In today’s digital age, estate planning has evolved to include not just physical assets but also a range of digital assets.
From social media accounts to cryptocurrency holdings, the digital realm presents unique challenges and opportunities for those looking to secure their legacy.
In this article, we will explore some of the challenges and opportunities associated with digital assets and estate planning.
Traditional stocks and shares
When it comes to traditional investments like stocks and shares, the process is relatively straightforward.
These assets are usually held with a financial institution and can be easily transferred or liquidated upon the owner’s demise, provided the proper legal documentation is in place.
A comprehensive Will should clearly outline the intended beneficiaries of these assets, and executors should be made aware of where to find the relevant account information.
It’s also advisable to consider the tax implications of stocks and shares when you are planning your Will.
Capital Gains Tax and Inheritance Tax can have a significant impact on how your estate is distributed and how much your loved ones receive. It is always advisable to discuss these issues with a qualified solicitor.
Cryptocurrencies
Cryptocurrency, or simply ‘crypto,’ presents a unique set of challenges when it comes to distributing your assets after you are gone.
Unlike traditional assets, cryptocurrency is not stored within a centralised institution but is secured through cryptographic keys – hence ‘crypto.’
Losing access to these keys essentially means losing the asset, making it imperative to include them in your estate planning.
One approach is to use a digital wallet with multi-signature capabilities, requiring multiple keys to authorise a transaction.
This way, you can entrust different keys to multiple individuals, ensuring that no single person has complete control over your assets.
Alternatively, you can use a hardware wallet stored in a secure location, such as a safety deposit box, with instructions outlined in your Will on how to access it.
Legal considerations
From a legal standpoint, the classification of cryptocurrencies is still a grey area.
While some jurisdictions consider them property, others view them as currency, affecting how they are taxed and transferred upon death.
Therefore, it’s crucial to seek legal advice from a solicitor who specialises in estate planning to gain a comprehensive understanding of the issue.
Estate planning in the digital age requires a multi-faceted approach, considering both traditional and digital assets.
While stocks and shares can be managed through well-established legal frameworks, cryptocurrencies require innovative solutions to ensure they are passed on securely and efficiently.
Regardless of the type of asset, a well-crafted Will remains the cornerstone of any robust estate plan, providing clarity and peace of mind for you and your loved ones.
For help drafting your Will, contact one of our solicitors.