For those of us who lived through the ‘80s (showing my age here), you may remember the big debates over the deregulation of marketing to children. Marketing started to target younger markets, as children were an advertising ‘goldmine’.
Fast forward a few decades, and the pre-teen boys’ demands for Hot Wheels and action figures has translated to pocket money spent on Robux, Minecraft mods, and video game skins. We no longer accumulate CDs or books – we have our iTunes and Audible accounts.
Although ‘virtual assets’ have been around for many years, it is becoming increasingly common for the accumulation of assets to be a ‘virtual’ enterprise. As outlined in our blog Cryptocurrency and Estate Planning: Decrypting the Issues, cryptocurrency is one element, but for the most part, these virtual currencies are still transferable.
There are very different issues involved with other online assets. In many cases, when we assume we are buying something digital, such as music or a book, we are actually entering into a licence agreement, which only allows us to use the download. It is not actually owned and cannot be transferred. There is no particular incentive for providers to enable transfers, and these are explicitly prohibited on many sites.
In the aftermath of the 2020 year, the Burke & Associates’ Estate Planning team have encountered a few clients who have become engrossed with MMORPG (“massively multiplayer online role playing games”), such as the classic World of Warcraft. These ‘open world’ role playing games often allow players to build an entire alter ego, which can be extremely addictive … and in some cases, expensive. Characters are developed, and virtual assets purchased with real money. A player may pay to transfer their character to another realm, with all their virtual possessions, but the game prohibits transfers to other account holders.
It is fascinating, particularly with popular television series such as ‘Reverie’ and ‘Upload’ contemplating the interaction between the physical and virtual worlds, enabling purchases with funds from the physical world for use only in the virtual world – noting that despite the somewhat fanciful premises of each show, this element is spot on. Virtual assets, once purchased, cannot be transferred back into currency, and are difficult, if not impossible, to transfer to another person, even upon death. It is important, when ‘investing’ in virtual assets, to be aware that we are buying an experience, not an asset.
In the physical world, there are also structures in which we accumulate wealth which cannot be transferred via a Will, such as superannuation, jointly owned assets, and assets accumulated in trusts. However, unlike virtual assets, the law covers how these tangible assets may be transferred upon death, and it will be interesting to follow the progress of digital asset transfers as this becomes an increasing issue in the future.
To find out more about the treatment of various types of digital assets upon death, and how they may be dealt with, contact a member of the Burke & Associates Estate Planning team, Special Counsel or Luke Palmer, Associate.