By Ollie Wright, Head of Financial Institutions Team at Estatesearch
Estatesearch has provided Financial Profile searches to help private client solicitors establish the assets and liabilities within an estate since 2018. As an award-winning technology innovator, we work closely with legal firms to understand the challenges they face when working on probate cases, refining and developing our offerings to offer solutions and help them smooth processes to ensure due diligence obligations are met.
One issue we come across frequently is the impact of society’s increasing move online. Everyone has a digital footprint these days, whether that be a simple money transfer app such as Paypal, a Facebook profile, or at the other end of the spectrum, a dabble in the world of cryptocurrency.
However, this shift online can create more challenges for private client practitioners working on estate administration. Financial profiles and therefore, estate assets, are difficult to find where the information is stored in a solely digital format, with no physical paper trail. The challenges of identification are only set to increase in the future as our society’s reliance on online interaction grows. For example: Three years ago in 2021, according to the FCA, 2.3 million UK adults owned Cryptocurrency with a significant portion of these (19%) holding more than £10,000 in crypto assets. Since then, estimates show these numbers may have doubled, and some of these digitally held assets could be of significant value. According to Finder.com (finder.com/uk/cryptocurrency-statistics), 6% of people in the UK have invested in cryptocurrency as of 2023.
In response to this trend, last year we launched a new Digital Assets Search to support private client solicitors in extending estate administration processes to online accounts. Since then, our Digital Asset Search has been thoroughly tested and evaluated to ensure it delivers robust results. The challenge for us, however, is that the definition of what a Digital Asset is; “anything that someone owns that exists in a digital format,” is wide-ranging. Such assets can be sentimental such as photographs in a Facebook account or documents stored on a cloud drive. They may also include assets with monetary value such as cryptocurrency or PayPal wallets, or online marketplaces and gambling accounts which could potentially also unearth liabilities and debt. Such accounts need to be cancelled to ensure that payments aren’t carried forward post-death.
Because the digital arena is so expansive, it was important for us to thoroughly test the product and listen to customer feedback. As such, we have drawn on our expertise in our core Financial Profile Searches and have refined our approach, enabling us to deliver the best value to our clients and ensure the most important digital assets are identified where possible. Previously, we were contacting social media, streaming, and communications companies, who were either not responding or did not have the capabilities to respond in a way that would add value to our search. Our Digital Asset Search is now designed primarily to search for profiles that are tied to monetary assets such as those held with cryptocurrency providers, gambling sites, credit agencies, or digital banks. Many of these organisations are regulated by the FCA but not all, which brings its own challenges.
There are of course still limitations and Cryptocurrency is an example. When we think of cryptocurrency, the first thing that often comes to mind is images of people dealing online, and this is often the case to start with but it’s more complicated than that. We can search for online cryptocurrency accounts where they are centralized and registered. This form of crypto is stored in what is called a ‘hot wallet’. However, Cryptocurrency can also be stored offline on a device or simply on a USB stick for example. This is a little like having cash in your pocket. These so called ‘cold wallets’ are outside the banking system, usually untraceable and are often heavily encrypted even if the family of the deceased finds them. In these cases, is simply not possible to identify these assets through a digital search.
We are also working with gambling organisations, including the industry’s leading brands, many of which now offer an online service. These are important to identify quickly in both deceased and mental capacity cases because any online gambling account that contains funds and remains untouched for more than 13 months is classed as dormant. At this point, the gambling site takes a small charge year on year until the account reaches zero, and then it is closed. Most of the gambling sites have been happy to work with us to identify any accounts belonging to an estate to help ensure beneficiaries can receive what is rightfully theirs.
The nature of online interaction is changing so rapidly, and the regulators are working hard to keep up. In February this year, the Law Commission launched two new consultative exercises related to its ongoing work in this space. This includes pushing for legislation around Digital Assets and personal property rights.
It is likely that by this time next year, our Digital Asset Search may have been refined and enhanced further. We aim to be working closely with more digital banks, Cryptocurrency providers, and online gambling sites to make access to information by personal representatives in probate cases easier. There is also some crossover between the offerings of some digital providers and ensuring we can offer our legal clients the best value for the information provided, all in one place is critical.
We will remain agile in an evolving digital space and will continue to help legal firms identify and deal with Digital Assets and undertake enquiries to demonstrate that they have done everything possible to assist in identifying the full extent of their client’s estate, as technology continues to expand into our modern lives.
Our Digital Asset Search is now available to order alongside Estatesearch’s Financial Profile Searches through our secure, free online portal. We also have free resources for firms such as our Digital Assets in Death Guide and a series of on-demand webinars.
For further information about Estatesearch’s Digital Asset Search please visit estatesearch.co.uk or contact helpdesk@estatesearch.co.uk
This article was submitted to be published by estatesearch as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.
