What happens to your digital assets when you die?

As technology continues to evolve, many aspects of our lives and finances are increasingly being moved to the internet and digital devices. This shift raises important questions about how these changes will affect us in the long run.

We are now seeing a growing number of people storing and investing their funds online in unconventional ways. The Financial Conduct Authority reported that, as of August 2024, 12% of UK adults—approximately 7 million people—owned cryptoassets. This is a sharp increase from the 2.2 million people with similar assets in 2021. The rise in online investment isn’t limited to cryptocurrency alone; many people are now using apps to invest in stocks and shares.

One of the key challenges faced with these assets is the lack of a paper trail when the owner dies. In the past, executors of an estate could rely on physical records to determine the full extent of someone’s assets. However, with the rise of cryptoassets and digital investments, this paper trail has been replaced by online correspondence, often through email or the app itself. This lack of visibility means it is imperative that people who own these assets take proactive steps to ensure their digital holdings are properly accounted for when they pass away. Complications can also be faced in relation to access. Unlike online banking, the process of retrieving online assets often requires knowledge of specific platforms, passwords, and even private keys.

Digital assets aren’t just about financial holdings. Today, many people store irreplaceable videos and photos of loved ones on their phones as opposed to a shoebox of pictures under the bed. To address this issue, companies such as Apple have introduced systems to help manage access to digital data. Apple’s “Legacy Contact” feature allows users to designate someone who can access their iCloud data after they pass away. This system is not without its faults; a Legacy Contact must keep the access key generated during the setup process, or else they may be denied access, and it doesn’t give that person unfettered access to their loved one’s device. Similarly, social media platforms such as Facebook and Instagram allow users to decide whether they want their accounts memorialised or closed upon their death. These features offer some comfort to people who want to ensure their digital legacies are handled according to their wishes.

One of the first actions of the new Labour Government was to introduce the Property (Digital Assets etc) Bill to Parliament. Currently at Report Stage in the House of Lords, the Bill aims to provide clarification on the classification of digital assets in English and Welsh property law. The Scottish Government’s digital assets consultation paper from November 2024 highlights the very likely possibility that we might see a mirroring Bill in Scotland soon. While proposed legislative changes address the grey area around the legal status of digital assets, it does not provide guidance on their management after death.

In our increasingly digital age, it is crucial for individuals to consider what will happen to their digital assets after they die. Whether it’s cryptocurrency, online investments, or treasured photos, people should begin to review the full extent of their digital holdings and plan accordingly. Ensuring digital assets are properly managed after death is just as important as preparing for the distribution of physical assets. By taking the necessary steps now, individuals can help their loved ones navigate the complexities of a digital inheritance in the future.