An Estate Plan To-Do List to Get Planning Done

Even if your New Year’s resolutions have fallen by the wayside, don’t let the resolution to create or revise your estate plan pass without tackling it. A recent San Francisco Bay Times article, “Kickstart 2025 With 5 Estate Planning Resolutions to Secure Your Future,” offers a step-by-step list of the tasks to complete your estate plan.

Start by locating your estate planning documents. Review them to be sure they’re up to date. If your will includes people no longer living or beneficiaries you’re no longer feeling generous towards, you’ll need to make those changes.

Review your estate plan with an eye on the people you’ve named for specific roles. Will the executor or trustee be a good fit? What about the person you’ve named as Power of Attorney? Your estate plan should also include a Healthcare Proxy. As you age, you need to be sure the people in these roles can still physically get to the bank or the hospital and navigate online banking or healthcare portals on your behalf.

Digital assets are now part of everyone’s life. However, not everyone addresses their digital assets in estate plans. You’ll need to review and record your digital accounts, from emails to social media to cryptocurrency, and create a list of the accounts, login information and passwords. If you have two or three-factor identification, you’ll need to be sure your digital executor can access your mobile phone or email to confirm their identity. Many people use password managers to gather their information. However, a notebook will do as long as your digital executor knows its location.

If you haven’t reviewed your healthcare directives in a while, you’ll want to do so. Your wish to be kept off any life-support systems while in your thirties may have changed as you have gotten older. After COVID, many people who would have never wanted to be on a respirator learned that it was lifesaving, not life-ending. Speak with your healthcare proxy about your wishes, so they know what you want and your estate planning attorney to ensure that they are documented properly.

An experienced estate planning attorney can help you avoid or minimize the probate process. For instance, placing assets in a trust can take the asset out of your taxable estate if the right trust is used. The assets in the trust won’t go through probate and will remain private. If using Payable on Death accounts makes sense for your estate plan, be sure that the accounts you want to transfer to someone else on your death are titled correctly.

An estate planning attorney will guide you through the process to ensure that you have the right documents, so your loved ones can help you if you become incapacitated and know your wishes when you die. It’s a gift to those you love, easing their burden and building your legacy.

Reference: San Francisco Bay Times (Feb. 5, 2025) “Kickstart 2025 With 5 Estate Planning Resolutions to Secure Your Future”

Does Your Estate Plan Include Digital Assets?

Technology has changed many aspects of estate planning from the lawyer’s point of view. It’s as easy to meet with clients on a video call as in person, and documents can be reviewed and shared through a secure document portal. Estate planning attorneys now include digital assets as well as traditional assets, like real estate and financial accounts. A recent article from Cape Gazette, “Estate Planning for Digital Assets,” explains how to address digital assets.

The definition of digital assets itself is constantly evolving as new assets are added, but for the most part, they include:

Electronic communication: emails, social media posts, blogs
Reward programs: credit cards, airline miles, hotels.
Financial accounts: PayPal, Venmo, online investment and banking accounts
Digital asset collections: music, videos, photos
Intellectual property: domain names, articles, books, artwork, videos
Electronically stored data

The rules of ownership of data and the platforms holding the data are more complicated than most people think. The law attempts to balance the privacy of the original owner or creator of the data and a fiduciary’s need to access assets after the original owner’s death or incapacity.

Every time you create a digital asset, you are asked to agree to a contract, known as a Terms of Service Agreement or TOSA. This is usually presented as a long page of small type with a box to check to state you agree to the terms. With a single click, you’ve agreed to the terms of a legally binding contract prohibiting another person from accessing the account. Even if your executor or Power of Attorney has a username and password, they may not have the legal authority to access your digital accounts, although some states have passed laws to give fiduciaries some authority to access digital assets. Your estate planning attorney will know the law in your jurisdiction and incorporate this into your estate plan.

For your estate plan to protect digital assets, you’ll need to start by creating an inventory of all assets with this information:

What type of asset
Where it can be found (the URL address)
User name
Login information
Does it require two-factor authentication, which verifies the user using a text to a mobile phone or email address?

You’ll also want to review each digital asset to see if there is any provision for assigning someone to manage your account in case of incapacity or death. Some of the larger platforms offer this ability, which is far easier than going to court to obtain photos from a loved one’s cell phone.

Another step to protect your digital assets is to name a digital executor through a Power of Attorney, so they can act on your behalf. It would be prudent to ensure that the POA includes a specific provision expressly providing the authority to access digital assets. This is required in some states.

