4 Reasons Why You Need A Digital Executor

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What is a digital executor?

With so much of our lives now spent online it’s important to consider who will look after our digital assets when we die.

Our digital property can be anything that’s stored online, such as photos, emails, NFTs and cryptocurrencies like Bitcoin and Ethereum.

But have you considered but would happen to all these assets when your time comes or who would sort out your digital life on your behalf?

Here are some of the reasons why you should consider naming a digital executor in your will, or when writing a codicil. You could also name a digital executor in a letter of wishes if you’ve written one.

If you need advice on how to prepare for someone to deal with your digital assets, take a look at our ADVICE SERVICES page.

What are digital assets?

Most people have a wide range of digital assets, but they might not have considered them as such.

Here are some of the main digital assets that people have:

• Bitcoin, Ethereum and other cryptocurrencies
• Online bank and building society accounts
• Online trading accounts, either for crypto or stocks and shares
• Points cards, ie supermarkets and other stores
• Anything online that makes money, such as an Etsy store, a blog or a website
• Photos, movies, music and other files
• Email and social media accounts

In fact, any digital file that you have could be considered a digital asset.

Some of your digital assets will be stored online and others on a device in your home.

For example, you might have part of your crypto portfolio on an exchange and the rest stored on a hardware wallet in your home.

It’s important to ensure that whoever you choose to be your digital executor a) knows about all your digital assets and where they’re stored and b) has the technical know-how and the passwords to access them.

4 reasons why you should have a digital executor for your crypto

• You could lose all your coins if no-one’s able to retrieve them which is why your digital executor needs to be thoroughly briefed on your crypto holdings.
• People will (hopefully!) be upset by your death and may not be thinking straight. Having someone who’s primed to look after your crypto will make the process of sorting out your estate less distressing.
• Naming a digital executor for your crypto in good time allows you to brief them on all your holdings and how to retrieve them and even go through the process of using the exchange/wallet where they’re stored to allow them to familiarise themselves with the process.
• Your cryptocurrency forms part of your financial estate and there is a legal requirement to provide an exact value for the purpose of calculating the Inheritance Tax (IHT) due.

What’s the role of a digital executor?    

An executor has traditionally been the person or people named in your will who are responsible for distributing your estate as per your wishes when you die.

This can cover everything from cash in your bank account, to selling your car or house. The executor is also responsible for paying any debts that you owe from the proceeds of the estate.

These days things aren’t quite as simple as popping down to the bank and closing an account.

Many people have online only banking and investment plans, together with photo storage vaults, multiple social media channels and often several email accounts.

And a growing number of people have cryptocurrency, either held on an exchange, a wallet app or a physical hardware wallet in their home.

The role of a digital executor is to gather information about your digital property when you die and follow your requests as set out in your will.

This could be distributing cryptocurrency to beneficiaries or selling it, creating an archive of photos, deleting files from a laptop or PC and shutting down your social media accounts or other subscriptions.

Many organisations have a specific process that executors will need to follow in order to access digital assets and close accounts.

But if you hold cryptocurrency in a self-custody account it’s down to you to ensure someone knows about it and has the skills to retrieve it if needs be.

Who should be my digital executor?

Your digital executor could be the same as your traditional named executor. You can also choose more than one person.

However, when selecting a digital executor you’ll need to choose wisely as sorting out your digital life and assets can become complicated, especially when it comes to cryptocurrency.

It’s important to choose someone who’s tech savvy and who knows their way around all the platforms and apps that you use in the crypto ecosystem.

When it comes to your Bitcoin, the person needs to have a thorough understanding of crypto exchanges, wallets, NFTs and anything else that forms part of your digital portfolio.

It’s wise to include detailed instructions in a letter of wishes, but never your will as this could potentially become a public document that anyone can request to see.

You could also brief your digital executor in person so they’re aware of all the crypto assets you have and how you store them.

Any executor appointed to handle your estate after you die should be someone you trust.

With crypto, you may need to leave a record of your private keys and seed phrases in case there’s a problem accessing your assets.

Anyone with this information can potentially steal your coins so choose your digital executor carefully.

How do I leave digital assets in a will?

Leaving digital assets in a will is very similar to leaving any other asset.

You name a beneficiary in your will and the executors will then need to ensure that the specific assets are passed along to them when the estate is distributed.

Some people employ the services of a probate solicitor to deal with a will, but they often charge eye-watering fees.

In most cases, wills are quite straight forward and do not require the services of a professional to distribute.

It can be a time consuming process, but most people should be capable of dealing with a will and saving the estate a large sum of money in the process.

Remember, if you don’t tell anyone about your crypto, there’s a possibility that it’ll never be found or, if it is located, your executor and loved ones will be unable to access it.

Related posts:

• How to reduce or avoid Inheritance Tax on cryptocurrency
• Bereaved families pay Inheritance Tax on lost cryptoassets