Your Digital Fortune Could Vanish Forever: Why Your 2024 Will Must Include These Critical Digital Asset Provisions
In today’s digital age, Americans are accumulating unprecedented wealth in cryptocurrency and digital assets, yet $140 billion worth of cryptocurrency had been lost or stranded in inaccessible digital wallets as of 2021. With approximately 6.8% of the global population investing in some form of cryptocurrency in 2024, representing a 33% increase in crypto investors compared to 2023, estate planning has never been more critical for protecting these digital fortunes.
The Growing Digital Asset Crisis
Digital assets encompass far more than just cryptocurrency. These assets encompass a much broader scope, from email accounts to social media to online banking, and include digital music or movie libraries, and even gaming content. The challenge is that unlike stocks and bonds, nobody will know your client owns crypto assets unless they provide that information in their estate plan and detail how to access it.
Cryptocurrencies pose a significant challenge due to their decentralized nature. If the private keys to these assets are not properly shared or included in estate planning, the assets can become inaccessible. It is estimated that over three million of the 19 million Bitcoin in existence have been lost due to either lost passwords while the holder is living or the holder passing away without planning for the transfer upon their death.
What Your Will Must Include in 2024
Modern estate planning requires a comprehensive approach to digital assets. If you only have a Will, you need a thorough plan to ensure the facilitation of your crypto assets are taken care of without listing any sensitive, personal information in your Will itself. Your Will should not include any passwords, PINs, seed phrases, or private keys to your crypto accounts.
This security concern exists because when a Will goes through the probate court, it is filed as a public record. Anybody can look at your Will either online or request it in-person at the Probate Court.
Essential Components for Digital Asset Planning
Document everything: Prepare a detailed list of all cryptocurrency assets, wallets and access instructions. Authorize access: Give fiduciaries explicit legal authority to access your digital devices and accounts via wills, trusts and powers of attorney.
Your estate plan should also include provisions for:
- A digital executor designated in a will or estate plan to manage the digital assets of the deceased, with responsibilities from closing online accounts to preserving digital photos and other important files
- A comprehensive inventory of digital assets, from banking and email accounts to cloud storage and loyalty programs, with provisions about digital assets added to the will or trust
- Evaluation of whether to create a trust for holding your digital assets, as not everyone will have the same considerations or need the same protection, but a trust can simplify cryptocurrency asset management for some families
Why Professional Legal Guidance is Critical
The complexity of digital asset planning cannot be overstated. Most states have laws covering fiduciary access to digital assets. When authority to access digital assets is not directly provided for in a will or trust, the fiduciary may have to go through the court system to ultimately obtain access, which is costly and time-consuming.
For Long Island residents seeking expert guidance, working with an experienced Wills and Trust Attorney Nassau County can ensure your digital assets are properly protected and accessible to your beneficiaries.
The Fratello Law Advantage
Fratello Law, P.C., founded in 2012 and serving clients throughout Nassau County and Suffolk County, understands the unique challenges facing modern families. Their experienced elder law and estate planning attorneys take pride in focusing on each client’s individual needs and serve clients by planning for and protecting assets with trusts, wills, and documents that ensure agents are appointed to make legal and healthcare decisions.
As every client is unique and they take the time to understand their clients’ individual needs, building lasting relationships with clients that span generations, Fratello Law is well-positioned to help families navigate the complexities of digital asset planning.
Advanced Strategies for 2024
Beyond basic documentation, sophisticated planning techniques are emerging. Some attorneys work with clients with cryptocurrency to set up trusts and “multi-signature” wallets that allow a third-party custodian, along with the estate attorney and beneficiaries, to gather separate passcodes/signatures. When enough signatures are gathered, you can build the ability to sign a transaction and move the digital assets to the beneficiary.
Time may be running out to take advantage of a historically large estate tax exemption scheduled to be cut approximately in half at the end of 2025, and estate planning with cryptocurrencies can raise certain challenges, such as how you choose to custody the assets, tax efficiency, and tax planning with a volatile asset.
Take Action Now
The digital asset landscape continues to evolve rapidly. The Property (Digital Assets etc) Bill aims to address these advancements by formally recognising digital assets as property, carrying implications for succession planning, emphasising the importance of updating wills and educating executors on their role.
Don’t let your digital wealth disappear into the blockchain void. Digital assets are a critical but often overlooked aspect of estate planning. Whether you own cryptocurrency, maintain valuable social media accounts, or have accumulated digital loyalty points worth thousands of dollars, proper estate planning ensures these assets pass to your intended beneficiaries rather than being lost forever.
Contact an experienced estate planning attorney today to update your will and create a comprehensive digital asset protection strategy. Your digital legacy depends on the planning decisions you make now.