Your estate planning attorney will help you protect your digital assets as part of creating a comprehensive estate plan.

Reference: Cape Gazette (Feb. 7, 2025) “Estate Planning for Digital Assets”

Millennials Need Estate Planning

One family jokes about their mother’s large blue binder, affectionately calling it “Mom’s Book of Life.” She has assembled physical copies of estate planning documents, including medical directives for next of kin, account information, passwords and a list of assets. Her adult children thought they were too young to deal with such matters, reports a recent article, “I’m Way Too Young For Estate Planning. Or Am I?” from The Wall Street Journal. On reflection, they realized they, too, needed an estate plan.

Someone as young as 18 could benefit from having an estate plan, and someone in their 30s definitely needs one. Once a young person becomes a legal adult, their parents no longer have any say in financial or health matters without properly prepared estate planning documents.

Everyone over 18 should have an advanced healthcare directive, sometimes called a healthcare proxy or healthcare power of attorney. This allows people of your choosing the ability to make decisions about your healthcare if you become incapacitated: too sick or severely injured and unable to communicate your wishes.

Adults of all ages also need a power of attorney. This document gives another person the legal authority to access and manage your finances in case of incapacity.

A will, also known as a last will and testament, is needed to direct how you want your assets to be distributed after death. Even if you don’t own a home or car, chances are you have some personal property and may want specific people to receive certain items. Creating a will and getting used to the concept of planning for the future is a good habit.

If you have an extensive online life, digital assets will also require some planning. An inventory of your digital assets, including email accounts, apps, social media, cryptocurrency, photos, videos, etc., should be created, so a digital executor can manage the accounts. Some platforms permit naming a legacy contact, while others require specific directions on what should be done with your content.

Student loans, 401(k)s from employers and other financial accounts should be inventoried. However, this information doesn’t go into the will. The will becomes a public document once submitted to the court for probate, so any specific account information should be kept in an inventory of assets and debts.

Creating an estate plan can open a conversation with older relatives and parents about their plans for end-of-life care, a difficult but important dialogue. Talking about their wishes before something happens will allow you or other relatives to know beforehand, rather than spending the rest of your life worrying about a decision made in an emergency situation.

Estate plans need to be changed as you go through your life. New partners or spouses may need to be added, or a deceased parent may need to be removed as an executor. Getting used to addressing these life matters is part of being a responsible and loving adult.

Reference: The Wall Street Journal (Oct. 18, 2024) “I’m Way Too Young For Estate Planning. Or Am I?”

What Happens to Digital Assets when You Die?

Remember the phrase “Swedish death cleaning?” This trend was based on decluttering your life while you’re living so you don’t leave a disaster for loved ones when you pass. Digital death cleaning may be even more critical than decluttering because you can’t clean out what you can’t find.

A recent article from The Wall Street Journal, “Why Everyone Needs a ‘Digital Death-Cleaning’ Plan,” offers a way to get organized so digital assets aren’t lost or used for identity theft and even worse cybercrimes.

Create categories and label files. A file with deeply personal materials might be labeled “DoD—Delete Upon Death,” while a file containing information about finances could be labeled “Relevant.” The goal is to let survivors know if they will need the files.

DoD files are stuff you don’t want anyone to read after you’ve passed. Years of complaints about your ex-spouse or the difficulties in raising children might be better-left unread. Another idea is to put these kinds of files on a hard drive somewhere and label them, so they can be destroyed as per the instructions in your will. Don’t count on encryption to protect files. Just as any password can be hacked, any file can be opened.

Relevant files include information about your estate, finances and account passwords. If you keep instructions about heating or air conditioning systems on the computer, they may be needed to keep things running—for example, if your oil burner is cranky and needs extra TLC at the start of every heating season.

You’ll probably have files to label “Memorabilia.” These may be photos, videos, or anything you think children or grandchildren would like to read in the distant future to learn about you, your family history and the world you lived in.

All your organizing will work best if you also leave a physical document with a list of digital assets, such as subscriptions, email addresses, utility login info, etc.

Talk with your estate planning attorney to determine how your state addresses digital assets in wills. Most states have adopted a uniform law concerning digital assets, so you’ll want the estate plan to follow these rules.

Finally, consider digitizing your life. If you have a collection of photos, articles you’ve published, or ephemera, all of it can fit into a shoebox if it’s been digitized and stored on thumb drives. You’ll be able to enjoy it as an online memory book now, and your children won’t be stuck clawing through an endless series of boxes later. If you’re a true packrat, chances are your children know it and will appreciate your efforts to lighten their lives after you’ve passed.

