Bitcoin hit a watershed mark of 190m users last year—in the UK alone over 4m adults own cryptocurrency. For private client practitioners in this developing online world, managing digital assets is a complex area that requires careful consideration and sensitivity
“Understanding how to value and include these assets in final estate accounts and how they can affect wills is essential,” says Dominic Hendry, Head of Private Client at Estate Research.
“Given the potential risks and complications associated with digital assets after death, it's crucial for private client practitioners to take a proactive role in advising their clients. One of the best courses of action for private client practitioners is to advise clients to take a digital inventory, leaving clear instructions about their digital assets, passwords, and what they want to happen to these assets after their death.
"Clients should also consider using options provided by larger tech companies, such as Apple's Digital Legacy program, which gives an authorised person access to their accounts or devices after death," he says. “The appointed representative has a legal duty to manage all the real and personal estate of the deceased, including digital assets, under the Administration of Estates Act 1925. However, accessing a person's computer post-death without authority could be an offence under the Computer Misuse Act 1990."
Hendry recommends that private client practitioners should engage with clients early on and encourage them to disclose as much information as possible: “If the client knows they may die soon, they should prioritise tidying up their digital affairs to ensure their welcome and valued assets do not just dissipate into cyber-space. Treading carefully and cautiously with clients and beneficiaries can save potential problems later.”
Hendry adds: “Drafting a will for digital assets requires caution and sensitivity with clients, working out a system with beneficiaries, and addressing any potential problems to ensure a smooth administration of the estate. Unfortunately, there does not yet seem to be a system that allows practitioners to search for such assets.
"As a company, we recommend solicitors carry out a Will Search and Asset Search and offer both as part of our intestacy services, as well as discussing the topic through our webinar series. However, with digital and societal changes, I think it is only a matter of time before a platform to search for crypto assets is created, and becomes in-demand by every private client firm.”
Hendry recommends that practitioners stay updated with digital and societal changes and be prepared to use new platforms or tools to search for crypto assets that may become available. “They should also regularly review and update their clients’ wills to ensure that any digital assets are adequately addressed,” he says, adding that “private client practitioners need to understand the importance of digital assets and take steps to ensure their clients' digital affairs are tidied up and managed appropriately to avoid potential complications during the administration of the estate.
“Failure to do so can lead to reduced inheritance for the beneficiaries, or even legal trouble. In the digital world, proactive planning is key”.
