Estate Planning for Digital Assets (NFTs, Social Media, Etc.)
With the rapid advancements in technology during our lifetime, our lives have become increasingly intertwined with the digital world, either through our ownership of more and more tech devices that allow us to access the digital world, or even through our use of online accounts through which we navigate the virtual world.
Upon our demise, assuming such devices and digital assets hold value for us, we would also want such assets to be accounted for and distributed according to our instructions. In order to do so, proper estate planning is crucial.
This article will cover the following broad topics:
What are Digital Assets?
Broadly speaking, digital assets refer to resources that are stored digitally and have or provide value. These can range from things like videos, images, audio files and document files to even online business accounts, digital banking accounts and social media accounts. In recent times, newer forms of digital assets such as cryptocurrencies, and Non-Fungible Tokens (NFTs) have also gained popularity.
Why Would Digital Assets Need to be Protected Upon One’s Demise?
After we pass away, the digital assets that we have amassed during our lifetime continue to exist undisrupted, as unlike non-digital assets with a tangible and often depreciating presence in the physical world, digital assets have a timeless virtual presence. Some implications of this timeless virtual presence of digital assets are as follows:
- In the case of subscriptions (e.g. subscriptions to streaming services like Netflix, Disney+ or Spotify), memberships, banking or business accounts, these can continue to incur charges and/or fees unless the webhost is notified of the owner’s demise.
- In the case of social media accounts, if they are not taken down and others are unaware of the owner’s demise, this could also lead to identity theft or misuse. Using the personal details and identities of a deceased person to perpetrate fraud and scams is not uncommon. For example, in the US, a common tactic employed by scammers is to trawl through newspaper obituaries to collect information about someone who passed away recently, before turning to social media to obtain additional personal information about that person. The scammers then use this information to steal the deceased’s identity. It is estimated that each year in the US, scammers steal the identities of 2.5 million deceased individuals to open credit cards, apply for loans, get cell phones etc.
How Can Different Types of Digital Assets be Planned For?
Estate planning refers to the process of planning how you want your estate (i.e. all the assets you have in your possession at the point of death) to be managed and transferred to your beneficiaries (if any) after your death.
In general, there are various types of estate planning tools at your disposal, including:
- Wills and testamentary trusts
- Central Provident Fund (CPF) nomination
- Manner of holding of immovable property
- Life insurance policies
- Lasting Power of Attorney
- Advance Medical Directive (AMDs)
- Inter vivos trusts
- Distribution of estates owned by Muslims in Singapore
You can refer to our other article on the 8 tools you must know for estate planning in Singapore for a broad overview of each of the 8 estate planning tools mentioned above.
However, due to the unique nature of digital assets, and depending on the types of digital assets you have, different estate planning tools may be more suitable to protect those specific assets. There are also certain types of estate planning tools that are less relevant to digital assets. For instance, CPF nomination, manner of holding immovable property, life insurance policies and AMDs. Wills are the most relevant and suitable estate planning tool for digital assets.
Digital currencies, cryptocurrencies and NFTs
Cryptocurrencies, or digital currencies, refer to forms of currency which exist virtually, and use cryptography to secure transactions. Unlike traditional forms of currency (i.e. the US Dollar or Singapore Dollar), they do not have physical manifestations that can be carried around and transacted in the real world, and also do not rely on banks to verify transactions. Bitcoin and Ethereum are examples of some of the more popular cryptocurrencies. On the other hand, NFTs are unique tokens secured by cryptography that can be owned and transacted. You may recall that in 2021, a Singapore buyer shot to fame after buying a piece of NFT artwork for S$93 million worth of cryptocurrency.
