As digitisation continues to revolutionise our life and reshape our financial landscape, estate planning must adapt accordingly. It is advisable to consult a lawyer or estate planner before diving into succession planning due to legal complexities surrounding the domain.
Vishnu Chundi, Founder & CEO, AasaanWill
As our lives become increasingly digitised, new forms of wealth have emerged. Cryptocurrencies, Non-Fungible Tokens (NFTs), online businesses, and other digital assets have quickly found their place in the financial portfolios of many investors. These digital assets hold significant value and potential, but a question that often gets overlooked is, what happens to these assets when you die? Many millennials, who are increasingly embracing such assets, overlook this crucial issue while preparing their wills.
Consider a hypothetical scenario involving Raj, a tech-savvy investor with a diverse portfolio of digital assets. Over time, Raj has accumulated a variety of cryptocurrencies, invested in several NFTs, and holds stake in numerous online businesses. However, like many of his peers, he neglects to include these digital assets in his will. When Raj passes away unexpectedly, his family finds themselves unable to access or claim them. The assets Raj worked hard to accumulate become stranded in the digital realm, out of reach of his heirs.
This illustrates the critical importance of integrating digital assets into estate planning to facilitate a smooth transition of wealth to the designated heirs and protect these assets from potential loss or legal disputes.
Social media influencers form a new and vital frontier in the digital assets space. Their platforms, follower base, and created content represent intangible assets that often hold significant financial and sentimental value. From Instagram posts to YouTube videos, TikTok clips to blog entries, the body of work an influencer produces can continue to generate revenue and impact long after they are gone.
Planning the will
Consequently, it’s crucial for influencers to consider these digital assets when planning their wills. Not only does this include their social media accounts, but also any royalties, digital rights, and associated branding elements. Preparing for digital asset succession can ensure the influencer’s legacy is preserved and managed according to their wishes, providing both financial security for the heirs and continuity for their online community.
But how does one incorporate digital assets into a will? The process begins with an extensive cataloguing of all digital assets. This list should include digital currencies held in various wallets, NFTs, digital subscriptions, stakes in online businesses, and even credentials for social media accounts and other online platforms. Once these assets have been listed, the will should provide detailed instructions for accessing each asset, including passwords, two-factor authentication details, and the necessary cryptographic keys.
Due to the complexity of digital asset management and the critical importance of getting it right, it may be beneficial to consult a legal professional specialising in digital assets and estate laws. An attorney can guide you through the process, ensuring that the language in your will clearly communicates your intentions and that the transfer of your digital assets is legally valid.
They can also keep you updated on any relevant legal developments. Furthermore, the advent of online will preparation platforms has made it significantly easier for people to understand and navigate their succession goals, enabling them to avail on-demand legal consultation and write a will from the comfort of their homes – well suited to a largely digital world.
Despite these precautions, managing the inheritance of digital assets is not without challenges. One significant hurdle is the rapidly evolving legal landscape surrounding such assets. The law in many jurisdictions has yet to catch up with the technological advancements in digital assets, resulting in ambiguities and potential legal pitfalls.
Another issue is the possible technology gap among older generations, who often serve as executors of Wills. Navigating the world of digital assets can be difficult for those who are unfamiliar with the technology, making it challenging to access and manage these assets effectively. Moreover, digital assets like cryptocurrencies can be incredibly volatile, requiring an understanding of the market and regular management.
Regarding the laws that guide the transfer of assets in a will, it varies depending on your jurisdiction. In India, for example, the Indian Succession Act, 1925, governs the aspects of a will. However, it does not specifically address digital assets, leaving a legal void that necessitates careful navigation.
As digitisation continues to revolutionise our life and reshape our financial landscape, estate planning must adapt accordingly.
Navigating the new frontier of digital inheritance may seem daunting, but it’s an essential task for any digital asset holder.