The untimely death of Gerald Cotton, former Chief Executive Officer of Canadian cryptocurrency exchange company, Quadriga CX, emphasises the importance of planning your electronic after-life.
Mr Cotton’s death in India, not only raised suspicion as to its authenticity (and allegations of an exit scam) but reiterated the chaos that can be created if digital assets have not been considered in an estate plan.
Mr Cotton was the sole custodian of encrypted passwords ‘protecting’ over $200 million worth of digital assets.
The digital assets referred to in the Quadriga saga comprise cryptocurrency (virtual currency created and stored electronically such as Bitcoin, Litecoins and Ethereum). The cryptocurrency system is decentralised and not subject to a governing authority, raising unique challenges in identifying and ‘locating’ the assets.
What are digital assets?
A person’s ‘digital life’ may encompass a range of online transactions, activities and accounts such as:
- cryptocurrency;
- financial assets including online bank accounts and shares;
- intellectual property attached to domain names or online literary works;
- online sporting and gaming accounts;
- loyalty programs such as Flybuys, Rewards and Frequent Flyers;
- online shopping accounts such as eBay and Amazon;
- personal / business social media accounts such as email, Facebook, Linked-In.
All should be considered, and included, in an effective estate plan.
Issues unique to certain digital assets
Traditional cash-based assets such as money deposited in a bank and shares are held by title to the owner and can be transferred to the beneficiary of a deceased person with the relevant documentation.
Ownership of digital assets like Bitcoin, however, is anonymous with owners accessing their cryptocurrency with private keys which are used to unlock and deal with the assets. This information may be held on a computer device (via a digital wallet) or on a USB. These assets can easily be overlooked or ‘keys’ misplaced, representing unique challenges when it comes to administering an estate.
Many digital assets are also held globally and may therefore raise jurisdictional issues from an estate planning perspective. In most instances, there is no uniform legislation governing access to a deceased person’s online accounts, so it is imperative that these matters are dealt with specifically in an estate plan.
Following are some steps you can take to ensure your online life is appropriately dealt with when you are gone.
Identify your digital assets
You should start by making a list of your digital assets (including online accounts) and determining what you would like to happen to them when you die.
Keep records of your online accounts and subscriptions including user names and passwords and store this information in a secure place.
Remember your online accounts and login details are likely to change frequently and your list should be maintained accordingly.
Understand your online accounts
Understanding how various accounts are dealt with by service providers will help to determine the type of action you would like taken when you die.
For example, Facebook account holders can advise in advance whether their account is to be deleted or memorialised. A memorialised account can provide a place for family and friends to share memories after a person dies on the deceased’s profile, and any content shared by the deceased person remains visible to those with whom it was shared.
Some loyalty programs such as Frequent Flyers may not be transferrable or redeemable after a person dies, so it may be wise to keep tabs on these types of accounts to utilise benefits regularly.
Include digital assets in your Will and appoint a technology custodian
Your Will should define and identify important digital assets and provide executors and trustees with appropriate directions and powers to deal with them.
Assign your executor or other trusted person, who is familiar with technology, the role of managing your online life after you die and ensure this direction is included in your Will.
Record your after-life technology instructions with respect to each account separately and ensure these instructions are secure, but accessible to your technology custodian. Never disclose passwords in your Will.
Online maintenance
Online accounts contain personal information which should be protected. Technology presents a real risk of identity fraud and unmonitored accounts can be particularly vulnerable. Regular monitoring and unsubscribing or deleting unused accounts can help minimise risk and keep your technology life tidy.
Regularly downloading photos and videos from your mobile to a storage device can ensure that memories are accessible to your family when you die.
Consider incapacity
It is also important to consider what happens to your online life in the event that you are incapacitated. Appointing a trusted person to manage your online affairs and including specific instructions in an enduring power of attorney is a logical step to ensure the appropriate management of your digital wealth if you are incapacitated.
The instrument making the appointment should be specific to the jurisdiction in which the assets are held, and in this respect, more than one document may be required.
Conclusion
It has become increasingly difficult for executors, lawyers and family members to ascertain and access online assets after a person dies, with many financial and other institutions operating in a ‘paperless’ environment. Certain digital assets such as cryptocurrency can present additional problems for a deceased’s family.
Inaccessible online accounts make it difficult to identify assets, and leaving online accounts open indefinitely raises concerns of potential identity theft.
Good online management and ensuring your digital assets are included in your estate plan will help your executors and family manage your online life after you are gone.
If you or someone you know wants more information or needs help or advice, please contact us on (08) 9758 8073 or email [email protected].