The Singapore courts have ruled that cryptocurrencies and NFTs can be considered as property in Singapore. As such, just like with other traditional forms of property (e.g. family heirlooms, sentimental keepsakes, money, real property etc.), you can consider managing your cryptocurrencies and NFTs through a will. However, there are a few things that you should look out for specifically:
- You should clearly set out what cryptocurrencies and NFTs you possess. As mentioned above, unlike their non-digital counterparts, digital properties are intangible. This means that it may be difficult for the executor of your will to even identify what cryptocurrencies and NFTs you possess if it is not clearly laid out in the will. Examples of information that you should provide are the types of cryptocurrencies you have (e.g. Bitcoin, Ethereum, Cardano), the quantities of each type of cryptocurrency that you own, the unique token ID associated with your NFT etc.
- Cryptocurrencies are also secured and stored in digital wallets. Hence, in order for the executor of your will to be able to access your cryptocurrencies and NFTs, you should give clear instructions on how they can be accessed, and also provide the necessary instructions on how the executor can access such information/tools necessary to grant them access, e.g. login password, private encryption keys, flash drives etc.
Upon your death, and upon completion of the necessary legal formalities, your executor will then proceed to carry out the instructions in your will, which would include the distribution of your cryptocurrencies and NFTs.
To illustrate, suppose you had owned 100 shares of cryptocurrency X in your lifetime, which is currently held in a crypto wallet hosted on the cryptocurrency platform Crypto.com. If you had left instructions in your will for your executor to transfer all 100 shares to your child after your demise, your executor will use the information provided by you to access your login details and private encryption key in order to access your crypto wallet and transfer the 100 shares of cryptocurrency X to your child’s crypto wallet.
For more information on drafting your will, you can refer to our complete guide to making your will in Singapore.
Social media accounts, email accounts and other online accounts
As for your social media accounts, email accounts and other online accounts, it may not be fully accurate to say that it is something that you own, and which can be transferred to someone (e.g. a relative or friend) after your death. Instead, you merely have the right to set up an account and use the platform (e.g. Facebook, X, Gmail etc.) on the terms set by the companies owning the platform. However, there are still certain things that you can do in order to transfer your access to such accounts to the executor of your estate, and to your intended beneficiaries.
- You should familiarise yourself with the policies of the platforms relating to the death of the account owner. For example, Facebook and Instagram offer the option of memorialising your account after your death. This is something that can be requested by a close friend or family member. Doing so ensures that the content on your account remains visible, but your profile will no longer be searchable. You can also designate someone as a legacy contact for your account, who then will be able to make changes such as pinning tribute posts, changing your profile picture etc. One estate planning tool that is relevant here is that of a Power of Attorney, which you can execute in order to identify your legacy contact.
- You can also consider expressing your intentions pertaining to your online accounts in a will. For example, if you wish for your legacy contact to memorialise your account, that can be something that you state expressly in your will. On the other hand, if you wish for your accounts to be deleted, that can also be specified in your will. If you do choose to express such intentions in a will, you should also include your access codes and login details in your will, or at least state in your will where your executor can find such information, so that your intentions can be carried out.
For more information on settling what will happen to your online accounts after you die, you can access our other article on the topic, which provides a breakdown of the different settings that some of the more common and popular platforms offer in relation to the death of a user.
Tech devices (e.g. mobile phone, smart watches)
Tech devices such as your mobile phone, laptop, tablet and smart watch are also considered property which you can leave to your beneficiaries in a will. It is relatively straightforward to do so, as such physical devices are just like any other physical and tangible pieces of property that you own (e.g. your car, your books etc.).
However, we now use our tech devices to access many online accounts, such as our social media accounts etc. Hence, apart from specifying how you would like your physical tech devices to be handed down, you should also have a plan for your online accounts, as discussed in the preceding section.
In conclusion, given that digital assets are different from traditional non-digital assets, different considerations would necessarily apply, which may affect the practical steps that you have to take in your estate planning. For example, some key points that have been mentioned in the article include being very clear in identifying and listing your digital assets and also prioritising leaving access to your digital assets, with clear instructions and the necessary access information.
For more detailed advice specific to your needs and requirements, you should contact an estate planning lawyer, who would be able to advise you on the tools which would be best suited for you, as well as to draft the relevant instruments (e.g. will) for you as well.
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