Doing your digital cleaning is also the time to review your estate plan, especially if it’s been a few years since it was reviewed. If you don’t have an estate plan, now is the time to meet with an experienced estate planning attorney to create a will, plan for incapacity with a Power of Attorney and Health Care Power of Attorney and related documents depending upon your unique situation.

Reference: The Wall Street Journal (Aug. 6, 2024) “Why Everyone Needs a ‘Digital Death-Cleaning’ Plan”

Estate Planning for Digital Assets

Almost every state has by now enacted laws giving executors the right to manage digital assets, including computer files, web domains and cryptocurrencies, reports a recent article from Forbes, “Smartphones, Email, Other Digital Assets And Your Estate Plan.” Another law, The Uniform Electronic Estate Planning Documents Act, is making its way through statehouses and would recognize electronic and digital signatures on trusts, wills and other estate planning documents, making paper and ink signatures a thing of the past.

Neither of these laws gives anyone, executor, spouse, or best friend, the legal right to access email, text messages, social media accounts and any other digital assets, unless the power to do so is given expressly in a will, trust, power of attorney, or court order. Without express permission, the digital door is permanently shut.

Making matters even more complicated, each digital platform has its own rules about allowing people other than the account owner to access digital assets, even if they have the username and password.

Another factor further complicating digital estate planning is the two-factor authentication many websites use today. This is done via biometrics, i.e., facial recognition or a code sent by text or email to the original owner’s cell phone or email address needed for access.

Cyber thieves are aware of the problems facing unskilled executors, and stealing the identities of recently deceased individuals has become a fast-growing crime. When identity theft occurs online, the assets are often compromised before executors and survivors can access the decedent’s assets.

There are steps to take that will prevent your executor from grappling with these problems.

First, create an inventory of devices, including cell phones, tablets, laptops and desktop computers. If you have old devices that you no longer use, delete your personal data and label them as not in use. A tech-savvy person could use an old device to access your accounts.

Next, create an inventory of all your digital accounts. This includes everything from social media to websites, photo storage, device access, shopping sites, subscriptions, video games, cryptocurrency, bank accounts, investment accounts, medical portals and frequent flier miles. Add notes regarding two-factor authentication: Will your texts need to be accessible to gain access to the account, or have you activated facial recognition?

Go through each item and decide who you want to access each item. Your will, trusts and POA should include notes on who should have access to each of the digital assets. Without it, your executor will take far longer to complete their task.

Some online services allow you to name a legacy contact and give someone you name access to your accounts and phone after your death. For now, Apple, Google, Facebook and Instagram have these features. Set them up and include them in your digital inventory.

Your will needs to state very clearly who you want access to which accounts. However, it should not include any details about the account, especially not your username and password. If you don’t want your executor to access everything, you’ll need to specify which ones you want them to access and which you don’t want them to access. If that’s the case, you’ll want to have whoever does have access to review emails and other accounts regularly and share any information needed with the executor.

Digital assets are still a relatively new asset class. However, they require as much care as traditional assets.

Reference: Forbes (June 19, 2024) “Smartphones, Email, Other Digital Assets And Your Estate Plan”

Digital Life Lives on After You’re Gone, Unless You Plan Ahead

Every year, Americans receive Facebook reminders to wish departed friends a happy birthday. It’s a sad reminder, but it happens because most people don’t address digital footprints as part of their estate plans. A recent article from the Monterey Herald, “Liza Horvath, Senior Advocate: Your digital life does not die with you,” explains how to get started.

Ensure that your executor has a list of websites and apps where you are a user. This includes Facebook, Instagram, X (formerly known as Twitter), Linked In, Snapchat, WhatsApp, Google email, Microsoft Outlook, bank accounts, investment accounts, photo storage and any other sites you use. You can use an online password manager or paper to make a list. If you create a spreadsheet on your computer, you’ll want to encrypt it to prevent unwanted access and ensure that your executor has the password. Whatever method you use, make sure that your executor knows where the information can be found.

When you die, certain platforms allow you to name someone to become your Account Manager or Legacy contact. Google’s Account Manager lets you set up parameters to notify someone if you have been inactive for a certain period of time. Facebook enables you to name a person to manage your account after you pass away. Apple also has a Legacy Contact option.

Like everything else online, website guidelines change, so you’ll want to create a Digital Will establishing your wishes for your social media and online accounts, referred to as “Directives.”

