digital assets, but it will likely take some time.

To book an appointment regarding estate planning please contact Jennifer Robinson in the Private Client team at Wake Smith Solicitors on 0114 224 2084.

Find out more about Wills and estate planning services

Published 13/06/22