This is a scenario already here but about to become a more common issue:
“Our late father was a true digital enthusiast, who took great delight in tech developments, and bought literally thousands of Bitcoins. Unfortunately, he was such an early adopter that he sold the lot once he had doubled his money: from £50 to £100!
“Years later, as part of his running joke about his loss of untold riches, he bought some Cryptokittie NFTs, several thousand Dogecoins, and a USB wallet with a cartoon dog key fob. We all had a good laugh, but none of us – least of all Dad — ever expected them to increase in value, any more than we expected him to pass so suddenly (and without a Will…).
“Now dealing with his probate estate, we have several problems: (a) how to value them, (b) how to transfer them (and to whom?), (c) what if any tax is payable on NFTs, and (d) how to know whether he has other crypto-assets hiding somewhere. Help!”
Non Fungible Tokens? A symbol of 2020?
Among the many things 2020 might be remembered for, the rise of the Non-Fungible Token, or NFT and Blockchains, could be a strong contender for the top slot.
And that’s saying something in a year that had lockdowns, COVID and ‘work from home’ as memorable things! So, NFTs?
Well, perhaps the recent sale of an NFT for an eye-watering $69 million, for what is essentially a digital copy of some digital art, provides some sense of the potential scale of the nascent NFT world.
Whether that sale represents the peak of a market bubble to rival the Dutch Tulip Mania of the 1600’s, whether the NFT party is just getting started, or whether this is just more evidence that folks with more money than sense are drawn to fine art collecting, all remain for history to determine.
What is not in any doubt, however, is that digital assets are here now and are here to stay, and with them come some not-so-digital headaches.
Among them, probate is a project that is simple in concept, but often vexingly complicated in practice.
Add NFTs, Bitcoins, or other digital assets to a probate matter and Executors may feel they are visiting a virtual world they did not know existed. But it is a world about which HMRC knows more than you would imagine!
If you are struggling with an NFT or digital asset probate issue, rhw solicitors can help.
Or, if you are thinking ahead about your own digital estate, one of the best ways for the digitally savvy to alleviate headaches is to prepare your Wills with a view to the complete coverage of your digital legacy.
That may or may not include naming who you want to see take care of your Cryptokitties, but it is likely to involve some planning regarding the logistics of how you entrust your private encryption keys to your Executors and Trustees, where to find your wallet, and what to do once they find it.
Your Will might also include details about how to deal with digital accounts like email and social media feeds:
- Do you want them shut down and deleted, or do they contain a repository of notes, memories, and photographs that you want entrusted to your heirs?
- If the latter, is access to be granted immediately, or on your youngest’s 21st birthday?
- Or are those accounts only to be shared with a surviving spouse, and then shut down?
That’s just for starters. And if your digital estate includes large parcels of land in Axie Infinity or SecondLife, we should talk: I have a Decentraland bridge you might be interested in…
Please contact our Private Client team for assistance with probate matters, or if you want your Will updated to reflect your own digital world. We would be very pleased to hear from you. By the way, if you were baffled by quite a lot of the terminology used in this article… don’t worry… what is baffling today will be familiar tomorrow!
Jack Haskew – rhw Solicitors