By Michele Procino-Wells, Esq.

Estate planning for digital assets is now an essential part of modern estate planning. When I reflect on the sweeping changes of my nearly 30-year legal career, one shift stands out more than any other: technology. As a young lawyer, I dictated documents onto cassette tapes, which would then be transcribed by a typing pool. Today, I can sit outside with a laptop, connect through my phone’s hotspot to my firm’s cloud-based server, and draft legal documents in real time.

Technology has not only transformed the practice of law, but it has also reshaped the very substance of estate planning. In years past, we concentrated on real estate, financial accounts, and tangible personal property. Now, clients must consider a new and often overlooked category of assets: digital assets. These assets make up a large portion of modern life, and without proper planning, they risk becoming inaccessible or lost forever.

What Are Digital Assets?

The definition of digital assets is broad and constantly evolving. At its core, a digital asset is anything of value that exists in electronic form. These can be financial, sentimental, or intellectual in nature.

Here are some of the most common categories:

• Electronic communications: emails, blogs, and social media accounts such as Facebook, Instagram, Twitter, or LinkedIn.

• Online rewards programs: airline miles, hotel points, or credit card rewards.

• Financial accounts: PayPal, Venmo, Zelle, online bank accounts, and cryptocurrency wallets.

• Digital collections: music, photographs, e-books, videos, or online subscriptions.

• Intellectual property: websites, domain names, trademarks, and copyrights.

• Stored data: files saved on personal devices, cloud services, or external drives.

• Cryptocurrencies: Bitcoin, Ethereum, and other blockchain-based currencies.

For many people, digital assets are not simply financial. They hold memories, stories, and legacies. Losing decades of family photos stored online, or failing to access an email account that contains treasured letters, can be devastating. On the financial side, leaving cryptocurrency wallets or online accounts without instructions can mean losing significant sums of money permanently.

The Legal Complexities of Access

Estate planning for digital assets is more complicated than passing down a deed or giving someone a key to a safe deposit box.

Terms of Service Agreements

When we create accounts online, we almost always click “I Agree” without reading the terms. These agreements often prohibit anyone else from accessing the account, even after death. That means your spouse, children, or executor may be barred from legally managing or retrieving assets.

Federal Privacy and Hacking Laws

Federal law further complicates the issue. The Computer Fraud and Abuse Act and the Stored Communications Act criminalize unauthorized access to accounts. Even if your fiduciary has your password, logging in may technically be illegal.

State Laws

Recognizing the growing problem, many states have adopted legislation to allow fiduciaries limited access to digital assets. Delaware led the way in 2014 with the Fiduciary Access to Digital Assets and Digital Accounts Act, giving fiduciaries control similar to traditional property. Other states have adopted versions of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). Still, these laws have limitations, and without explicit estate planning, families may struggle.

The Risks of Ignoring Digital Assets

Neglecting digital assets can lead to both financial losses and emotional heartache.

• The Lost Cryptocurrency Fortune: In one widely reported case, a man died with millions in Bitcoin but never shared his private keys. His heirs knew of the fortune but could never access it. The wealth was lost forever.

• The Social Media Battle: A young woman passed away unexpectedly. Her family wanted to preserve her Instagram account as a memorial, but without authorization, they could not access it. Years later, the account was deleted, and priceless memories disappeared.

• The Online Business Collapse: An entrepreneur built a successful online store but left no instructions for heirs. Within weeks of his passing, accounts were shut down, customers were lost, and the business crumbled.

These examples illustrate how failing to plan for digital assets creates unnecessary burdens in probate. What might have been a smooth estate transition becomes a legal and emotional crisis.

Steps to Create an Estate Plan for Digital Assets

Estate planning for digital assets requires a proactive and structured approach. Here are the essential steps:

Step 1: Take Inventory

The first step is awareness. List all of your digital accounts and assets. Include:

• Account type (financial, social, communication, subscription).

• Where the account is located.

• Username and login details.

Consider using a secure password manager such as Keeper, LastPass, or SecureSafe. These tools allow you to store credentials safely while designating trusted access. The key is keeping the list updated and ensuring your fiduciary knows where to find it.

Step 2: Incorporate Assets Into Legal Documents

Your estate planning documents must explicitly address digital assets.

• Power of Attorney: In Delaware and many states, this document must specifically authorize digital access rights. Without it, fiduciaries may be powerless.