If you have digital currency or cryptocurrency, you’ll need an executor who understands how crypto works. They should be able to access your digital wallet and “key”, so they may access your assets. These funds are frequently lost due to a lack of planning and no paper trail to follow.

Depending upon your state, you may be able to give your Power of Attorney access to your digital assets in case of incapacity. Speak with your estate planning attorney to be sure that your will or trust addresses the ability to manage digital assets according to the laws of your state.

If creating a list of digital accounts seems too much to deal with, imagine your executor having to figure out your digital life. Without digital estate planning, your assets could be lost. As a result, your entire online life is vulnerable to digital identity theft that could easily continue for decades.

Reference: Monterey Herald (March 1, 2024) “Liza Horvath, Senior Advocate: Your digital life does not die with you”

Make a New Year’s Resolution to Do Your Estate Planning in 2024

Creating or reviewing an estate plan is something that many people know they should do but often put off. It’s natural to say things like: “I’ll take care of it later,” or “I don’t have enough money to have an estate plan.” However, life and circumstances happen that may be out of your control. Every adult needs to have an estate plan, regardless of how large or small their estate is. The new year is a great time to make a resolution to create or review your estate plan, explains ElderLawAnswers in a recent article, “New Year’s Resolution: Get That Estate Plan Donee.” No one knows what the future holds, yet legally documenting your wishes ensures that your plan decides what happens to you, your loved ones and your assets. Start off 2024 right by working with an estate planning law firm to secure your present and future.

How Do You Create an Estate Plan?

Estate planning provides many benefits to individuals and their families. One of these is relieving stress and uncertainty during a difficult time by providing a clear guide for what you want to happen in the event of your incapacity or death.

Estate planning starts with working with an estate lawyer who guides an individual or family in making a last will and testament and critical documents, including a Power of Attorney, trusts and medical directives based on individual goals and circumstances. Creating an estate plan allows a family to protect investments and other assets during disability or illness and ensure the distribution of property after death. At the same time, an estate plan can help ensure that taxes and probate are minimized or avoided.

What Is a Last Will and Testament?

A last will is a legal document addressing property, assets, debts and investments and their distribution after the owner’s death. The executor is the individual who helps settle the estate with creditors and heirs. If there is no will, your state’s laws will determine how the estate will be distributed. A will is also used to name a guardian for minor children if both parents pass away. Therefore, every young family should have a will. Without a will naming a guardian, the court will make decisions about the children’s guardian, possibly appointing a person the parents might not have chosen.

What Information Do I Need for My Estate Plan?

Proof of Identity

Your executor will need information, including a valid birth certificate, Social Security card, marriage or divorce certificates, a prenuptial agreement, or military service discharge papers.

Digital Asset Information

With so much of our lives lived online, everyone needs a digital vault, an integrated password manager, or some system for managing digital assets. Without this, your traditional and digital assets are vulnerable to identity theft and fraud.

Property Deeds and Titles

You have titles for cars, homes, or real estate property. They must be gathered and kept in a safe place, and then one or two highly trusted individuals must be told where these documents are located.

Debts

Debts do not disappear when you die. Your executor will need to know what debts exist because they must address them. Compile a list of your debts, including mortgages, auto loans, credit cards, personal loans and student loans. Add contact information for the lender, account number, login information and approximate amount of the debt. If you have credit cards you rarely use, include those so they can be closed out before identity theft occurs.

Assets with Named Beneficiary Designations

Retirement accounts and life insurance policies that have named beneficiary designations can be transferred directly to beneficiaries. However, this does not happen automatically. Your executor will need to provide beneficiaries with the information for the assets, including the name of the insurance company or financial institution, the location of policies, account numbers and the value of the assets. The beneficiary may need to provide a death certificate and identification information before releasing the assets.

Financial Information

Create a detailed list of financial information, including bank accounts, car insurance, credit cards, health, home, and life insurance, pension plans, retirement plans and tax returns.

Funeral Wishes

If you want to save your family a lot of stress during a difficult time, outline what you want to happen. Do you want a cremation or embalming and burial? Should it be a full-on faith-based memorial service, or a few poems read at the graveside? Ensure that your wishes are communicated and shared with loved ones, so everyone knows what you want.

What If I Already have an Estate Plan?

Your estate plan is not a static legal document. As your life changes, so might your wishes regarding how your assets are distributed after your death. It’s common for relationships, financial circumstances and family dynamics to change over time. Each significant shift in your life may warrant a review and possible estate plan update. The start of a new year is a great time to review your existing estate plan and your current financial situation to ensure that you are meeting goals and communicating future expectations to your intended heirs.

