Online assets reflect on a person’s wealth, estates, tax status and reputational value, being on top of them all is crucial in the digital age, writes Helen Cox
Blogs, vlogs, emails, domain names, cryptocurrencies, digital documents, digital photographs… the list goes on. Although we may not think of them as ‘assets’, over the past decade most of us have built up a significant collection of digital assets. For many, the value of these assets is simply sentimental – they host the modern day equivalent of diaries, journals and personal correspondence. But for high-profile individuals, these sentimental assets may also carry significant financial and reputational value. For others, their digital assets are income generating and essential to the success of a personal online business.
These digital assets need the same level of attention and management as any physical assets, particularly when it comes to estate planning.
When considering how to manage, protect or pass on your digital assets, you need to establish what digital assets you actually own. If you hold accounts through online providers, whether you ‘own’ or have the power to pass on those accounts will depend on the provider’s terms and conditions. For example, music accounts or eBooks are not commonly “owned” in the usual sense; instead the provider grants the user a licence for their lifelong use which expires on death.
Being cyber aware is key to safeguarding your digital assets during your lifetime. Ensuring that two factor authentication is switched on for your accounts will help to prevent hackers from accessing your data and assets. Further, more obvious points around being careful with online accounts when in an unsecured wifi hotspot and ensuring that your personal wireless router is not using out of date encryption software will also help to protect your digital assets.
If you hold digital assets personally which are crucial to your business, transferring them to a personal company may be a sensible option from a tax and succession planning perspective.
If your digital assets are a form of intellectual property, they may have automatic protection under copyright law, but you may also need to consider applying for protection (for example, registering names and logos as trade marks).
Unless guided to do so by their lawyers, most people are unlikely to consider including their digital assets in their will. However, if they are not specifically listed they will form part of the residue of your estate and will pass to whoever inherits the residue. This may be unintended and could cause potential problems if more than one person is entitled to the same digital asset.
In contrast, any digital assets held by your company will remain assets of the company post-death. Whoever inherits your shares will therefore inherit control of – or a stake in – the digital assets held by the company.
You should also ensure that the recipient can access any assets transferred to them. Consider creating a ‘digital assets log’, where you record and maintain a list of all digital assets held personally along with their account numbers and logins. Any such log should be kept in a safe, secure place away from your computer.
Whatever the value of your digital assets, these steps are easy to take and should help to protect both your digital assets during your lifetime and your digital legacy.
Helen Cox is a managing associate at Mishcon de Reya