The overlooked asset: Digital Assets
In the increasingly digital world we live in – laptops, smartphones, online banking, private email, social media accounts and cryptocurrency are at our fingertips daily.
Most of our digital assets will have a monetary and/or sentimental value. It is therefore essential that consideration is given to your digital assets in the context of both your will and your Lasting Power of Attorney (LPA).
As of December 2018, HMRC view cryptocurrency as ‘property’ for inheritance tax purposes.
This means executors of your will will need to establish and declare crypto assets on the deceased’s tax return.
Digital property does not vest with the executors until it can be found, accessed and retrieved. A secure virtual wallet is needed to store, send and receive cryptocurrency which holds the private keys.
Without a key the assets are lost forever and cannot pass to beneficiaries. It is therefore imperative to consider preparing a secure list of your digital assets and details of how to access them to avoid these assets being overlooked or lost. The list should be regularly updated and can form part of an accompanying letter, which can be held securely with your will.
A LPA is also a very useful tool to enable trusted individuals to look after your financial affairs when you are no longer capable. Therefore, it is very important that your attorneys know how to access your digital assets by having a secure list.
If you have an LPA, is it essential it is worded specifically to allow your attorney to deal with your digital assets, and deal with third party providers. This is especially important if you hold cryptocurrency.
Whilst it may seem daunting for an executor, attorney or trustee, it need not be provided if expert advice is taken at the earliest possible opportunity and thorough planning is put in place.
Nicola Davies is a solicitor at Agri Advisor’s Welshpool office