Meet with an Estate Planning Attorney

Make an appointment with an estate planning attorney to put this information in the appropriate legal documents. They may have recommendations for options that you may not know about.

Digital Assets in Estate Planning

In the contemporary world, digital assets have evolved to become an essential component of our lives. From emails and photos to online financial portfolios, these assets play a vital role and are of significant value. However, what happens to these assets when we are no longer around? Integrating digital assets in your estate planning is a step towards ensuring that these assets are managed and passed on according to one’s wishes.

What is a Digital Asset?

A digital asset is any content owned by an individual in digital form. This can include everything from email accounts and online accounts to social media accounts and even digital photos. With the shift towards digitalization, the significance and value of these assets, be they monetary or sentimental, have grown.

Why is it Important to Include Digital Assets in Your Estate Plan?

It’s crucial to understand that much of our lives are now online. These digital assets carry both monetary value and sentimental value. By integrating digital assets in your estate plan, you ensure that these assets are not lost, misused, or left unattended upon your demise. It also provides clarity to the executor and beneficiaries about how to handle these assets.

What Types of Digital Assets Should Be Included?

When considering types of digital assets, the list can be extensive. It includes email and social media accounts, online financial portfolios, online content and assets stored in the cloud. Some assets, like online financial accounts, may have clear monetary value, while others, like digital photos or emails, might carry sentimental value.

How to Create Your Digital Estate Plan?

Creating your digital estate plan involves a series of steps. Start with making a list, appropriately named the list of digital assets. This should detail every digital property you own. Subsequently, use a password manager like 1Password to keep track of usernames and passwords. Finally, appoint a digital executor, someone you trust, to manage your online assets after you pass.

What Challenges Might Arise?

Even with a comprehensive digital estate plan, challenges can arise. Some service providers may not easily grant access to the data, even with a death certificate. There might also be legal complications, as laws governing fiduciary access to digital assets are still evolving. Seeking legal advice can help navigate these waters.

Designating Access: Executor or Beneficiary?

When planning for digital assets, it’s essential to designate someone to manage them. While an executor is an obvious choice, there are instances where you might want a beneficiary to have direct access. This choice often depends on the nature of the asset and your personal wishes.

Legal Implications and Rights

The Uniform Fiduciary Access to Digital Assets Act is a legal framework addressing the executor’s access to digital assets. However, nuances exist. Some assets, especially those you’ve licensed but don’t own, may not be transferable. Understanding the legal landscape and seeking professional guidance is crucial.

What About Security and Unauthorized Access?

Security is paramount as much as you want your executor or beneficiaries to access your online accounts and passwords. Unauthorized access to computer systems is illegal. Therefore, ensuring that your executor has the proper legal authority is crucial. Using tools like password managers and keeping a master password in a secure but accessible location can be beneficial.

The Future of Digital Assets in Estate Planning

With ever-increasing digitalization, digital assets will play an even more significant role in estate planning. With potential changes in the law and the evolving nature of digital platforms, staying updated is essential. Regularly revisiting and updating your estate plan can help protect your digital legacy.

Key Takeaways:

Digital assets encompass everything from emails and photos to online portfolios.
Integrating these assets into your estate plan ensures that they are managed per your wishes.
A comprehensive list and password manager can help organize and grant access.
Legal challenges can arise; seeking professional advice is essential.
Keeping security at the forefront is crucial to prevent unauthorized access.
The landscape of digital assets in estate planning is evolving; staying updated is vital.

In conclusion, as the digital world continues to expand, integrating digital assets into your estate planning is not just recommended but essential. By doing so, you not only protect your assets but ensure a smooth transition for your loved ones.

How to Include Digital Assets in Your Estate Plan

While owning digital assets hasn’t changed the principles of estate planning, it has made the estate pre-planning process more complicated, according to the article “Estate planning and cryptocurrency: 5 tips for leaving your digital assets” from Bankrate. The hurdle is the information needed to retrieve digital assets, including passwords, keys and digital asset locations. There’s no one to call, and the stories of millions in digital assets lost forever are already legendary.

Here are five tips for cryptocurrency owners:

Know where the crypto is held. Cryptocurrency held with a traditional broker or crypto exchange can be handled like other investment accounts, if a beneficiary is named on the accounts or otherwise specified in a will or trust documents. An owner might try to hide the account. However, it generally can be found if the executor knows where the crypto is located.

