From estate planning to estate administration legal challenges posed by digital assets

Abstract

The rapid digitisation of wealth has introduced a novel asset class, namely digital assets, into the realm of succession law. From cryptocurrencies and non-fungible tokens to social media accounts and cloud storage, these intangible assets present unique challenges regarding identification, access and transfer upon death. South African legislation, specifically the Administration of Estates Act 66 of 1965 and the Wills Act 7 of 1953, was drafted in a pre-digital era and currently lacks explicit provisions for digital estate administration. This dissertation investigates the legal nature of digital assets, analysing whether they constitute "property" capable of inheritance, particularly in light of the Western Cape High Court's decision in Bester v Mirror Trading International 2023 3 All SA 101 (WCC), which classified cryptocurrency as intangible movable property in terms of the Insolvency Act 24 of 1936. It further critiques the contractual impediments imposed by Service Providers' Terms of Service, which often extinguish rights upon death, thereby conflicting with the principle of freedom of testation. Through a comparative analysis of the United States' Revised Uniform Fiduciary Access to Digital Assets Act of 2015 and Canada's Uniform Access to Digital Assets by Fiduciaries Act of 2016, this study proposes legislative reform for South Africa. It recommends the adoption of a "Digital Assets Access Act" to clarify fiduciary authority and advocates for practical estate planning measures, such as the use of sealed memoranda for security credentials, to prevent the permanent loss of digital wealth.