The way we manage assets has changed significantly. Today, many people own valuable digital assets, including cryptocurrency, online accounts and digital records.
The death of Gerald Cotton, former Chief Executive Officer of Canadian cryptocurrency exchange Quadriga CX, highlighted the importance of planning for your digital assets after death.
Mr Cotton was the only person who held the encrypted passwords needed to access more than $200 million worth of digital assets. After his death in India at age 30, many customers could no longer access their funds.
The situation created uncertainty and demonstrated the problems that can arise when people fail to include digital assets in their estate plans.
Digital assets require special consideration because many rely on passwords, private keys and online platforms. Without appropriate planning, executors and family members may struggle to identify or access these assets.
Speaking with estate planning lawyers can help ensure your digital assets form part of your overall estate plan.
What are digital assets?
Digital assets include anything of value that exists electronically or requires online access.
| Type of digital asset | Examples |
|---|---|
| Cryptocurrency | Bitcoin, Ethereum, Litecoin and other virtual currencies. |
| Financial accounts | Online bank accounts, investment platforms and shares. |
| Digital property | Domain names, online businesses and intellectual property. |
| Online accounts | Email, social media, shopping and subscription accounts. |
| Loyalty programs | Frequent flyer points, rewards programs and memberships. |
Your estate plan should consider these assets and explain how you want them managed after your death.
Why digital assets create estate planning challenges
Traditional assets such as bank accounts, shares and property usually have clear ownership records. Executors can generally transfer these assets after providing the required documentation.
Digital assets often operate differently. Cryptocurrency, for example, relies on private keys that allow owners to access and transfer their funds.
These keys may exist on computers, digital wallets, USB devices or physical records. If nobody knows where to find them, the assets may become inaccessible.
Many digital assets also operate across international platforms. Different countries may have different rules regarding access to online accounts after death.
Because there is no single set of laws covering all digital assets, you should include clear instructions in your estate plan.
How to include digital assets in your estate plan
1. Identify your digital assets
Start by creating a list of your digital assets and online accounts.
Your list may include:
- cryptocurrency wallets;
- online banking accounts;
- investment platforms;
- social media accounts;
- online subscriptions;
- digital photographs and files; and
- online businesses or intellectual property.
Keep details about usernames, account locations and access instructions in a secure place.
Review this information regularly because online accounts and passwords often change.
2. Understand your online account rules
Different providers have different rules about what happens to accounts after death.
For example, Facebook allows users to choose whether their account should be deleted or memorialised after death.
A memorialised account allows friends and family to view shared content, but nobody can log into the account.
Some loyalty programs may not allow points or benefits to transfer after death. Reviewing these accounts can help you use or manage valuable benefits before they expire.
3. Include digital assets in your Will
Your Will should give your executor appropriate authority to deal with your digital assets.
You may wish to appoint a trusted person who understands technology to help manage your online accounts after your death.
However, you should avoid placing passwords directly in your Will because Wills become part of the estate administration process and may become accessible to others.
Instead, keep access information secure and provide instructions about where your executor can locate it.
4. Maintain your online accounts
Online accounts often contain personal information that requires protection.
Unused accounts may increase the risk of identity theft or unauthorised access.
Regularly reviewing accounts, deleting unnecessary profiles and updating security settings can help protect your digital identity.
You should also regularly back up important photographs, videos and personal files so your family can access them in the future.
5. Plan for incapacity
Estate planning should also consider what happens if you become unable to manage your online affairs.
An enduring power of attorney may allow a trusted person to manage certain financial and personal matters on your behalf.
The appropriate documents depend on the location of your assets and your individual circumstances. In some situations, more than one document may be required.
6. Consider using trusts for significant digital assets
Some people may benefit from holding substantial digital assets through a trust structure.
A trust may provide greater control, asset protection benefits and potential taxation advantages.
However, the trust structure must align with your estate plan. Your Will should address how the trust operates after your death and identify the intended beneficiaries.
Frequently asked questions about digital assets and Wills
Are digital assets included in my Will?
Digital assets can form part of your estate. However, your executor may need specific instructions and access information to identify and manage them.
Can cryptocurrency be included in estate planning?
Yes. Cryptocurrency should be considered as part of your estate plan. However, access details such as private keys must be stored securely.
Should I include passwords in my Will?
No. Passwords should generally not appear in your Will. Instead, store access instructions securely and tell your trusted representative where to find them.
Conclusion: Why digital asset planning matters
Digital assets have become an important part of modern estate planning.
Without proper preparation, executors and family members may struggle to identify or access valuable online assets.
Creating a clear plan for your digital assets can help protect your online accounts, preserve your digital property and make estate administration easier for your loved ones.
If you or someone you know wants more information or needs help or advice, please contact us on (02) 9818 2888 or email [email protected].