The Edge-Kenanga Retirement Forum 2018: Navigating the conundrum: Don’t leave out digital assets, says Rockwills

This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on October 15, 2018 - October 21, 2018.
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As more wealth is accumulated in the digital sphere, it is, therefore, increasingly important for people to secure their digital and electronic assets. Otherwise, there is a risk of these valuable assets being lost to one’s next of kin, says Rockwills International Group managing director Saw Leong Aun.

In his talk, entitled “Will Writing for Digital Assets”, at The Edge Kenanga Retirement Forum 2018, held in Penang early this month, Saw said testators must prioritise the bequeathing of digital information and electronic devices, just as they would with the more common items such as offshore assets, landed properties, insurance plans, bank accounts and fixed deposits.

“Digital assets are quite simply records that are created, recorded, transmitted or stored in a digital format or in some other intangible form through electronic means,” he said.

Examples of such assets include social media accounts, blogs, online banking or trading accounts, gaming or cryptocurrency accounts, frequent flier airline miles, hotel reward points and files stored in remote, cloud-based servers.

Failure to secure these assets could be disastrous for the next of kin. Saw cited the example of deceased millionaire and cryptocurrency investor Matthew Mellon. According to Forbes, Mellon had nearly a billion dollars in Ripple in January this year. Ripple is a popular cryptocurrency that is now used by banks to facilitate cross-border payments. Unfortunately, he died without revealing the keys to the e-wallets in which he stored all those millions. For the moment, it appears that Mellon’s substantial ownership of Ripple is lost to his next of kin.

Given just how expansive a person’s digital presence can be these days, Saw recommended appointing a “digital asset facilitator” in their will. “This person would be tasked with helping the testator retrieve all their online accounts and digital information. This facilitator would also be tasked with assisting the executor wherever necessary,” he explained.

In addition, a testator ought to consider drafting a “digital asset memorandum”. It is a series of documents listing down any and all online accounts, access codes, passwords and challenge questions as well as specific retrieval procedures, in the event one of these accounts is locked down. “Be sure to keep this list of access codes and passwords in a secure location. Mention the location in your will and leave instructions with the executor to pass it on to your appointed digital asset facilitator,” said Saw.

Ideally, he added, a testator should categorise each of his online accounts according to those with financial value and those without.

Apart from digital assets, one must also plan well for traditional assets that are located overseas. In the question-and-answer session, a participant asked Saw about the treatment of assets in international jurisdictions.

“It depends on the nature of the assets,” Saw said. “If you’re referring to stocks and shares — liquid assets that are easily converted into cash — then it may not be necessary [to draft a will in that foreign country].

“However, because laws differ between countries, we sometimes still recommend preparing a local will for that country to specifically cover those assets.”

Things can get complicated with non-liquid assets like landed properties. Countries will have very specific laws on these assets, so in this instance, Saw recommended drafting a specific will in the jurisdiction to cover those assets. “And then, in your Malaysian will, you can mention your desire to exclude that international will covering your international assets.”

Keeping one’s local and international wills separate also makes for faster probate procedures in the respective courts. “This way, you can commence simultaneous administration or management processes. If there is none (an international will covering that country’s assets), then you (the administrator) will have to get the will probated (in the testator’s home country) and get it registered in the foreign court,” said Saw.

“If the international asset is in a non-Commonwealth country, then the courts there may not recognise your probate. One of our clients does a lot of business in China, and their laws are very different [from Malaysia’s]. We have advised our client to engage a lawyer in China to draft a simple will covering his assets there.”