John must treat cryptocurrency the same as any other assets, factoring their value into his estate planning while also ensuring his online footprint is safeguarded after his death.
John recently invested some money in digital currency and the investments have done well. He now has approximately £25,000 invested in Bitcoin, but does not know how this will be dealt with in his will.
John is the author of a successful blog that is starting to attract income from advertisers. He wants to make sure his affairs are organised so they can be dealt with as quickly as possible when he dies.
In the same way as other cash and more traditional investments, the value of any digital assets will be included in John’s overall estate. It will be factored in when calculating whether any inheritance tax is due on his death.
Similarly, if John decides to give away any of his digital assets during his lifetime, it will be a potentially exempt transfer at the date of the gift. The value will only fall outside of his estate once seven years have passed. The value of any digital assets should not be overlooked when considering estate planning more generally.
John should ensure his digital assets are as organised as possible to help his executors. Some key things to consider include:
- Keeping an up-to-date list of any assets stored digitally, for example Bitcoin, PayPal, eBay, or credit in online gambling accounts.
- Keeping a list of any other online accounts that would need to be closed down or memorialised on death. This may include Facebook accounts, blog content or email accounts. Each platform will have its own terms and conditions about executors accessing accounts on the death of the individual. But a good way to start is to sign a specific instruction authorising your executors to access your information. It is important any lists are updated regularly. To protect security, passwords should not be stored alongside usernames.
- Think about leaving a specific gift of digital assets in your will. In the absence of any specific legacy, it is likely that any digital asset will fall within the definition of a chattel (a personal possession) and may mean personal information belongs to someone other than the intended beneficiary.
- In relation to his blog, John should consider the value of any intellectual property rights around this. He should consider taking steps to protect such rights, as these may continue to have some value after his death.
In an age in which more and more of our information is stored digitally, some companies do offer a password management service. If John would prefer to use a third party rather than give his executor the details during his lifetime, this might be a preferred option.
When considering his overall estate planning, John’s digital assets should also be specifically considered. It is important to distinguish between those digital assets that can be inherited by John’s beneficiaries (such as credit in a PayPal account) and those that are not John’s to leave to his chosen beneficiaries on his death (such as iTunes content). This is where John may not actually own the content, but instead owned a licence to use the content in his lifetime only.
Kirsten Pettit is an associate at Taylor Vinters