We have mentioned digital assets before, as your computer passwords may prevent access to hidden treasures after your death, like your Internet Bank account, family photos, or last online tax return!
A recent article in The Wall Street Journal voiced growing concern in the USA about the value which can attach to such assets. For example do you own a domain name which might be worth a fortune if sold to a well known international business? Or did the excitement of winning £100,000 in an online betting gamble cause a fatal heart attack, but leave a small fortune in your account? If so, how will your Executors find out about it?
Nowadays your digital assets may include items of sentimental value such as photos, music, and personal records (your family history?) as well as online accounts with banks, bookies, service providers and others.
The first question is how does a family member or your executors find out about them, let alone gain access? That must be down to you to keep a separate record and perhaps in a letter addressed to executors, left with your Will, explain how this might be accessed in the event of your unexpected death.
It might even be sensible to set up a lifetime trust to hold some digital assets so that the accounts do not “die” with you. An independent trustee would remain the legal owner, able to administer them separately from your personal estate which passes under your Will, accounting for inheritance tax, if appropriate, as happens with other lifetime trusts.
There is a parallel of sorts to the problem, and solution, in the case of a company pension scheme of which you are a beneficiary. In the event of your death the independent trustee may automatically switch income benefits over to a surviving spouse. In the case of a lump sum, the Trustees should have a letter of wishes from you to explain how you would like it distributed.
While family members as executors who are also beneficiaries may be happy to “muddle through”, the legal obligations on friends who have accepted this role, or professional executors such as solicitors or Trust Companies, may place them in a difficult position. If they fail to identify the online betting winnings, or find the unpublished novel, or do not know how to gain control of them, they may expose themselves to significant negligence, or breach of trust, claims. If they do identify less obvious assets like a valuable domain name, a personal business “brand name”, or intellectual property, and fail to protect them by paying subscriptions, or to obtain expert valuations for an Inheritance Tax return, they may become personally liable.