• Wills and Trusts: Generic “residuary” clauses that leave “everything else” to heirs may not apply cleanly to digital property. Instead, designate digital assets explicitly. For instance, leave your cryptocurrency wallet to a specific heir or your photo collection to your children.

• Digital Executor: Some states recognize a “digital executor,” a person assigned solely to manage digital accounts. Even if not legally binding everywhere, naming one can reduce family conflict.

Step 3: Assign Fiduciary Authority Clearly

Clarity prevents disputes. Name the person authorized to manage your digital assets. Choose someone:

• Legally trustworthy.

• Comfortable with technology.

• Capable of honoring your wishes.

This fiduciary may be different from your primary executor. In some cases, it may be wise to appoint a separate person for digital responsibilities.

Step 4: Update Regularly

Digital life evolves quickly. Accounts are added, deleted, or changed. Passwords update frequently. An estate plan that doesn’t evolve will quickly become outdated. Review your digital asset plan annually, just as you would review insurance or tax documents.

Case Studies and Real-World Lessons

Case Study 1: The Cryptocurrency Mystery
A California family discovered their father held significant cryptocurrency, but only a partial record of his accounts remained. Investigators were hired, and months of legal proceedings followed. In the end, only a fraction of the assets were recovered.

Case Study 2: The Family Photo Library
A widow sought access to her husband’s iCloud account to retrieve family photos. Apple refused without a court order. Legal proceedings took months, during which important memories hung in limbo.

Case Study 3: The Disputed Will
A man changed his will online weeks before passing, leaving assets to a new partner. His children challenged the change, arguing undue influence. Because digital signatures and online platforms were involved, the case became a prolonged probate dispute.

These cases highlight the dangers of not explicitly planning for digital assets and how courts are struggling to adapt to this new frontier.

The Emotional Side of Digital Assets

While financial concerns often dominate estate planning, digital assets also carry profound emotional weight.

• Photos and videos capture family history.

• Emails and text messages hold sentimental value.

• Social media accounts reflect a person’s daily life, thoughts, and connections.

Failing to protect these assets risks losing a piece of a loved one’s legacy. Estate planning for digital assets is not only about money—it is about preserving memories and honoring lives.

The Future of Digital Asset Planning

Technology continues to evolve, and with it, so must estate planning.

• AI Accounts: Digital identities and AI-driven avatars are emerging. These raise new questions about ownership and succession.

• NFTs and Blockchain Assets: Non-fungible tokens and digital art now hold significant financial value. Without planning, heirs may lose access.

• Metaverse Property: Virtual real estate and businesses in the metaverse may be worth thousands or millions of dollars. Estate plans must adapt to protect them.

Law is still catching up. Families cannot rely on default rules. They must take proactive steps today.

FAQs

Q: Can I just give my heirs my passwords?
A: No. Sharing passwords may violate service agreements and federal law. Legal authority is required.

Q: Do small estates need to plan for digital assets?
A: Yes. Even photos, messages, and email accounts qualify as digital assets worth preserving.

Q: What happens if digital assets aren’t planned for?
A: Families may lose access permanently, assets may disappear, and disputes may arise.

Q: Should I appoint a digital executor?
A: If allowed in your state, yes. It provides clarity and reduces disputes.

Q: How often should I update my plan?
A: At least annually or whenever major changes occur in your digital accounts.

Why Digital Asset Planning Matters

A 2023 Caring.com survey found that only one in three Americans has an estate plan, and even fewer include digital assets. That gap leaves families vulnerable.

Without planning:

• Financial accounts may vanish.

• Memories may be lost forever.

• Families may fracture in disputes.

For more on avoiding common mistakes in planning for both traditional and modern assets, including digital ones, see Hackard Law’s blog on Estate Planning Pitfalls: Avoid Costly Mistakes.

Ensuring a Lasting Legacy

To create a comprehensive estate plan for digital assets:

1. Inventory and organize your accounts.

2. Use legal documents that explicitly address digital access.

3. Assign a trusted fiduciary.

4. Update regularly.

Digital assets represent more than money. They are memories, values, and part of your legacy. With planning, you ensure they remain protected.

Ensuring a Lasting Legacy

At Hackard Law, we know that your legacy is more than financial accounts or property titles. It includes your stories, your memories, and yes, your digital life. Protecting those assets requires foresight and the right legal guidance.

If you are ready to safeguard your family’s future and ensure that your digital assets are part of a complete estate plan, Contact Hackard Law today. Our experienced team is here to provide the counsel and advocacy you need.

Your legacy deserves protection. Your loved ones deserve peace of mind.