Quick overview

Digital assets include any item that exists in digital form and has value — financial, sentimental, or functional. Examples include cryptocurrency wallets, online brokerage accounts, email and social accounts, cloud-stored documents, domain names, digital photos, loyalty accounts, and business platforms. Without explicit planning, beneficiaries often face locked accounts, lost passwords, or legal barriers that prevent access or transfer.

Why this matters now

The volume and value of digital assets have grown rapidly. Cryptocurrency ownership and online business models mean a family’s economic and emotional assets increasingly live online. The Internal Revenue Service treats virtual currency as property for tax purposes (see IRS guidance on virtual currencies: https://www.irs.gov/businesses/small-businesses-self-employed/virtual-currencies). Separately, most U.S. states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which sets rules for fiduciary access to digital property but still relies on the account holder’s instructions and the platforms’ terms (Uniform Law Commission: https://www.uniformlaws.org/acts/rufadaa).

In my practice as a financial planner, I’ve seen two common, painful outcomes: 1) families who can’t access an online business or crypto wallet because key recovery details were kept only in a private device, and 2) heirs who inherit a legal mess because beneficiary designations and account access weren’t coordinated with estate documents. Planning prevents both.

Practical, prioritized steps for securing and transferring digital assets

Below is a step-by-step checklist to build a practical digital-asset plan you and your loved ones can use.

  1. Create a comprehensive inventory
  • Start with a plain list: account name, provider (Google, Coinbase, PayPal), account login email, whether two-factor authentication (2FA) is enabled, and the type of access needed (read-only, transfer, or control). Include hardware locations for devices and external drives. Treat this inventory as sensitive.
  1. Use a secure method to store access information
  • A reputable password manager (with emergency access features) is usually safer than written lists. Many password managers offer a way to designate a legacy contact or emergency access. If you prefer physical storage, use a sealed, fire-safe container and clearly note the location in your estate plan documents.
  1. Name the right people and give precise powers
  • Appoint a digital executor or explicitly authorize your regular executor/trustee to manage digital assets. Many people choose a tech-savvy family member, a trusted friend, or a professional (attorney or corporate fiduciary) for this role. Be specific in the account powers you grant: viewing archives, continuing subscriptions, selling assets, or closing accounts.
  1. Coordinate legal documents
  • Update your will, trusts, durable power of attorney, and advance directives to reference digital assets and to authorize fiduciaries to access and manage them. A durable power of attorney can be especially useful for access during incapacity. State law and platform policies matter — consult an estate attorney familiar with digital-asset clauses.
  1. Use platform tools when available
  • Many services offer options to designate a legacy contact or to set post-mortem preferences (e.g., Facebook’s legacy contact, Google’s Inactive Account Manager). These tools operate within the platform’s terms and can be an efficient way to transfer or memorialize an account.
  1. Secure cryptocurrency and keys differently
  • Crypto custody needs its own plan. If you hold private keys or seed phrases, document how and where those are stored, and whether multi-signature wallets or custodial services are used. If you rely on password-based exchanges, ensure account recovery information and KYC details are available.
  • Consider splitting seed phrases across secure locations (but only with a clear reconstruction plan). Advise beneficiaries on the tax implications of crypto transfers (IRS treats virtual currency as property; see IRS guidance above).
  1. Plan for business and revenue-generating accounts
  • For online businesses, document login credentials, payment processor access, domain registrations, supplier and customer lists, and any recurring revenue paths. Decide whether the business should be sold, transferred, or wound down and include these instructions in your plan.
  1. Keep the inventory current
  • Review your digital inventory and legal designations annually or after major life events (divorce, marriage, birth, new business). Outdated passwords and obsolete accounts are a common source of failure.

Technical and security best practices

  • Use a strong, unique password for each account and enable multi-factor authentication (MFA). Where possible, use hardware security keys for high-value accounts (e.g., crypto exchanges, email, financial accounts).
  • Avoid storing unencrypted passwords and seed phrases on cloud notes. If you must, use end-to-end encrypted containers and document the decryption method in your plan.
  • For high-value digital property, consider custody alternatives: reputable custodial crypto services, multi-signature wallets, or trust-owned wallets managed by a corporate trustee.

Legal instruments and how they interact with digital assets

  • Will: a will can name a digital executor and state general wishes but may not be sufficient on its own to grant access to most online accounts because of platform terms and privacy laws.
  • Trust: transferring digital property into a revocable living trust (or granting the trustee power to manage specified accounts) can avoid probate and provide clearer post-death authority. See our guide on trusts and funding: “Trust Funding 101: Ensuring Your Trust Actually Owns Your Assets” (https://finhelp.io/glossary/trust-funding-101-ensuring-your-trust-actually-owns-your-assets/).
  • Durable Power of Attorney: grants authority during incapacity and can include specific digital access grants. Our article on powers of attorney explains updating and naming an agent: “Powers of Attorney and Advance Healthcare Directives” (https://finhelp.io/glossary/powers-of-attorney-and-advance-healthcare-directives/).
  • Platform legacy tools and RUFADAA: many states have adopted RUFADAA, which lets account holders direct access through online tools or estate documents, but platforms still reserve the right to follow their own terms. Confirm state law and platform policies when drafting instructions (Uniform Law Commission: https://www.uniformlaws.org/acts/rufadaa).

Tax and reporting considerations

Common pitfalls to avoid

  • Leaving recovery data only in an encrypted phone or thumb drive without instructions.
  • Assuming a spouse or executor can access every account — platform policies vary and may block access without prior consent or court orders.
  • Failing to coordinate beneficiary designations (retirement accounts, payable-on-death accounts) with your will or trust — beneficiary forms typically override wills for those accounts.

Example scenarios (realistic)

  • Scenario A: A creator stores all photos in a cloud account with no legacy contact. After death, the family cannot download sentimental photos because the cloud provider requires login verification tied to a device the family doesn’t possess. A documented backup plan and designated legacy contact would have saved the family time and expense.
  • Scenario B: An owner of a small ecommerce site uses a custodial crypto wallet and provides the exchange credentials to a password manager with an emergency access feature. When the owner became incapacitated, the appointed agent used emergency access to maintain the business and arrange an orderly sale.

Where to get professional help

  • Consult an estate planning attorney who understands state digital-asset law and RUFADAA. Coordinate with your financial planner and tax advisor for valuation, reporting, and account titling.
  • Use resources from federal agencies for consumer guidance (Consumer Financial Protection Bureau: https://www.consumerfinance.gov) and federal tax guidance for cryptocurrency (IRS link above).

Quick links to related FinHelp guidance

Professional disclaimer

This article is educational and reflects common practice and law as of 2025. It is not legal or tax advice for your specific situation. Estate planning for digital assets intersects state law and platform rules; consult a licensed estate attorney and a tax professional before implementing or changing your plan.

Final practical checklist (one-page summary)

  • Inventory all digital assets and update annually.
  • Use a secure password manager and enable emergency access.
  • Name a digital executor and define powers in estate documents.
  • Add clear instructions in your will, trust, and durable power of attorney.
  • Use platform legacy settings where available.
  • Treat cryptocurrency keys with separate, secure custody plans.
  • Coordinate beneficiary designations with estate documents.
  • Review the plan after life changes and keep at least one trusted person informed of where to find your plan.

By taking these steps, you reduce legal friction, protect value, and preserve your digital legacy for those you choose to receive it.