There has been an increase in wealth being distributed across various forms of digital assets or platforms. For example, NFTs, cryptocurrencies such as Bitcoin or Ethereum, or even online social networks or gaming accounts can have significant value in them. Investment is no longer limited to its traditional forms, which has led to the emergence of many investments in alternative assets, most of which are done anonymously.
When thinking about how to plan the succession of digital assets, it would be useful to distinguish between digital assets that can be transferred from those that are not.
Tradable digital assets
Tradable digital assets include cryptocurrency, NFTs, money in online accounts such as Alipay or WeChat pay. These can usually be passed on by making provisions in a will. Most countries can treat them in the same way as any traditional asset (such as bank accounts or real estate) and require some form of grant of representation to access digital assets.
Some companies may even provide the functionality on their software platform whereby the user can designate a person as an emergency contact to receive the data in the user’s account under conditions specified by the user, such as in the event of the user’s death or incapacity. This feature would potentially allow an executor or executor named in the user’s will (if there is one) to access valuable personal, financial and business information after the user’s death, before he can even present an authenticated probate of probate the company, as well as to act on this information for the benefit of the next generation of the user in accordance with the will. For example, Apple has a policy known as legacy contacts, where the person listed as the old contact can access photos, messages, notes (but not passwords, music, subscriptions, etc.) with only the access key that was generated when the old contact was fixed and the death certificate.
Given the popularity of the digital assets, popular trading platforms for cryptocurrency and other digital assets already have some kind of structured policy for dealing with deceased account holders. Some trading platforms have adopted the traditional requirements for handling any other physical asset, i.e. requiring beneficiaries to provide a grant of representation, death certificate and other supporting documentation to allow access to the deceased’s account, while other platforms allow their users to complete their know-your-customer procedure, which allows the platform to identify the person using the account and therefore help recipients access those accounts.
However, since there is currently no uniform standard for how to disseminate digital assets, the best and easiest method is to ensure that your recipients are able to discover not only the digital assets you own. It is important to note that due to the highly secure and encrypted nature of digital assets, such that some form of password or key is required to access assets, it may be important to store these passwords in a secure location, but also letting your recipients know how to access those passwords and keys.
Non-transferable digital assets
Non-transferable digital assets are generally digital assets that are licensed for personal use but not owned in a legal sense. These include email accounts, social media IDs and accounts or accounts for mobile applications and the information they contain. These generally cannot be passed down simply by will and may require non-traditional estate plans.
Although the personal nature of these non-transferable digital assets prevents their transfer, it is possible to store them in accordance with the wishes of the deceased. For example, Instagram offers a service called “memorialization” of the deceased’s account, which allows the memorialized account to be kept as if it were frozen in time. Facebook offers another service that allows the person to designate an older contact to manage the memorial account to some extent (such as writing a pinned post to share a final post or to update the profile picture, but does not allow deleting or changing previous messages etc.). YouTube also offers an estate planning service known as Dormant Account Manager, which allows the individual to designate who should have access to information or whether the account should be deleted. Otherwise, individuals may have to go through customer service stages and ultimately not even be able to access personal or important information.
Inheritance tax considerations
Digital assets (especially cryptocurrencies) can fluctuate rapidly in value. In Hong Kong, where inheritance tax has been abolished, this is generally not a concern. However, digital assets may also be based in other jurisdictions which impose inheritance tax and therefore the applicable jurisdiction of the digital asset or the company through which the digital assets are held must be considered and taken into account before “investing in them”. during the succession. Planning.
With different forms of valuable assets and advances in technology offering new solutions for property and asset security, individuals are facing wealth protection and estate considerations more than ever. It is highly recommended that a legal framework is carefully planned to ensure that their wealth can be protected from unwanted interference.