Digital assets, whether we think they are or not, are increasingly becoming part of everyday life. We are now all familiar with online banking, social media, digital storage of family photos and of course cryptocurrency. As with any other asset, be they sentimental or monetary, these too should be carefully considered when updating your Will/s.
The major difference with digital assets (such as cryptocurrency), as opposed to other assets, relates to knowledge and access. Firstly, knowing of the asset’s existence and secondly knowing how to access them, through your digital devices.
Given that a Will becomes a public document once a Grant of Probate is issued, a person must be careful not to give away too much information within their Will. A carefully worded and secure letter of wishes, to go along with a suitably drafted Will is often seen as the best way to deal with your digital assets safely and fully.
Examples of digital assets:
- Cryptocurrency (Bitcoin and Ethereum)
- Digital Music
- Social Media Accounts
- Information saved in a cloud, such as family photos and videos
- Instant Messaging Accounts (email, Messenger, WhatsApp)
- Online accounts (utilities and shopping)
- Financial Accounts
- Tax preparation service accounts
- Software Licences
- DNS Service Accounts
- Domain Registrations
- File Sharing Accounts
In terms of taxation and in particular relation to Cryptocurrency, Inheritance Tax will need to be considered on the death of the holder and Capital Gains Tax on disposal. It is essential that Executors take advice, obtain the correct valuations, fully declare the holdings, and pay all taxes due to avoid any costly interest and or penalties. This job is made altogether easier if the testator leaves a clear inventory of all such assets and how to access them for valuation and sale purposes. Furthermore, executors would be well advised to take advice on non-UK-based exchanges to see if they are subject to Inheritance Tax.
- Produce a secure digital inventory and revise regularly.
- Put in place a Lasting Power of Attorney and ensure it contains an explicit authority for the Attorney/s to deal with your digital and crypto assets.
- Have a tailored Will together with a carefully drafted letter of wishes. This should be reviewed and updated regularly.
- Trusts – Consider the use of them to manage your holdings going forward.
Whilst it may seem daunting, considering your digital assets and cryptocurrency, it need not be, provided expert advice is taken at the earliest possible opportunity and you keep your affairs reviewed and updated regularly.
Contact our Wills, Trusts and Probate team for all related enquiries today on 01202 525333 or email email@example.com. You can also contact our Wills, Trusts and Probate team by emailing firstname.lastname@example.org.