Writing your will? Don’t forget about your digital assets

A recent nationally representative survey reported by FTAdviser found that participants held £67.6 million in combined digital assets.

Yet, the survey also found that nearly 86% of them had not included these assets in their will.

Without clear instructions for how your beneficiaries can receive their inheritance from your online accounts and digital portfolios, it could take years before it passes safely into their hands, if at all.

Keep reading to learn what digital assets you should be keeping track of, and three strategies to help you ensure your chosen beneficiaries can access this wealth after you pass.

Digital assets refer to wealth tied up in your online accounts

In this context, digital assets don’t just refer to the wealth you hold in cryptocurrency or Non-Fungible Tokens (NFTs); they are all of the online accounts you use to access or hold wealth.

These can be:

• Current accounts
• ISAs
• Trading apps
• Online businesses
• Digital intellectual property

Digital assets have quickly moved from being a novelty to a permanent feature in modern-day financial planning.

Traditional brokers, with three- to five-day transfer windows, moved equities through phone conversations and pen and paper. In the past two decades, brokers have been quietly replaced by apps providing instant transfers, allowing investors to buy stocks and shares without the need for a broker and from the comfort of their own home.

While online processes mean that saving and investing have never been easier, many struggle to keep up with the pace of modern-day financial planning. As such, newer asset types, like digital assets, are easily left behind in wills, leaving many beneficiaries struggling to access the inheritance they were promised.

69.2% of digital investors meet the criteria for “access risk”

“Access risk” is a term used in estate planning, referring to the legal, practical, and financial barriers that might prevent beneficiaries or executors from quickly and legally obtaining control of an estate’s assets following death.

According to FTAdviser, access risk is especially prominent with digital estate planning, with 69.2% of digital investors meeting the criteria.

This is largely due to the increasing complexity of online verification processes; many require multiple layers of authentication before gaining access to accounts. This can involve passwords, biometric logins, email verification, and two-factor authentication.

Similarly, even though many will leave wealth in certain accounts to their beneficiaries, they crucially forget to record how they can gain access.

This means that they might not be able to access funds they may be relying on immediately after you pass. The process can also be convoluted, as the executor of your estate will have to negotiate with the bank directly to gain access, and your beneficiaries will need to gather the correct documentation to prove their right to access your wealth.

3 ways you can mitigate access risk for your digital assets

1. Create a digital asset inventory

This is a comprehensive, organised catalogue of all your digital assets.

It pairs the asset name and location with specific details to help your executor gain access. For a bank account, it might include your:

• Bank’s name
• Account number
• Sort code
• CVC
• Online banking password

This information allows your executor to have a complete overview of all your assets and how to access them so that they can be effectively gifted to your chosen beneficiaries.

It is important to store this securely, ideally in an analogue setting such as a paper folder, and if you wish to be extra pragmatic, within a safe in your home. This prevents the risk of the information falling into the wrong hands.

2. Use a password manager with emergency access

You likely interact with your password manager every day when you try to log in to an account, and you receive a pop-up asking to autofill your details.

Your password manager keeps all of your passwords in one place. Typically, only you can access it using a biometric login or password, which makes it difficult for your beneficiaries to access your online account information once you die.

Fortunately, some password managers allow you to share access with an emergency contact. This means that, in the case of your death, they will have a comprehensive overview of all your digital financial information.

3. Include digital asset instructions in your will

Listing a set of instructions for how your digital assets can be accessed after you die can also give your beneficiaries a clear starting point for how they can go about claiming their inheritance.

This might mean a combination of the above, in addition to appointing a digital executor who can contact providers, access data, and manage assets on behalf of your beneficiaries.

This might be a trusted third party, like a solicitor or your financial planner.

With a clear process your loved ones can follow to successfully inherit your wealth, you can simplify estate planning and reduce any risk of your wealth slipping through the cracks.

Your Kellands financial planner can help you keep your digital estate clean and tidy

We understand that digital assets are an important part of modern-day financial planning.

As part of our comprehensive services, we can help you track your digital assets so that you and your beneficiaries can have fast and easy access to your financial information once your estate passes to them.

If you’d like to learn more about how we can help you organise your online accounts and build your long-term digital wealth, email us at hale@kelland.co.uk or call 0161 929 8838.

Please note

This article is for general information only and does not constitute advice. The information is aimed at individuals only.

All information is correct at the time of writing and is subject to change in the future.

The Financial Conduct Authority does not regulate estate planning or will writing.

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