If crypto assets are self-custodied in an off-chain wallet, and no one knows where the wallet is or its existence, crypto can be hidden and may not be retrievable. A title or probate search will not reveal them; it may be gone forever without the password, private key, or seed phrases.

Understand crypto can easily be lost permanently. Anyone holding crypto on an encrypted hard drive could lose the asset forever, if no one but the owner knows where it is or how to access it. If a hard drive is lost, destroyed, or stolen, or if the key is lost, the crypto is gone.

Provide access to crypto accounts. Whether it’s traditional brokerage accounts or crypto on a hard drive, you’ll need to provide the means and info for your executor or heirs to access these assets upon your passing. The challenge is balancing access with the security of the accounts. There are ways to set up a centralized location to secure all known seed phrases, keys and passphrases and then locate them in the most secure place available. For example, a hard copy list may be stored with other important documents in a fire and waterproof safe.

Another problem is that if your executor is unfamiliar with digital assets, they may not know anything about how digital assets work, making accessing the accounts challenging. You may need to bring them into the digital world as part of your estate planning process.

Protect access to accounts with best practices. If crypto is sent to another person, it’s basically unrecoverable. Don’t include this information in your will, as it becomes a public document upon going through probate. It may be better to secure digital vaults or use reliable, reputable third-party services to store access information. Be careful about providing access to family members who may take advantage of their digital fluency before the estate plan is settled.

Don’t forget cryptocurrency is taxable. Any realized capital gain is taxable, and so are purchases using crypto when the value of the goods is worth more than the purchase price of the crypto. If the estate is over the federal or state exemption level, it can owe estate taxes, even when the crypto is hidden. Tax implications, including tracking the cost basis and gain and loss metrics, are especially important during the asset transition phase. Executors dealing with crypto must be careful to declare the estate’s taxable gains and losses. The estate must meet all tax obligations, crypto and traditional assets included.

Speak with an experienced estate planning attorney about how your state’s laws govern cryptocurrency and digital assets as part of a comprehensive estate plan.

Reference: Bankrate (September 5, 2023) “Estate planning and cryptocurrency: 5 tips for leaving your digital assets”

Protecting Digital Assets in Estate Planning

The highly secure nature of crypto assets results largely from the lack of personally identifiable information associated with crypto accounts. Unfortunately, this makes identifying crypto assets impossible for heirs or executors, who must be made aware of their existence or provided with the information needed to access these new assets.

The only way to access crypto accounts after the original owner’s death, as reported in the recent article “Today’s Business: Cryptocurrency and estate planning” from CT Insider, is to have the password, or “private key.” Without the private key, there is no access, and the cryptocurrency is worthless. At the same time, safeguarding passwords, especially the “seed” phrases, is critical.

The key to the cryptocurrency should be more than just known to the owner. The owner must never be the only person who knows where the passwords are printed, stored on a secreted scrap of paper, on a deliberately hard-to-find thumb drive, or encrypted on a laptop with only the owner’s knowledge of how to access the information.

At the same time, this information must be kept secure to protect it from theft. How can you accomplish both?

One of the straightforward ways to store passwords and seed phrases is to write them down on a piece of paper and keep the paper in a secure location, such as a safe or safe deposit box. However, the safe deposit box may not be accessible in the event of the owner’s death.

Some people use password managers, a software tool for password storage. The information is encrypted, and a single master password is all your executor needs to gain access to secret seed phrases, passwords and other stored information. However, storing the master password in a secure location becomes challenging, as information cannot be retrieved if lost.

You should also never store seed phrases or passwords with the cryptocurrency wallet address, which makes crypto assets extremely vulnerable to theft.

This information needs to be stored in a way that is secure from physical and digital threats. Consider giving your executor, a trusted friend, or relative directions on retrieving this stored information.

Another option is to provide your executor or trusted person with the passwords and seed phrases, as long as they can be trusted to safeguard the information and are not likely to share it accidentally.

Passwords and seed phrases should be regularly updated and occasionally changed to ensure that digital assets remain secure. If you’ve shared the information, share the updates as well.

A side note on digital assets: the IRS now treats cryptocurrency as personal property, not currency. The property transaction rules applying to virtual currency are generally the same as they apply to traditional types of property transfers. There may be tax consequences if there is a capital gain or loss.

Properly safeguarding seed phrases and other passwords is essential to estate planning. Include digital assets in your estate plan just as a traditional asset.

Reference: CT Insider (March 18, 2023) “Today’s Business: Cryptocurrency and estate planning”

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