Digital technology is now an integral part of our lives and, with the advent of fintech, more people are investing in digital currencies and cryptocurrencies.
Currently, digital assets and planning legacy for such assets tend to be overlooked by many Malaysians in their estate plans. The result is a potential loss of valuable assets and data, some of which are of immense emotional meaning to family members, with money and time spent to track them down.
While data protection and digital security are important when we are alive, how do we make sure that our digital assets can be accessed by our loved ones when we pass on? The answer is to include them in our inheritance plan. As digitalisation and its adoption continues, planning will become more important.
What are Digital Assets?
Digital assets are a collection of binary data online rather than actual physical objects where it is created, stored, recorded in digital devices and/or online services, for example, websites, social media sites, emails, cloud services, mobile phones, laptops, hard drives and computers.
The most well-known digital asset is digital currency. Other popular digital assets of monetary value are e-wallets, e-commerce accounts, internet domain names, online business platforms and even online storage such as google drive and dropbox as it may contain valuable data.
These days for creative professionals, their photography and works of art are often found in various online platforms such as shutterstock.com and istock.com. Such platforms allow their work to be sold or used for a limited period. Their work product stored in such platforms are digital assets which generates income and the royalty payments to the account holder.
In order to gain access to any digital asset stored online, it requires the username and password. If there are multiple accounts for different types of digital assets, the account owner should have an inventory of usernames and passwords for each account. Unfortunately, many people do not bother have such an inventory to organise their digital assets meticulously.
If an estate plan did not account for digital assets properly and without an inventory list, the executor would not be able to access them. They may not even be aware of the existence of such digital assets. These assets will be lost forever and the heirs might not receive all the money and/or the precious memories that the deceased have wanted to leave for them.
Digital Assets Inventory
How then do we safeguard our digital assets?
First and foremost, prepare a list of your digital assets using a digital assets memorandum (DAM), including cryptocurrency accounts, social media accounts, e-wallets, online securities trading accounts and e-commerce account such as Lazada and Shopee.
As you would only want a trusted person to have access to your digital assets’ user and password details, you would need to appoint a Digital Facilitator in your Will.
In your Will, you should state the type of digital assets you own and the beneficiaries who will be entitled to them. You may include the user details, but the passwords must not be included in the Will.
Your passwords should be stored separately from the DAM and your Will. It may be kept in an encrypted thumb drive in your home safe or safe deposit box or in some secure manner. However, it must be made known to your Digital Facilitator where it is kept and how to gain access to it.
As you may change passwords from time to time, it is important to update the list of passwords. Otherwise, your Digital Facilitator will not be able to gain access to your digital assets.
Accessing Digital Assets
Gaining access to digital assets is difficult. Each online service has its privacy or end-of-life policy and a court order will not count.
Even if the local court where the owner of the Will resides grants the families access to the digital assets, the laws where the company resides could prevent the families from getting access to them.
The laws that govern digital assets vary from country to country, and online sites have widely different terms and conditions that sometimes lock out executors. There may even be difficulty to determine which jurisdiction to apply for the court order to let the company allow your heirs to gain access.
Therefore, it is best to make sure that your estate plans are prepared and executed by lawyers or professional trust companies because it is a specialised area.
Malaysians aged 18 and above who reside in Peninsular Malaysia and Sarawak are eligible to set up a Will, while people in Sabah are required to be 21 and above.
This article is contributed by Azhar Iskandar Hew, Group CEO, Rockwills International Bhd.