Can I leave my digital assets in a will?

Digital inheritance is emerging as a highly important area in estate planning. In recent times, the digital space has begun to be dominated not only by millennials but also by all groups of people. The market for non-fungible tokens (or NFTs) is rapidly expanding, with musicians, artists and video editors all selling their digital assets in return for substantial sums of money. Acquiring digital assets is the new rave, which means that understanding what to do with these assets is important.

Generally, digital assets that are owned outright and can be passed down through a will. The key is to confirm that the asset in question is transferable because some digital assets may specify against the right to transfer. Here are some examples of digital assets that can be inherited:

• Bitcoin and other forms of cryptocurrency

• NFTs

• domain names

• funds kept in online accounts, such as PayPal

• money inside an online store, such as if you have an Etsy or Amazon shop

• digital music files or pictures

• frequent flyer miles, depending on the airline

• blog content or other online published works

• monetised video channels actively earning advertising revenue

• online investment portfolios and wallets.

Despite how common these digital assets are becoming, they are rarely considered in long-term financial planning.

When talking about the ownership of digital assets, an important distinction emerges between transferable and non-transferable assets. Typically, the non-transferable category includes digital assets that are licensed for personal use but are not actually owned by individuals. These assets cannot be inherited, although you can specify how to access them in an estate plan. Here are a few examples:

• e-mail accounts

• social media handles and accounts

• app accounts and the information contained in them

• subscription services, such as Apple TV or Spotify

• any assets deemed non-transferable in the terms; this is most common with domain names.

Consideration must be given to how these types of digital assets will be handled in the future. If not, these assets, particularly e-mail accounts and social media handles and accounts, and any funds or memories that they contain, could be lost online along with the chance to pass them down to family members and friends.

NFTs are valuable assets, and it is wise to include them in your estate planning documents such as a will or trust. It is important to protect your investment if you want to ensure your heirs will one day gain ownership of your digital art. Through smart planning, you can strategically include NFTs in your estate plan.

The last thing you want is for ownership of your NFT to disappear with your death. You want your loved ones or a charity to enjoy the NFT after your death or to be able to sell it and keep the proceeds to buy something else they like. Holding NFTs inside your trust is one thing, but you also need to understand how your intangible work of art can be accessed in the future because only then can it be passed down to heirs.

Remember that neither you nor your trustee (the person who is charged with distributing your estate) can physically hand an NFT over to a beneficiary. Therefore, while you can pass it on through your will or trust, there is more to the process.

Whether you are making a long-term investment or just dabbling in cryptocurrency, you need to have a plan for what will happen to your coins when you die. Cryptocurrency is a form of digital cash (of which Bitcoin is the most well known) and is not like a traditional asset. It is not enough simply to include cryptocurrency in your will. Without the necessary information, your beneficiaries will not be able to find or access this asset.

Your cryptocurrency or NFTs are worthless unless someone knows (1) that they exist, (2) where they exist, and (3) the private keys needed to access them. When you create a will, consider naming an executor who is tech-savvy enough to navigate this world.

To ensure your loved ones can inherit and access your cryptocurrency, you need to ensure you do the following:

• list your cryptocurrency in your will

• include information about your digital wallets in your will

• create a memorandum to your will but do not include passwords and PINs, and

• include a step-by-step guide to explain how your beneficiaries can access your cryptocurrency.

It might seem obvious, but you must actually list cryptocurrency in your will. If something you own is not listed in your will, it falls into the ‘residue’ or ‘remainder’ of your estate — is a sort of catch-all provision for your property. The remainder refers to a collection of everything you own that was not accounted for in your will, such as personal property, clothing, miscellaneous accounts, or subscriptions.

This is not an issue when tangible property falls into an estate’s remainder. Physical objects, such as books or jewellery, can be seen, and other assets can be discovered through a paper trail, for example, bank accounts or stocks. However, owning cryptocurrency does not leave much of a paper trail, if any, and it is almost impossible to discover its existence if you do not know where to look. If your beneficiaries are unaware of your cryptocurrency, they might never discover its existence if it is not mentioned in your will.

If you own digital assets, you should speak with an estate attorney on how to best protect your digital assets in a will without exposing too much information. This protection should be a top priority, particularly if your digital asset is considered highly valuable. Just like with any other asset, it is important to protect your investment and ensure that it is passed on exactly as you wish when you are no longer around.

Venice Williams Gordon is an attorney-at-law with Lewis, Smith, Williams and Company.