Digital assets and your Will: Does your estate plan cover your online life?
For years, estate planning focused largely on things you could see, hold or record on paper: the family home, bank accounts, investments, vehicles, personal possessions and business interests.
Today, a growing part of our financial and personal lives exists somewhere else.
Cryptocurrency. Online investment accounts. Business websites and domain names. Cloud-stored photographs. Email accounts. Social media. Digital intellectual property. Subscription accounts. Password managers.
Some may have significant financial value. Others may be valuable for entirely personal reasons.
The problem is that an older Will may say very little about any of them.
And even where a digital asset ultimately forms part of an estate, an executor still needs to know that it exists, work out who has authority to deal with it and, crucially, be able to access it.
That makes digital assets an increasingly important part of modern estate planning.
What is a digital asset?
There is no single category of property called a “digital asset” that neatly covers everything we own or control online.
In practical estate-planning terms, however, digital assets and digital accounts can include:
- cryptocurrency and digital wallets
- online investment and financial accounts
- websites, domain names and online stores
- digital intellectual property and income streams
- email accounts and electronic correspondence
- social media accounts
- cloud storage
- digital photographs and videos
- loyalty and rewards accounts
- subscription and digital-content libraries
- password managers and authentication systems
- online business accounts and platforms.
Not everything on that list will necessarily be an asset capable of being transferred to someone else. The legal rights involved can differ considerably from one platform or account to another.
But from an estate-planning perspective, they all raise a similar question: What should happen to your digital life if you die or become unable to manage it yourself?
Are digital assets covered by a Will?
New Zealand’s Wills Act 2007 establishes the framework for making and administering Wills, while the Administration Act 1969 governs important aspects of administering a deceased person’s estate.
Neither provides a simple digital-assets checklist. That does not mean digital property sits outside an estate. Rather, questions about digital assets can depend on the nature of the particular asset, ownership rights, the terms governing the platform and the wider estate plan.
Owning an asset is not necessarily the same thing as having unrestricted rights over the account or platform through which it is accessed.
An executor may therefore need to deal not only with New Zealand succession and property law, but also with passwords, authentication systems, privacy considerations and the contractual terms of an overseas technology provider.
What happens to cryptocurrency when someone dies?
Cryptocurrency illustrates the problem particularly well.
New Zealand courts have recognised cryptocurrency as capable of being property. In Ruscoe v Cryptopia Ltd (in liquidation) [2020] NZHC 728, the High Court considered cryptocurrency to be a form of intangible property for the purposes at issue in that case.
But recognising something as property does not solve the practical estate-planning problem.
If an executor knows cryptocurrency exists but cannot locate the wallet or obtain the information required to access it, recovering that asset may be extremely difficult.
Unlike a conventional bank account, there may be no New Zealand bank for the executor to approach with probate documents and identification. The practical arrangements around the asset can therefore matter enormously.
What about photographs, emails and social media?
Not every digital account is valuable because it can be sold.
For many families, some of the most important digital material is personal. Years of family photographs may exist only in cloud storage. An email account might contain important correspondence or information needed to administer an estate. A social media account may hold photographs, messages and memories that family members want preserved, memorialised or removed.
Different providers have different rules about what happens following the death of an account holder.
That means simply leaving someone a password may not be an adequate estate plan. The better starting point is to identify the important accounts and decide what you would like to happen to them.
Why executors need a map
One of the biggest problems with digital assets is often not determining who should inherit them. It is discovering that they exist at all.
A conventional executor can search correspondence, property records and bank statements. Digital assets can be considerably less visible.
Someone may hold cryptocurrency through a private wallet, operate an online business, receive income through a digital platform or store important documents in a cloud account without anyone else knowing.
That is why a digital asset register can be useful.
What is a digital asset register?
A digital asset register is a separate record identifying the important digital assets and accounts that may need attention if you die or lose capacity.
It might record what the asset or account is, the relevant provider or platform, where further access information is securely stored, whether the account has financial or personal value, any particular wishes you have for the account or content, and who may need to know about it.
The register should be kept securely and reviewed regularly. Importantly, it does not necessarily belong inside the Will itself.
Probated Wills can ultimately become publicly accessible documents. Sensitive passwords, private keys and other security credentials therefore require particularly careful handling.
The objective is not to create a document containing every password you have. It is to leave your executor a reliable map rather than a digital treasure hunt.
Digital assets are about more than your Will
A modern estate plan is not necessarily just a Will.
Depending on your circumstances, it may involve your Will, Enduring Powers of Attorney, family trust arrangements, business and company structures, jointly owned assets, beneficiary arrangements, succession planning and instructions concerning important digital accounts.
These arrangements need to work together.
For example, an online business may involve company property, personally owned intellectual property, domain names and access credentials. A cryptocurrency investment may raise different issues from a cloud photo library. A family trust may own assets that do not form part of your personal estate at all.
The right approach therefore depends on what you own, how it is held and what you want to happen.
Don’t forget incapacity
Digital planning is not only about what happens when you die.
There may also be a period during your lifetime when illness, injury or loss of capacity means someone else needs to manage important affairs for you.
That is one reason Enduring Powers of Attorney form an important part of wider personal legal planning.
If significant parts of your financial or business life operate digitally, it is worth considering whether the people who may need to act for you have enough information to understand what exists and obtain appropriate advice about dealing with it.
When should you review your Will and digital estate plan?
A review is particularly worthwhile when your Will was prepared several years ago, you have acquired cryptocurrency or other digital investments, you operate an online business, important family records now exist primarily in the cloud, your family or relationship circumstances have changed, you have established or changed a family trust, you have bought or sold a business or significant property, your executors or attorneys have changed, or your existing Will no longer reflects the assets you actually own.
Estate planning works best when it reflects your life now, not the life you had when the documents were first signed.
A practical digital estate-planning checklist
1. What do I own or control digitally?
Think beyond cryptocurrency. Include business accounts, domains, intellectual property, cloud storage and personally important content.
2. Would anyone else know that these assets or accounts exist?
If not, consider creating a secure digital asset register.
3. What do I want to happen to them?
Some assets may be transferred or realised. Some accounts may need to be closed. Some personal material may need to be preserved.
4. Can the right people find the information they will need?
That does not mean putting passwords into your Will. It means establishing a secure and sensible process.
5. Does my existing Will and wider estate plan still reflect my circumstances?
Digital assets are one reason to review it. Changes in relationships, property, businesses, trusts and family circumstances are others.
Your estate has changed. Has your estate plan?
Your digital life may now contain assets, information and memories that did not exist when your Will was prepared.
The law is only part of the equation. Good estate planning also requires making those assets identifiable, thinking through what you want to happen to them and ensuring your Will and wider arrangements work together.
Canterbury Legal can review your existing Will and estate-planning arrangements, identify areas that may need updating and help you put a practical plan in place for both your physical and digital assets.
Talk to us before an important part of your estate becomes the part nobody can find.
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This article provides general information only and is not legal advice. Digital assets and online accounts can involve different ownership, contractual, privacy and access arrangements. Advice should be obtained for your particular circumstances.
