A new coin of dilemma

It is striking to note how reliant I have become on my iPhone and tablet. More and more transactions involve the use of the internet, electronic communication and electronic devices. I know I am not alone in this position.

The days of an attorney being required to make a cash transaction, will, I predict, fast disappear over the coming years. With clients owning foreign assets and with the ever-changing exchange rates on foreign currency, will the electronic currency, the bitcoin, provide a global currency and solution to this problem?

I will leave this debate to the economists among us, but one thing is certain; the change is coming, and fast. These changes will affect how advisers deal with a person's lifetime affairs and their affairs on death.

The current landscape

Under the Computer Misuse Act 1990 (CMA), it is a criminal offence for an individual to perform a function on a computer, with the intent to secure access to a program or data held within the computer, knowing that their actions are unauthorised.

Imagine the case of Paul, aged 25, who has been involved in an accident rendering him incapacitated. Before Paul's accident, he had made lasting powers of attorney, appointing Sarah as his attorney. Paul, like many of us, was and remains heavily reliant on his technology - his 'electronic assets'.

As Paul's attorney, Sarah knows that she will be required to access Paul's computer, use his online banking, download songs on his iTunes account and make financial transactions on his behalf, all using electronic means of communication. In doing so, Sarah will be accessing a program, or data, held in a computer, performing a functions that make her potentially criminally liable under the CMA.

Is a legally appointed attorney going to be prosecuted criminally for acting in a donor's best interests? Presumably, no. The actions taken by the attorney will have been authorised as a result of the donor having consented to the attorney acting on his behalf in the LPA.

From an adviser's point of view, do you know exactly what assets the donor owns that may need to be administered, either on death, or by an attorney during the donor's lifetime?

Gone are the days of the 'black bag exercise' in estates; all of a person's financial information is now more likely to be stored in the form of dots and dashes in the ether of the internet, or on an electronic device of some sort.

Intangible assets

I recently advised a client who was an app developer. This is one of those jobs from which nothing tangible is actually created, but a sequence of dots and dashes put together in the correct order, which produces the array of sounds and pictures that infuriate even the most patient of us on our commute to work.

His concern was, on death or incapacity, what right would his attorney, or executor, have to deal with his apps? None whatsoever, was my answer. The apps in their electronic form, as a mix of carefully arranged dots and dashes, do not have a tangible form. What his attorney or executor would have, is a right to manage the rights (intellectual property) that are associated with electronic assets.

The world of electronic currency in the form of the bitcoin, is, in my opinion, growing. The selection of attorneys and executors needs to be closely considered by clients, ensuring that someone with the correct knowledge of such areas is appointed in these important roles. 

David King is a solicitor at Hugh James

He writes the regular vulnerable clients comment in Private Client Adviser