In a world of increasing decentralised assets and unregulated markets, the way we view property, and what constitutes property must shift also. This is particularly relevant when drafting a will and determining what assets an individual has which they can dispose of when they die.
Disposing property in a will
The Succession Act 2006 (NSW) (‘the Act’) determines what constitutes property, and what property can be disposed of in a will. However, both of these notions have been left with some scope for debate. Under s3 of the Act, property is defined as anything with ‘valuable benefit.’ One can also dispose of any property to which they are ‘entitled’ at the time of their death. At law, property has been referred to as an elusive concept, because it does not simply refer to a thing, but to a legal relationship with a thing, or a ‘bundle of rights.’ This flexibility allows individuals to dispose of assets in their name at their death which may not have been commonly considered to be an asset 10, 15 or 20 years ago.
Cryptocurrencies and non-fungible tokens (NFTs)
The obvious example is cryptocurrencies, which are clearly intangible assets which have a valuable benefit to the owner. Indeed, sales and gifts of cryptocurrency can attract capital gains tax, and are assets which can be gifted, or constitute the rest and residue of one’s Estate. Similarly, non-fungible tokens are appreciable assets which can add value to one’s portfolio.
Like trademarks and other intellectual property, domain names are an increasingly valuable commodity in the current market. In some instances, the sale and purchase of domain names can be a profitable venture, and such ownership could constitute an asset with which an individual may wish to dispose of in their will.
Social media accounts
One asset which you may not have considered are social media accounts. These generally take the form of a licence to use the software by the social media platform, rather than ownership rights per se. Depending on the particular terms of service of the platform however, one may be able to transfer the ownership of the account entirely, in some cases for consideration, transfer the licence for the account, or in other cases, have no ability to transfer those accounts at all. Licences are another asset which attract capital gains tax ramifications, and it may therefore be prudent to seek your own independent accounting advice as to the ramifications of transferring or selling those accounts.
Individuals who hold one or more of the type of assets mentioned above are strongly encouraged to seek expert advice as to how best to structure their testamentary intentions, both in terms of the legal permissibility of such actions and also the tax ramifications for their Estate and its beneficiaries.