Your clients may not be aware of how many of their assets – from photos, to email accounts, to cryptocurrency – are categorised as digital, or what happens to these assets when someone dies or becomes incapacitated.
Last year, STEP carried out research into estate practitioner views on, and experiences with, digital assets. This was a joint research project in partnership with the Microsoft-funded Cloud Legal Project at Queen Mary University of London.
The findings were published in a report – Digital Assets: A Call to Action. Our research found that clients seek digital asset advice about estate planning and administration. Social media and email accounts top the list of most frequently asked about assets.
How can practitioners help clients deal with digital assets?
It is important that practitioners are able to guide clients through this challenging process with the requisite support and advice.
When helping clients plan their digital assets, here are some useful tips to consider:
- Help your clients plan how to pass on their digital assets by creating an inventory. STEP has developed a template Digital Assets Inventory that you can use for this.
- For financial information, only list the names of the institutions and their contact details. Exclude all account numbers and any sensitive financial data from the inventory.
- Advise clients to use the legacy tools that companies like Meta and Google already have in place. STEP’s #DigitalMemories campaign (https://memories.step.org/update-your-legacy-settings/) has details of these free that do not take long to complete.
- Keep the inventory and related documents in a folder. Advise clients to keep the folder locked in a file cabinet or safety deposit box. Ensure that the executors know where it is located.
- Have a flash drive or other storage device holding the same information as additional backup to the folder.
- Keep the digital assets inventory up-to-date and remind clients not to include passwords or privacy keys. Clients should leave separate instructions for the executors on how to access the digital accounts and wallets.
- Do not include any specific details of digital assets or cryptocurrencies in the will. If possible, include general instructions on how the client would like the executors to administer them.
- Advise clients to make a Financial Property & Affairs Lasting Power of Attorney providing explicit authority for the attorneys to deal with their digital assets.
- Include jurisdiction-specific digital assets clause in each of the client’s will, power of attorney, and trust agreements.
Successful estate planning requires clients to communicate their wishes about digital assets to their loved ones, just as they would regarding any other part of their financial estate or sentimental belongings.
Advisors should be discussing their clients’ digital assets with them in the same way that they would discuss and make plans for the rest of their estates. The traditional estate planning rule would be to review plans every few years or upon a major life event such as a birth or death.
However, this is a fast developing area. New digital platforms are being developed every day and digital assets laws are being established. For this reason, it is important to ensure portfolios remain up to date and plans are regularly reviewed.
Emily Deane TEP, Technical Counsel and Head of Government Affairs at STEP
