Accessing Digital Assets – Estate Planning Essentials

Accessing Digital Assets – Estate Planning Essentials

The recent death of Gerald Cotten, 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 at the age of 30, has 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 (USD?) worth of cryptocurrency (virtual currency created and stored electronically such as Bitcoin, Litecoin and Ethereum). His untimely death has left numerous Quadriga customers unable to access their assets. Mr Cotton’s widow states that she played no role in the running of Quadriga and, despite her efforts, has been unable to unlock the laptop used by Mr Cotton nor access any of his accounts.

Regardless of how the Quadriga saga unfolds, it is a timely reminder of how important it is to consider what should happen to our digital assets when we die.

What are digital assets?

A person’s digital affairs 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, shares or other paper-based investments are held by title to the owner and can be transferred to the beneficiary 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), on a USB, or printed separately. 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.

There are some simple steps you can take to ensure your online life is appropriately dealt with when you are gone.

1. 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.

2. 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. Nobody can log into a memorialised account.

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.

3. 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.

4. 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.

5. 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.

6. Consider trusts

It may also be beneficial to hold substantial digital assets through a trust structure, if possible, for greater protection and better taxation outcomes. In doing so, the trust must be considered and dealt with under the Will, which should nominate beneficiaries of the trust or shares in the trustee company and include provisions to ensure the trust can achieve the desired objectives.

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 (02) 9963 9800 or via our contact form.

COVID-19: Witnessing Legal Documents Electronically

COVID-19: Witnessing Legal Documents Electronically

The Electronic Transactions Amendment (COVID-19 Witnessing of Documents) Regulation 2020 (NSW) (The Regulation) is another government initiative in response to COVID-19. The Regulation officially came into force on 22 April 2020 and aims to provide clarity on how some documents can be witnessed by an eligible witness via audio visual link. One of the most critical aspects of the Regulation is that it does away with the requirement for a witness to be physically present to witness the execution of documents. In this blog, we answer some of the most common questions regarding the new method of witnessing legal documents electronically.

What does audio visual link mean?

Audio visual link means any technology that enables audio and visual communication between two persons who are not physically present in the same room. This usually consists of the classic video conferencing platforms such as Zoom, WhatsApp, Skype and FaceTime.
What documents can be witnessed by audio visual link?

The below documents can now be witnessed through an audio visual platform:

  • a Will;
  • a Power of Attorney or Enduring Power of Attorney;
  • an Appointment of Enduring Guardian;
  • a deed or agreement;
  • an affidavit (including any annexure or exhibit to an affidavit) except for the purposes of divorce; and
  • a statutory declaration.

How do I witness a document by audio visual link?

In order to have a validly witnessed document it is imperative that the Regulation is followed correctly and carefully. In accordance with the Regulations, a person witnessing the signing of a document using an audio visual link must:

  1. Observe the person signing the document in real time (i.e. not via a pre-recorded video) to confirm the signature is legitimate.
  2. Next, the person witnessing the document must sign the document (or a copy) as soon as possible after the witnessing via audio visual link to confirm they witnessed the signature. This could be done on a hard copy of the original document that the signatory signed which is either sent in the post or electronically to the witness.a.
    • It is important to note that the person witnessing the document must be reasonably satisfied that the document signed by the witness is the same document signed by the signatory.
  3. The person witnessing must then state on the document the method of witnessing (either countersigned or counterpart) that was used and that it was witnessed in accordance with the Regulation.
    • For example: “I, [insert name here] attest that this document was signed in counterpart and witnessed by me by audio-visual link via Skype in accordance with clause 2 of Schedule 1 to the Electronic Transactions Regulation 2017”.

Are there changes to who can act as a witness?

The Regulation has altered who can witness a Statutory Declaration. Traditionally, only Justices of the Peace and Solicitors could act as a witness to a statutory declaration.

The Regulations have been amended to allow the below persons to witness a statutory declaration

  • financial advisors;
  • pharmacists;
  • nurses;
  • accountants who are a member of Chartered Accountants Australia, CPA Australia or the Institute of Public Accountants;
  • psychologists;
  • veterinary surgeons;
  • police officers; and
  • teachers (only those employed on a permanent full time or part time basis at a school or tertiary education institution).

Further Information

With so many changes happening in the legal sector due to COVID-19 it is important to be fully aware of how these may practically impact you. If you would like more information on how we can assist you with your matter, do not hesitate to contact us on 9963 9800 or via our contact form. Check out our blog for further information and analysis on the restrictions and rules in place during COVID-19.