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Protecting your digital assets

Posted on 11th February, 2019

You may have seen in the headlines recently that one missing word has caused a whole heap of trouble in the world of cyber currency;  the owner of Canada’s largest cryptocurrency exchange sadly dying quite unexpectedly, and taking with him to his grave the password to access £145 million of investors’ money held in digital wallets. Yes £145 million!

We can certainly all relate to password problems (I know I am forever hitting that ‘forgot your password?’ link) and although most of us will never be troubled with having custody of such eye-watering sums it does make you think, in this digital age, if I were to die could my nearest and dearest access my digital assets? Would I be taking my passwords with me too?

It is clear that the law of Wills and Estates is still coming to grips with the digital age; legislation and terminology remains firmly seated in laws stemming from way back in 1837. In the world of Wills, we speak of terminology like “chattels” which will still be (and quite correctly for the record) referred to in any Will prepared today but with the definition of personal items being drawn from the Administration of Estate Act of 1925 we must ask how can this be applied to the modern age; peoples belongings are increasingly no longer just physical possessions that can be handed over but intangible digital assets held in ‘cyberspace’.

Have you considered whether you would need to make provision for your digital assets in your Will? Moreover, what are digital assets and can they be inherited?

It may surprise you to find out that there is actually no clear legal definition of digital assets in UK legislation, but I would expect (as a non-exhaustive list!) personal digital assets to include any information stored electronically online on a physical device, online accounts, blogs, websites, social media profiles and virtual currency. Most of these are things all of us have in some shape or form.

What can you do to protect your digital Estate? This is a tricky area; we are all well aware of cyber security and of the mantra of not divulging or writing your password down! However, to prevent a situation like that of the chief executive of Quadriga CX the following things could be considered:

  • Creation of a memorandum of digital assets with emails, user names and passwords and keep this safe perhaps storing on an external hard or flash drive or a copy of this with your Will. Whilst it may be an administrative bore it goes without saying it is important to keep this up to date!
  • Printing hard copies of digital assets that have particular financial or sentimental value or to save them to external hard drives
  • To store virtual currency wallets offline
  • To not rely on the personal chattels clause in a Will given the potentially archaic definition as discussed above: make specific gifts of any purely digital assets to beneficiaries in your Will
  • To leave a Letter of Wishes giving clear and comprehensive instructions about each digital asset

And of course, unfortunately it’s not just on death that we need to think of access to digital assets but also lack of mental capacity. It is important that you have an appropriately worded Lasting Power of Attorney (a legal document giving authority to nominated persons to manage your financial assets if you were to lose capacity) to allow your attorneys to access and manage your digital assets on your behalf if that scenario were ever to arise.

A word of caution in this cautionary tale however, even if attorneys or personal representatives have express power to deal with a digital asset and are aware of usernames and passwords, they should not access the digital assets without first checking the terms of service as they could be committing a civil or criminal offence.

If this has given you food for thought and want to discuss Wills and Lasting Powers of Attorney please do not hesitate to contact the Private Client team at Jacksons Law Firm on 01642 356500.

Helen Milburn, Associate Solicitor, Private Client

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