Delegates from across the world attended STEP’s Special Interest Spotlight Sessions in London, UK on 9 December. Expert panellists discussed the latest issues affecting philanthropic giving, cross-border estates, international clients, business families, contentious trusts and estates, mental capacity and digital assets.

This is the second in a series of blogs capturing the sessions and the expertise shared. It focuses on the discussion during the session presented by the Digital Assets Special Interest Group. It focused on the case study of the estate of the late Gerald Cotten, CEO of QuadrigaCX, and looked at the potential risks and liabilities that this case highlights for estate practitioners and their firm.

News of Cotten’s death on his honeymoon in India captured the globe’s attention. The entire case, and the details of the USD140 million in cryptocurrency lost upon his death, are chronicled in lengthy bankruptcy court proceedings, articles and documentaries.

Cotten died with a will that included a clause authorising his executor to access and administer his digital assets. However, his executor was unsuccessful in retrieving the funds following his death.

Using the QuadrigaCX case study as a backdrop, this session highlighted the potential financial and emotional loss that results from digital assets being undisclosed, legally inaccessible, or if there is a protracted delay in administration.

Practical steps that practitioners can take to help clients manage their assets

STEP’s research report, Digital Assets: A Call to Action, found that nearly 60 per cent of practitioners have dealt with questions from clients about digital assets and 90 per cent expect this to increase in future. However, practitioner knowledge about how best to advise clients about their digital assets varied.

Practitioners will be already be aware of the importance of having an estate plan. The panellists agreed that it was vital that advisors also work with their clients to develop a digital assets plan as well as a defined process for sharing them.

It can be daunting for a client to know where to start with a digital assets plan, given that the average person holds 100 online accounts. Asking a client to focus on the five to ten most important accounts and document those in detail is the best place to start.

Advisors were also asked to encourage clients to maintain good ‘digital hygiene’ and de-cluttering accounts, closing down those not used and consolidating where possible.

STEP’s digital assets report found that that nearly a quarter of the respondents had clients who have experienced difficulties accessing digital assets of a family member, causing significant distress and frustration in many cases.

Supporting clients to use digital planning tools will help them and their families avoid these difficulties with the privacy settings of digital asset accounts.

How to store and share digital assets

A client might ask for advice in how best to store their assets as part of their assets plan. The session considered the different ways that cryptocurrency can be stored. A ‘hot wallet’ is connected to the internet and enables easy trading. A ‘cold wallet’ is a USB stick or similar device that enables files to be stored more safely offline.

The panel advised that it is best practice not to hold digital keys for clients because this is a huge liability risk.

• To get started with mapping digital assets, STEP has developed an Inventory for Digital Assets and Digital Devices
• To keep up to date with the latest digital assets developments, visit STEP’s Digital Assets Content Hub

Liz Skinner, Communications Manager at STEP