The emergence, and rapidly growing popularity, of cryptocurrencies represent a shift in how people are investing their money, away from traditional brick-and-mortar institutions or regulated currencies. While the majority of cryptocurrencies are not yet ubiquitous as a form of legal tender, they nonetheless represent a (potentially) lucrative opportunity for individuals willing to invest in a cryptocurrency’s speculative value.
The future of cryptocurrency remains unknown; however, its popularity is evident and so must be a relevant consideration when finalising your estate planning. As cryptocurrencies are decentralised, and are not subject to any governing authority, they raise unique challenges in identifying and locating the assets in the event of a person’s death.
Ownership of cryptocurrency is anonymous, with owners accessing their cryptocurrency using private keys which are used to ‘unlock’ and deal with the cryptocurrency assets. This information may be held on a computer device via a digital wallet, on a USB, or printed physically. Many digital assets are also held outside of Australia and may therefore raise jurisdictional issues from an estate planning perspective. In many jurisdictions, there is no uniform legislation governing access to a deceased person’s online cryptocurrency accounts, and so it is imperative that these matters are dealt with specifically and clearly during the estate planning process.
Other digital assets
Cryptocurrency poses many potential issues when it comes to estate planning, however this is not the only digital asset that must be given careful consideration when advising on estate planning. Both society and the legal industry are increasingly reliant on online services for day-to-day financial needs. Often there may be a discount when applying for a product online, or when opting to receive digital-only statements and communications. It is also a widely utilised modern convenience to have all your bank cards and loyalty programs on a mobile phone, rather than in their bulky, physical form. Some examples of your digital assets may include:
- financial assets, such as online bank accounts and shares;
- intellectual property attached to domain names or online literary works;
- online sporting and gaming accounts;
- loyalty programs such as supermarket rewards and airline frequent flyer programmes;
- online shopping accounts such as eBay and Amazon; and
- personal or business social media accounts such as Instagram, Facebook and LinkedIn.
As these digital assets may represent significant value to your estate, you must give thought to how they may be accessed in the event of your death.
How to deal with your cryptocurrency and digital assets
It is important that your cryptocurrency and digital assets can be identified, located and accessed after your death. In considering your estate planning, you should ensure that you have a fulsome list of your digital assets, how and where those assets are held and accessed, and determine how you would like those assets dealt with.
It is important that you maintain up-to-date records of your online accounts and subscriptions including usernames, passwords and any two-factor authentication required. These records should then be stored in a secure place such as with your solicitor, in a safety deposit box, or on the ‘cloud’. You should advise your executor where your account records are stored so that they can deal with those assets after you die.
Understand your online accounts
Understanding how various accounts are dealt with by service providers will help to determine the type of action that will need to occur when you die.
For example, Facebook account holders can nominate whether their account is to be deleted or memorialised upon their death. A memorialised account will remain active, and so can provide a place for family and friends to share memories on the deceased’s profile, and any content shared by the deceased person remains visible to those with whom it was shared.
How to include digital assets in your will
Your digital assets automatically form part of your estate, and so can be distributed in accordance with the terms of your will, unless they are owned by a company, trust, through superannuation or held by a different entity. If you would like to gift particular digital assets to particular people, your will should define and identify these accordingly in your will; however, noting that a grant of probate is publicly available information after you die, it is not advisable to disclose the particular details of any cryptocurrency accounts in your will.
We firmly advise that, if applicable, you maintain a detailed list of digital assets which will form part of your estate, as well as the passwords (or any other relevant identifiers related to those assets), credentials, details of any two factor authentication and any other details required to access these assets. Often, we hold this information with your original will for safekeeping.
It is also important to consider what happens to your digital assets in the event that you are incapacitated. Appointing a trusted person to manage your online affairs and including specific instructions in an enduring power of attorney is a means by which you can ensure the appropriate management of your digital wealth if you are incapacitated.
Precision Legal’s Wills & Estates team has considerable experience helping clients with their estate planning, particularly where their estates include cryptocurrencies or other digital assets. Please contact a member of our team for further information on how we can assist you.
8212 1115 or email [email protected].