As technology advances, digital assets are becoming more and more common, which can complicate the probate process.
Probate, a process that deals with the distribution of a deceased person’s estate, has traditionally dealt with physical assets such as properties, money, and personal belongings.
However, in this increasingly digital world, what happens to one’s online assets upon death must also be considered.
What are digital assets?
This term encompasses a broad range of digital belongings. These include assets such as:
• Digital photos or videos
• Social media accounts
• Digital intellectual property
• Domain names
• Online banking accounts
How do these impact probate?
It could be easy to overlook digital assets, especially if the Executor does not have the relevant logins for accounts.
However, any digital assets should be included in the valuation of the estate, as they impact whether Inheritance Tax (IHT) is due.
IHT may be due if the estate exceeds the nil rate band of £325,000. Should the residence nil rate band (RNRB) apply, the tax-free threshold will be increased to £500,000.
The challenge with cryptoassets
As cryptoassets are considered part of the estate for IHT purposes, their value must be determined and taken into account.
It is advised for individuals to outline how to access their cryptowallet in their Will, which makes it easier for the Executor to identify and value assets.
In the instance that the individual’s Will didn’t outline how to access their cryptowallet, this can pose problems.
Experts may be able to help to review the deceased’s computer to gain account details, however this may not be possible.
It is essential for Executors to attempt to identify and value all assets held by the deceased and seek advice from experts to guide them through this.
It is important to note that some digital assets do not hold any value and are therefore not included in the probate process.
Need advice on the probate process? Get in touch with our experienced private client team today.