Planning for Digital Assets

A growing share of what people own lives behind a password: bank and brokerage logins, cryptocurrency, photos in the cloud, a domain name, an online store, airline miles. Many families discover after a death that they cannot get into any of it. Paper statements no longer arrive, the phone that receives the two-factor codes is locked, and the companies holding the accounts are bound by privacy law and their own terms of service. This chapter explains what counts as a digital asset, what the law lets your executor do, and how to leave a plan that someone can actually follow. A separate book on this shelf, Digital Estate Planning, goes deeper; this chapter covers what every household should have in place.

What you own online, and what you only license

Start by separating three kinds of digital property, because the law treats them differently.

• Assets with money value. Online bank, brokerage and retirement accounts; cryptocurrency held on an exchange or in your own wallet; payment apps; an online business, its domain names and its revenue accounts; loyalty points and miles; digital art or intellectual property you created.
• Personal records and memories. Email, photos, documents, social media accounts, messages.
• Access tools. The devices, passwords, password manager, authenticator apps and phone number that unlock everything else.

Some of what feels owned is only licensed. Music, films and ebooks bought from most platforms are licences that end at death or cannot be transferred under the terms of service. Loyalty programmes set their own rules, and some let points pass to a family member while others cancel them. Read the terms for anything valuable.

Financial accounts and cryptocurrency are property like any other. They pass by beneficiary designation or under your will, are included in your estate, and generally receive the same step-up in basis described in chapter 3.

What the law lets an executor do

Two kinds of law collide here. Federal privacy law, the Stored Communications Act, restricts online providers from disclosing the content of communications. State law gives executors authority over a deceased person's property.

Most states have resolved this by adopting the Revised Uniform Fiduciary Access to Digital Assets Act, known as RUFADAA. It sets an order of priority:

1. The provider's own online tool comes first. If you used a tool such as Google's Inactive Account Manager, Apple's Legacy Contact or a social network's legacy contact setting, the provider follows that instruction.
2. Your will, trust or power of attorney comes next. If you gave your executor or agent explicit consent to access the content of your electronic communications, the provider must generally honour it.
3. The terms of service apply if you left no instruction at all.

Without your consent, an executor can usually obtain a catalogue of communications (who you wrote to and when) but not their content. Providers can also require a death certificate, letters from the probate court, and sometimes a court order, which takes time. A few states have not adopted the act or use a different version, so check your state's rule.

Cryptocurrency: the asset most easily lost for good

Cryptocurrency held on an exchange works much like a brokerage account: the exchange will release it to the estate or a named beneficiary after verification, though some exchanges have no beneficiary option. Cryptocurrency held in your own wallet is different. Whoever holds the private key or recovery phrase controls it, and if nobody can find the phrase, the coins are gone permanently. No court order can recover them.

The planning trade-off is between security and access. A recovery phrase written in your will becomes public record once the will is probated. A phrase left in a drawer can be stolen. Common approaches include:

• A sealed letter of instruction kept with your lawyer or in a safe deposit box, describing where the wallets are and how to recover them, with the phrase itself stored separately.
• A hardware wallet in one secure place and its recovery phrase in another, with instructions telling your executor where both are.
• A multi-signature arrangement that needs, for example, two of three keys, so that no single lost or stolen key loses the funds.
• A trust that holds the assets, with a trustee who understands how to manage them.

Also record the tax basis of each holding. The IRS treats digital assets as property, so heirs need the date-of-death value, and the executor needs to know what exists to report it.

Building a plan someone can follow

A digital estate plan has four parts.

An inventory. A list of every account and device: the institution or platform, what is in it, and what should happen to it (transfer, archive, close, memorialise). It does not need to contain passwords.

A way in. A password manager with an emergency access or legacy feature, which lets a named person request access and gives you a waiting period to deny it, is the simplest method for most people. Record where the master password and recovery codes are, and how to get into the phone that receives two-factor codes. Keep your mobile number active long enough after a death for codes to arrive.

Legal authority. Ask your lawyer to include express consent to digital access, including the content of communications, in your will, trust and durable power of attorney, and name the person who should handle it. That person can be the executor or a separate digital executor where state law allows.

Provider settings. Turn on the legacy and inactive-account tools offered by your main email, phone, photo and social media providers. They take minutes, and they come first under the law.

For an online business, add a short operating note: where the revenue arrives, which subscriptions and renewals must be paid to keep it running, which domain names expire when, and who could run or sell it.

YOUR NEXT STEPSDo this now

1. Write a one-page inventory of your financial accounts, crypto holdings, devices, email and main online services, and store it with your estate documents.
2. Set up emergency access in your password manager, or start using one with that feature, and name a trusted person.
3. Turn on legacy or inactive-account settings with your email, phone and photo providers.
4. If you hold cryptocurrency in your own wallet, write instructions your executor could follow without your help, and store the recovery phrase separately from them.
5. Ask your lawyer whether your will and power of attorney grant digital access consent under your state's law, and add it at your next review.