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How to Plan for Digital Assets in Your Estate Plan

1 Jul 2025 Beinhaker Law

In the modern digital era, our personal and financial lives are deeply intertwined with online platforms, digital currencies, and virtual assets. From cryptocurrency holdings and social media accounts to intellectual property and subscription services, digital assets have become an integral part of estate planning. However, many individuals overlook these assets when drafting their wills or trusts, potentially leaving their loved ones without the necessary access or legal authority to manage them. Without proper planning, digital assets may become inaccessible, lost, or even vulnerable to identity theft and fraud. This article explores what digital assets are, why they should be included in your estate plan, and how to ensure their smooth transfer to beneficiaries, particularly in New York and New Jersey.

Understanding Digital Assets and Their Importance

Digital assets encompass a wide range of electronically stored information, online accounts, and virtual holdings. They can be classified into several categories, each with unique considerations for estate planning. Financial digital assets include cryptocurrencies such as Bitcoin and Ethereum, online investment accounts, and digital payment platforms like PayPal and Venmo. These assets often hold significant monetary value and require specific security measures, such as private keys, to access them. Personal accounts, including email, social media profiles, and cloud storage, contain sensitive communications, sentimental content like photos and videos, and important personal records. Without proper instructions, these accounts may become permanently inaccessible or mismanaged after a person’s passing.

Beyond personal and financial assets, business-related digital holdings such as domain names, e-commerce accounts (like Amazon or Etsy), and intellectual property, including blogs, trademarks, and copyrights, must also be addressed in estate planning. Business owners, in particular, must take extra precautions to ensure that their online operations continue smoothly or are properly transitioned after their passing. Lastly, subscription services, such as Netflix, Spotify, and other paid memberships, should be considered to avoid unnecessary charges and complications for surviving family members.

Including digital assets in an estate plan is essential for several reasons. Without explicit instructions, valuable digital holdings may be lost due to inaccessibility. Some online platforms have strict policies that terminate accounts upon the owner’s death, leaving heirs unable to recover important information or financial resources. Additionally, failing to secure and manage digital assets properly can expose them to identity theft or unauthorized access. Proper estate planning ensures that trusted individuals have the legal authority and necessary information to manage these assets efficiently.

 

One of the primary challenges in digital asset estate planning is the issue of ownership rights. Many online services have restrictive terms of service agreements that limit access to accounts after the original owner’s death. For instance, some platforms prohibit account transfers or automatically delete accounts upon notification of the owner’s passing. This can make it difficult for family members to retrieve important data or financial resources.

Another obstacle is password protection. With many digital assets requiring login credentials, two-factor authentication, and encryption, gaining access without the correct information can be nearly impossible. Unlike physical assets, which can be passed down with a title or deed, digital assets often require passwords, security questions, and recovery methods to be accessed. If no one is informed about these credentials, recovering digital holdings can be a complex and frustrating process.

Additionally, legal restrictions at both the federal and state levels can create further complications. The Stored Communications Act limits unauthorized access to online accounts, even by close family members, making it crucial to provide explicit legal authorization in an estate plan. To address these challenges, both New York and New Jersey have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which allows individuals to grant their estate executors or designated digital representatives access to manage their digital assets. However, this authorization must be explicitly stated in estate planning documents to be legally effective.

 

How to Include Digital Assets in Your Estate Plan

  • Creating a Comprehensive Digital Asset Inventory

The first step in planning for digital assets is to compile a detailed inventory of all online accounts, financial holdings, and stored data. This list should include the names and types of accounts, associated email addresses, login credentials, and security questions. For high-value assets like cryptocurrency, private keys and recovery phrases must also be documented securely. Additionally, the inventory should specify whether an asset should be transferred to a beneficiary, closed, or archived for sentimental reasons.

Since digital assets and their access methods frequently change, it is essential to update this inventory regularly. A best practice is to review the list at least once a year or whenever there is a major change, such as acquiring new cryptocurrency, launching an online business, or changing passwords.

