In today’s digital age, it’s not uncommon for individuals to own a variety of digital assets, ranging from social media accounts to cryptocurrency investments. However, many Australians may not fully appreciate the importance of including these digital assets in their estate planning.

As an experienced wills and estate lawyer, I’ve seen firsthand the challenges that can arise when digital assets are overlooked. In this article, we’ll explore what digital assets are, how cryptocurrency is treated under Australian estate planning law, and provide practical tips to ensure your digital assets are protected after you pass away.

What Are Digital Assets?

Digital assets encompass a wide range of online and electronic properties. These can include:

• Social Media Accounts: Facebook, Instagram, LinkedIn, and other social media profiles.

• Email Accounts: Gmail, Yahoo, Outlook, etc.

• Online Banking and Financial Accounts: Accounts with traditional banks as well as online-only banks.

• Cryptocurrency: Bitcoin, Ethereum, and other cryptocurrencies.

• Digital Media: Photos, videos, music, and e-books stored online.

• Online Subscriptions and Services: Streaming services, cloud storage, and other digital services.

These assets can have both monetary and sentimental value, making it essential to consider them in your estate planning.

The Legal Challenges of Digital Assets in Estate Planning

One of the main challenges with digital assets is the lack of physicality. Unlike traditional assets like property or bank accounts, digital assets can be difficult to locate, access, and manage after someone’s death. Additionally, the terms of service agreements with various online platforms may complicate matters, as they often restrict third-party access to accounts.

For instance, some platforms may automatically delete an account after a certain period of inactivity, while others may allow family members limited access. Without proper planning, your loved ones might struggle to access or manage your digital assets, leading to potential loss of valuable information or money.

How Is Cryptocurrency Treated in Estate Planning?

Cryptocurrency, like Bitcoin or Ethereum, is a relatively new type of digital asset that has gained significant popularity in recent years. However, its unique characteristics make it particularly challenging to manage in estate planning.

1. Ownership and Access:

Cryptocurrency is stored in digital wallets, secured by private keys known only to the wallet owner. If these keys are lost or inaccessible, the cryptocurrency is essentially lost forever. This makes it crucial to ensure that your private keys and wallet information are securely stored and that your executor or beneficiaries know how to access them.

2. Valuation:

The value of cryptocurrency can be extremely volatile, with prices fluctuating significantly over short periods. For estate planning purposes, it’s important to regularly update the valuation of your cryptocurrency holdings to ensure they are accurately reflected in your will.

3. Tax Implications:

In Australia, cryptocurrency is considered property for tax purposes, meaning it may be subject to capital gains tax when transferred to beneficiaries. It’s important to work with a legal professional who understands the tax implications of cryptocurrency to ensure your estate plan accounts for any potential tax liabilities.

Practical Tips for Including Digital Assets in Your Estate Plan

Given the unique challenges of digital assets and cryptocurrency, it’s essential to take proactive steps to ensure they are properly managed in your estate plan. Here are some practical tips:

1. Create a Digital Asset Inventory:

Make a comprehensive list of all your digital assets, including account names, usernames, passwords, and any other relevant information. This inventory should be stored securely, such as in a password-protected document or with a trusted digital estate management service.

2. Include Digital Assets in Your Will:

Clearly specify in your will how you want your digital assets to be handled. This could include instructions for social media accounts, access to online financial accounts, and the transfer of cryptocurrency. Be sure to name a digital executor if possible, someone who is familiar with technology and can manage these assets effectively.

3. Store Access Information Securely:

Ensure that your private keys, passwords, and other access information are stored in a secure location, such as a digital vault or with a trusted individual. Make sure your executor or beneficiaries know how to access this information when needed.

4. Regularly Update Your Estate Plan:

As digital assets and laws related to them evolve, it’s important to regularly review and update your estate plan. This ensures that all your assets, including new digital assets you may acquire, are properly accounted for and protected.

5. Seek Professional Advice:

Given the complexity of digital assets and cryptocurrency, it’s wise to seek professional legal advice to ensure your estate plan is comprehensive and legally sound. A lawyer with experience in digital assets and estate planning can help you navigate the intricacies of managing these assets after your death.

Incorporating digital assets into your estate plan is no longer just an option—it’s a necessity. Failing to do so could result in the loss of valuable assets, both monetary and sentimental. If you haven’t yet included your digital assets in your estate plan, or if it’s been a while since you last updated your will, now is the time to act.

As an experienced wills and estate lawyer, I can help you create or review your will to ensure your digital assets, including cryptocurrency, are protected. Don’t leave your loved ones to navigate the complexities of digital assets on their own. Contact my office today to schedule a consultation and take the first step in safeguarding your digital legacy.

Click To Protect Your Digital Legacy

By addressing the unique challenges of digital assets and cryptocurrency in your estate planning, you can provide peace of mind for yourself and your loved ones, knowing that your digital legacy is secure.