The phrase "wills and estates" often evokes thoughts of traditional wealth and assets, typically encompassing physical possessions and financial holdings stored in investment accounts and financial institutions. However, the scope of estate planning extends far beyond these tangible assets. In this article, we explore the concept of digital estate planning, hoping to shed light on the significance of effectively organising and distributing digital assets within your will.

Digital versus physical assets

A digital asset is a broad concept covering any digital records, files, or any other information stored in electronic format. This would include, inter alia:

  • crypto-assets;
  • a digital photo album (whether stored locally or in the cloud);
  • cosmetic items in video games;
  • gaming and social media accounts;
  • investment and bank accounts;
  • loyalty benefits; and
  • all information and files stored on your local devices or in the cloud.

As we have discussed in one of our previous articles on cosmetic items in video games, cosmetic items are tradable and marketable and are capable of holding high value (depending on the gaming platform). The most noteworthy example are cosmetic items from the game Counter-Strike Global Offensive 2, with skins selling up to the price of R1.2 million. If you have any video game cosmetic items which are marketable and of value, you should include a provision in your will stipulating how these digital assets should be dealt with following your death. Within legally permissible parameters, our recommendation is to clearly outline your wishes regarding the distribution of these cosmetic items including specifying which items are to be transferred to which beneficiary and any conditions or restrictions that you may want to impose.

The majority of people today store photographs digitally on their mobile and other devices, or within the cloud. If these photographs have not been shared with others and hold sentimental value, you may want to ensure that these photographs are accessible after your death. Here, you could include a provision in your will stipulating how these photographs may be accessed, who is allowed to access them, and any other requirements or restrictions you may have regarding such photographs, such as for example creating a backup.

Some of the more obvious digital assets which have commercial value include crypto-assets, e-commerce platforms, websites and domain names. For individuals seeking to ensure that their heirs can derive benefits from these assets, addressing their inclusion in estate planning is paramount.

It is important to make appropriate provision for how your digital assets are to be regulated upon your death otherwise these assets might fall into a state of 'digital limbo' rendering them inaccessible. Even inaccessibility doesn't shield the accounts containing your digital assets from potential hacking, leaving your personal information and assets vulnerable to compromise or theft.

As a general precaution, it is important to note that the regulation of digital assets is subject to the implementation of suitable terms of service by the service provider. Thus, considering the terms of service of the appropriate gaming or cloud platform or cryptocurrency exchange is vital as this will determine what can and cannot be done from a legal compliance standpoint. For example, many gaming and cloud platforms have terms of service agreements that govern the use of digital assets. By understanding these parameters, you can ensure that any transfers you request or conditions you impose are compliant with the agreed terms and conditions, which often deal with matters concerning ownership rights, restrictions and transferability. Violating the terms of service such as by transferring assets in breach of agreed policies, could result in account suspension or closure.

Digital estate planning

The following steps are necessary to deal with your digital estate:

  • Take inventory of all your digital assets including their names, descriptions and estimated values;
  • Consider including appropriate instructions in your will which deal with your digital estate; and
  • Consider the appropriateness of appointing a "digital estate" executor who has the knowledge and competency to manage and distribute the digital estate in line with agreed terms and conditions, as well as your directions and wishes.

In today's rapidly expanding digital landscape, it is no longer sufficient to view our estates solely in terms of traditional wealth composed of physical assets. Instead, equal importance should be placed on digital estate planning to encompass our digital assets. Seeking guidance from a specialist in digital estate planning is vital to effectively navigate the complexities of this field. Through consultation with such an expert, individuals can guarantee that their cherished memories, financial assets, and sensitive personal data are managed and distributed according to their preferences. This proactive approach offers peace of mind for individuals and their loved ones, both presently and in the future.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.