Digital assets are often overlooked in estate planning.

These can include anything from online businesses and digital currencies to intellectual property and social media accounts.

Their inclusion in your estate plan is vital. However, it can be difficult to know how to do this in practice.

Here’s what you need to know about digital estate planning and how you can implement it into your larger estate plan.

What is digital estate planning?

Digital estate planning, or digital asset management, sets out the digital assets you own and how you would like them to be distributed upon your death.

Unlike liquid assets, the monetary value of digital assets is not always immediately apparent. Not all digital assets hold monetary value, but they may hold sentimental value – for example, digital photos or posts on a private social media account – so it is still crucial to include them in your digital estate plan.

The challenges of digital estate planning

Digital assets and the issues surrounding them are evolving faster than legislation. This means that there are several challenges involved with digital estate planning.

Digital assets are not currently defined in English law. Theoretically, they should be treated like any other form of property. However, there are key notable differences.

Unlike traditional assets, there is often no physical documentation that proves the deceased’s ownership of digital assets – therefore, it becomes necessary to access the deceased’s online accounts.

While physical assets such as properties or bank accounts are usually easily accessible to Executors, this is not always the case with digital assets.

Furthermore, under the Computer Misuse Act 1990, it is a criminal offence for anyone to gain unauthorised access to any computer device, including using another person’s password without their permission.

This can make accessing and distributing digital assets very difficult for Executors.

Although the Digital Devices (Access for Next of Kin) Bill was proposed in 2022 to grant a right of access to the digital devices of a deceased person to their next of kin, it only reached a second reading before the 2021-2022 session of Parliament was prorogued. At present, therefore, the Bill will make no further progress.

This is why it is important to consider how you wish to distribute your digital assets and how you will enable your intended beneficiaries to access them legally.

Prepare an inventory

The first step in digital estate planning is to prepare an inventory of your digital assets.

This should include details of the assets, any relevant terms and conditions (such as deleting or preserving social media accounts), and any passwords needed to access these assets.

You should also set out whether you want any of your digital assets to be deleted after your death.

You can then decide how you wish to distribute your remaining digital assets, before incorporating these into your letter of wishes.

This will make sure your Executor(s) understand how you want your assets to be passed on.

However, you should not include passwords in your letter of wishes. Instead, store these in an online encrypted and secure digital vault that can only be accessed by an appointed Executor.

The digital vault company may allow you to set up an agreement stating that your vault can only accessed by your Executor upon presentation of your death certificate.

Appoint a digital Executor

When appointing Executors in your Will, you should consider who will be responsible for accessing, distributing, and deleting digital assets. You may wish to have a dedicated Digital Executor, or grant permission to all named Executors.

You must make it clear in your Will that your Executor(s) are authorised to access your digital assets after your death. This will help to prevent them from falling foul of the Computer Misuse Act.

Digital estate planning with Rotherham Taylor

Digital estate planning is an essential part of your preparations for how your estate will be passed on after your death.

Utilising the expertise of your accountant can provide clarity and direction

Rotherham Taylor can help you keep up to date with the latest regulatory developments in digital estate planning.

We can help you determine the value of your digital assets and understand how these fit into your overall estate and tax planning – providing peace of mind and clarity for the future.

For tailored advice on securing your financial and digital legacy, contact our estate planning experts today.