The ability for crypto-assets held by an SMSF to exist in a number of locations around the world is a key reason why they need to be included in an estate plan to ensure successor trustees will have access to them, a super and estate planning lawyer has stated.
WMM Law director Kimberley Martin noted digital assets can span multiple jurisdictions, with a device holding access keys in one country, the exchange platform in another and the owner possibly in a third location.
“This can make it difficult to determine the proper law and place that applies to digital accounts, particularly where different service agreements and legal frameworks apply,” Martin said during a recent briefing hosted by The Auditors Institute.
“This brings us to why digital estates must be included in estate planning.
“People assume that [the role of] fiduciaries, including successor trustees and directors, automatically extends to digital assets and devices. This is not always the case.
“Digital custodians, such as exchanges, email providers and cloud services, operate under their own service agreements and those agreements often restrict access by third parties.
“This means that a standard power of attorney, successor documents, trust deeds and executive powers may not be sufficient and parts of the digital estate may become invisible, inaccessible or non-transferable upon death or incapacity.”
She gave the example of United States legislation, The Revised Uniform Fiduciary Access to Digital Assets Act, which states unless there is an express statement in the relevant documents that the asset holder grants access to an executor, attorneys or successor trustees, the relevant provider can prevent that from happening.
A related problem was where the device holding access keys was held in the name of an SMSF trustee as an individual and not in their capacity as trustee, she noted.
“In that case, successor trustees may have no legal right of access, which creates compliance risks, potential asset loss and audit concerns,” she said.
“If a trustee has the private keys to their own personal crypto and the crypto they hold as trustee of their SMSF [on their phone] and loses that phone, they can no longer access those assets.
“Alternately, the SMSF fund can’t access those assets if the member loses capacity or dies as the phone belongs to the individual, so the trustee of the SMSF might need to work with the estate and wait to get access to that device before it’s able to access and control the crypto-assets held by the SMSF.”
During the presentation, she also pointed out SMSFs needed specific succession plans for digital assets that dealt with who will receive them and how they could be accessed, and that information should be kept in two separate plans.