  • Using Secure Password Management Tools

Given the risks associated with storing login credentials in physical formats, many individuals opt for password management tools such as LastPass or Dashlane. These applications securely store passwords and allow authorized individuals to access them when needed. By setting up emergency access features, users can grant trusted family members or estate executors the ability to retrieve login information after their passing. This prevents the need for writing down sensitive passwords, which could be lost or stolen.

  • Appointing a Digital Executor

A digital executor is a designated individual responsible for managing a person’s digital assets after their death. This role involves securing online accounts, retrieving financial assets, closing unnecessary subscriptions, and ensuring that personal information remains private. When selecting a digital executor, it is important to choose someone who is both trustworthy and tech-savvy, as they may need to navigate complex online platforms and security settings.

Under New York and New Jersey’s RUFADAA laws, individuals can explicitly grant their digital executor the authority to manage digital assets. However, this authorization should be included in estate planning documents, such as a will or trust, to ensure legal validity.

  • Updating Wills and Trusts to Address Digital Assets

To legally formalize digital asset management, provisions should be included in wills and trusts. A will can specify which digital assets should be passed on and who should manage them. However, since a will becomes a public document during probate, it is advisable not to list sensitive information, such as passwords or private keys, within the will itself. Instead, the will should reference a separate, securely stored document containing login credentials.

For assets with significant financial value, such as cryptocurrency holdings or intellectual property, placing them in a trust can be a more secure option. Trusts allow assets to bypass probate and ensure smoother transitions to beneficiaries. They can also provide better legal protection, particularly for business-related digital assets.

  • Utilizing Built-In Digital Estate Planning Tools

Several major online platforms now offer features for users to manage their accounts after death. Google’s Inactive Account Manager, for example, allows users to set up automatic transfers of account access to a designated individual if the account remains inactive for a specified period. Facebook’s Legacy Contact feature enables users to appoint someone to manage their profile or request account deletion upon their passing. Taking advantage of these platform-specific tools can help simplify the process of passing down digital assets.

 

Final Considerations and Common Mistakes to Avoid

When planning for digital assets, several common mistakes can lead to complications or unintended outcomes. One major oversight is failing to document all digital holdings, leading to lost or inaccessible assets. Additionally, some individuals neglect to formally designate a digital executor, leaving their loved ones to navigate legal hurdles when trying to access accounts. Another mistake is improperly storing or sharing passwords. Writing down login credentials in unsecured locations or including them in a will can expose sensitive information to theft or misuse. Instead, using encrypted storage methods or password managers is a safer alternative.

Given the complexities of digital estate planning, working with an experienced estate planning attorney can provide crucial guidance. An attorney can help navigate legal restrictions, ensure compliance with state laws, and integrate digital assets seamlessly into an overall estate plan.

By taking proactive steps to inventory digital accounts, appoint a digital executor, and include legally binding instructions in estate planning documents, individuals can safeguard their digital legacy. Whether in New York, New Jersey, or any other state, a well-structured plan ensures that digital assets remain accessible to loved ones while protecting privacy and security. If you are ready to address digital assets in your estate plan, consulting a legal professional can help tailor a comprehensive strategy that aligns with your unique needs.

Mitchell C. Beinhaker, Esq. is a business lawyer and estates attorney who runs a solo legal & consulting practice representing business owners, entrepreneurs, executives, and professionals. Through his 30+ years of experience, Mitchell has handled business development, marketing, firm management, along with business transactional work for clients of the firm. He has extensive experience with corporate governance, commercial transactions, real estate, and risk analysis. Using his years of practical experience, he drafts contracts, negotiates purchases, and can manage outside counsel for any corporate situation. For business owners and executives, he creates and implements estate plans, along with succession plans to help companies continue for future generations. 

Mitchell is the co-author of 10 Ways to Get Sued by Anyone & Everyone:  the small business owners guide to staying out of court, available in paperback and kindle from Amazon.

If you need legal help with any of our services, contact our office for a free consultation.  You can email us at info@beinhakerlaw.com.  To learn more about Mitchell and his practice, visit beinhakerlaw.com.

Beinhaker Law and Mitchell C. Beinhaker, Esq. do not guarantee the accuracy of any information provided in this article.  Its not to be construed as advice of any kind.  Be sure to check with your local professionals before making any decisions.