Some digital assets, however, do have obvious monetary value, such as online accounts, and should be considered to be part of your estate and should also be matters declared by executors when dealing with probate and Inheritance tax returns.
Other parts of our digital estate may have no monetary value but have significant sentimental value. This could include photographs saved on a cloud-based storage system or the memories created and stored through social media such as Facebook or Instagram. Many of these sites now enable you to leave, normally as part of the privacy settings, instructions as to how the account is to be handled on death and who should be the nominated person to deal with these accounts. Each site, however, has specific rules. Gaming sites, which may include ‘assets’ you have won, may not be transferable as the game participant simply has a licence to take part in the game. Each site needs to be considered separately.
All digital assets need to be considered to be separate from the devices on which they sit. For example, if I give my mobile phone to my daughter it does not follow that she inherits the digital assets that may be stored on the phone. As digital assets are not tangible movable property (like personal belongings), clarity is required in Wills. The majority of the time, and in the absence of clarity, the assets will fall into the residuary estate for the executors to distribute. However, this may not be your intention.
If you want your digital assets to be dealt with in a specific way, it is important to document them assets carefully and decide how they will be distributed. A specific legacy could be included in the Will. In addition, your executors will need access to your digital assets to be able to distribute them in accordance with your wishes. One of the executors could be tasked specifically to deal with them.
It is also important to maintain a list of account logins which may be required by your executors. As we move to an increasingly paperless economy, a trend which will have been accelerated by the pandemic, it is important to ensure that your executors’ task is not made more difficult by failing to leave instructions regarding online accounts. Failure to leave instructions runs the risk that assets are overlooked and are not accounted for when making Inheritance Tax returns and dealing with the distribution of an estate. The job of an executor is not complete until an estate is fully administered, and all tax liabilities are fully discharged. Obviously, bearing in mind cybersecurity risks, these logins and passwords should be kept in a safe place and reviewed regularly. Digital assets should also be backed up safely. This could be via cloud storage, a separate hard drive or portable storage.
The law in this area is developing, with the Law Commission considering aspects of the digital economy, but as we have retreated, albeit temporarily, from a physical to a digital world it is important to take advice.
