How To Use A POA To Manage Your Digital Assets

A boom in technological innovation and AI-driven applications has led to increased digitalisation across numerous industries. This, along with the growing popularity of social media platforms, electronic storage of creative works, cryptocurrency, and online payment wallets, has led to the creation of a new asset class known as digital assets.

Digital assets, like cryptocurrency and blockchain, are already regulated in many countries and are gaining ground among investors. Though digital assets have not yet been defined by law in the UK, a bill was proposed in September 2024 to make provisions for the same. This bill proposes the inclusion of digital assets as personal property.

However, with the challenges of limited legislation and the application of different jurisdiction laws to digital assets, it’s essential to account for digital assets in your estate planning. A power of attorney (POA) can address this issue and secure your digital assets for your beneficiaries.

In this article, we show you how creating a power of attorney online can help you effectively manage your digital assets.

Table of Contents

1) Create an Inventory of Digital Assets

Any expert in digital asset management will tell you that comprehensive estate planning begins with creating an exhaustive digital asset inventory.

Therefore, it’s important to list your digital assets along with key logins, pass keys, social media handles, email addresses, keys for blockchains, etc. This would make it easier for the executor of your will or POA attorney to access and manage your digital assets.

Include everything available on your personal computer, tablet, phone, and online social media on your digital asset inventory list. It’s important to consider how this information is stored and shared to avoid falling into the wrong hands. Since digital assets are of substantial value, ensure their respective digital keys and logins are stored in a safe place. For example, an external hard drive, flash drive or a safety deposit box.

Additionally, consider making a special note of online bank or investment accounts that have no monthly/yearly paper records and are solely operated through online platforms.

The ownership of most digital assets is transferable, yet certain items like email addresses, social media accounts, and subscriptions can’t be transferred. In such cases, your executor or attorney will have to make arrangements to notify or close such accounts after creating backups of important items. You can make arrangements for this through a POA for property and finance.

2) POA for Property and Finance

The best way to ensure your digital assets are protected and distributed according to your preferences is to set up an LPA, trust, and will (digital assets clause), accompanied by a letter of wishes.

Digital assets are meant to be regulated under personal property laws in the UK. This means your digital assets will be considered personal property. All property and assets are generally provided for in estate planning through POAs, specifically through a property and finance LPA.

Setting up a power of attorney online for a property and finance LPA is a fairly straightforward process. However, you need to ensure your digital asset inventory list is duly updated before you can proceed.

The primary advantage of a property and finance LPA is that it allows you to give your chosen attorney specific powers and instructions to manage your digital assets.

You can also consider appointing a digital executor or attorney separate from a property and finance LPA attorney to exclusively manage your digital assets. However, your choice of digital assets attorney must be a tech-savvy and trustworthy individual who is knowledgeable about the nuances involved in the management of digital assets.

3) Key Factors to Consider

LPA forms online have a section titled ‘Your instructions’ which can be used to address your preferences for the distribution and management of digital assets and cryptocurrency.

Since most cryptocurrency pass keys are highly sensitive, it’s advised to avoid including them directly in your LPA. Instead, include instructions for your attorney to find them in a safety deposit box or another storage method. Alternatively, you could assign your LPA attorney as a signatory to a multi-signature wallet that stores such sensitive information.

Since digital assets are a relatively new class of assets, the laws regarding them and their application are still evolving and may vary according to jurisdiction. It’s important to factor this in while making your LPA.

If you’d like, you can create a letter of wishes to accompany your property and finance LPA to give your attorney further instructions about managing your digital assets. This could include the deletion or closing of certain accounts, the transfer of certain digital assets or any matters pertaining to intellectual property rights.

Conclusion

POAs are a great way to manage your digital assets and including them in a property and finance LPA will ensure your digital legacy is passed on securely.

Setting up an LPA will not only help protect your digital assets but also help your beneficiaries receive their share in assets of substantial value, like cryptocurrency.

By keeping the above points in mind, you can effectively use a POA to manage your digital assets and ensure they’re distributed according to your wishes.