BUSINESS NEWS - While the vast majority of people are aware of the importance of making sure that their physical assets and personal wealth are passed on to those left behind when they pass away, it’s becoming increasingly important to ensure that the growing number of digital assets are also specifically included in our estate planning.
That’s according to Johan Strydom of FNB Fiduciary Services who explains that the term ‘digital assets’ is a very broad one that can cover everything from knowledge recorded digitally in eBooks, documents websites and social media, to software, apps and code we may have developed, important digital data, patents or trade secrets, digital artwork or recordings, and of course cryptocurrency investments.
“There is a great deal that people own today that cannot be classified as a physical asset that we can hold or touch, but which still has immense financial value,” Strydom explains, “but because of the digital format of these assets, there is a very real risk that they may be accidentally overlooked when we are doing our estate planning or drawing up a will.”
And Strydom points out that the importance of considering such digital assets in estate planning has increased when one considers that the value of these assets often also goes far beyond the financial benefit they may offer the loved ones we leave behind.
“While assets like cryptocurrency, digital contracts, art and music productions, code and patents can undoubtedly have huge financial value, for most people the importance of what they have stored digitally goes far beyond monetary consideration,” he explains, “but given that few people could ever put a price on things like family photos and videos the importance of considering how best to securely pass all our digital assets to our beneficiaries can’t be overstated.”
Strydom’s advice makes good sense, when you consider that even if many people don’t own actual digital assets with a financial value, the majority of us live significant digital lives that include social media accounts, online banking and shopping profiles, email services, and more. Most of these are password protected. which makes accessing or closing them near impossible for those left behind in the event of our death.
“The issue is not just an inability by our heirs to access the many digital accounts that most of us have, it’s also not knowing what we actually want them to do with these accounts once we’re gone,” Strydom says, “which makes it absolutely vital for everyone to include explicit instructions in their will regarding their online presence, including the usernames and passwords required to deal with these digital accounts after their passing.”
Of course, when it comes to digital assets with financial value, the process of passing these on to your loved ones becomes significantly more complicated due to obvious security concerns.
“While it’s easy enough to stipulate in your will who gets which of your digital assets after you die, the security precautions in place to protect these assets have the potential to make it difficult, if not impossible, for your beneficiaries to access what becomes rightfully theirs,” Strydom says, “which is why the effective management and bequeathing of these digital assets demands very careful thought and planning.”
Strydom points out that unlike physical bank accounts and traditional investments, which are frozen after the owner’s death until dealt with by an executor, digital assets and investments remain active and can be accessed by anyone who has the necessary login details. What’s more, many international digital service providers like iCloud, Yahoo, and iStore don’t make allowance for transferability of digital assets to beneficiaries, which further complicates matters.
And under South African law, there is still no clearly defined process for dealing with digital assets. All of which means that it’s likely any cryptocurrency or other digital assets you own will need to form part of your overall estate and be dealt with by your nominated executor, who will need to be able to access those digital assets in order to include them in the estate winding up procedures.
“It is obviously not advisable to include login details for any accounts that hold financial assets in your will as this could be accessed by an unauthorised individual, even while you are still alive,” he explains, “so the best approach is still to partner with a trusted estate planner or other fiduciary expert and enable them to make sure your loved ones benefit from these assets being included as part of the overall estate they inherit when you die.”
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