Digital assets and making a will
In January 2018 a unique, mint condition item was put up for sale in an online auction house. Signed by Tyler Latham and created to commemorate his team’s victory in a major tournament, the item generated a huge amount of interest and ended up selling for a world record price of $61,052.63. The item in question? A ‘skin’ (a file used to change the appearance of an object) for a weapon in the computer game ‘Counter-Strike: Global Offensive’.
It has become something of a cliché in recent years to say that we are living more and more of our lives online, but a consequence of this is that people are increasingly viewing their digital assets as having the same kind of value as real-world objects. While the idea of spending the best part of £50,000 on what is essentially just a piece of code for use in a game might seem extreme, it does show how quickly perceptions of what can be valuable have changed and that there is now a need to consider your digital assets seriously when thinking about estate planning or making a new will.
If you own digital assets and you are thinking about making a will, here are a few points that you may not have thought about:
- What do you actually own?: This may seem like a rather odd question to raise, but it is central to how physical and digital assets can differ. An extensive music collection on a physical medium such as CD or vinyl is something tangible that you can leave to someone or sell, but you currently cannot do the same with an equally expensively assembled music collection on iTunes. The reason for this, is that in this example you legally only hold a licence to the music, and under the terms of the licence agreement you are not allowed to sell or give the music you have purchased to anyone else. As a general rule of thumb, if it is something that you have created yourself then you will probably own the rights to it, but if it is something that you have purchased you will need to check your user agreement with the seller to see what rights you have over the asset.
- Volatility: The most commonly traded digital assets have shown themselves to be a great deal more volatile in terms of their value than more traditional assets, which can make planning your estate much more complex. Take cryptocurrencies for example: Bitcoin, the most well-known cryptocurrency, was valued at more than £14,500 per coin at its peak in December 2017, but at the time of writing, each coin is valued at just under £3,000. Such wild swings in values could lead to an unforeseen inheritance tax bill, or a loved one receiving much less money from your estate than you wanted them to have if such assets form part of your estate and feature in your will. It is therefore important to factor in this volatility when tax planning and considering how you want to dispose of your estate.
- Logins: The ability to do so much online, from banking to paying utility bills and doing your weekly shop, is incredibly convenient but could lead to some serious headaches for your executors, who will be dealing with the assets in your estate after you die. Picture this not-too-farfetched scenario; a person has their bank account with one of the new range of 'challenger' banks that has no physical branches and so the person carries out all of their banking activity in an app on their smartphone. As the person uses a payment app on their smartphone for all of their day-to-day purchases they have done away with their debit card, and in order to access their smartphone you require biometric data from the person themselves, such as a thumb print or iris scan. Finding out about the existence of the bank account would be difficult enough for the executors, never mind actually accessing the account. It is therefore extremely important to create a record of the logins that are required to access any of your digital assets, together with any passwords or security questions that can be used to gain access. The login details should be stored securely (perhaps even with the solicitors who hold your will), but your executors should be able to get access to them when needed.
Digital assets are a new and constantly changing part of our lives. If you need some advice on how to deal with your digital assets as part of your plans for the future, please do not hesitate to get in touch with a member of our Wills and Succession planning team.