Estate planning in the age of crypto, NFTs, and digital wealth has fundamentally changed how individuals protect and transfer what they own. Not long ago, estate plans focused on tangible assets such as homes, bank accounts, and retirement funds. Today, however, a growing portion of personal wealth exists entirely online.
Cryptocurrencies, NFTs, digital businesses, and cloud-based assets have reshaped how value is stored and accessed. As a result, estate planning now requires updated legal strategies, clearer documentation, and a practical understanding of how digital assets actually work.
Without proper planning, digital wealth can become inaccessible or disappear entirely – regardless of its value
What Is Digital Wealth?
Digital wealth includes assets that exist primarily in electronic form or are accessed digitally. These assets often require passwords, encryption keys, or specialized platforms to manage or transfer ownership.
Examples of digital wealth include:
- Cryptocurrencies such as Bitcoin, Ethereum, and stablecoins
- NFTs (non-fungible tokens), including digital art, music, and virtual property
- Online investment and trading accounts
- Digital wallets and private keys
- Revenue-generating websites, e-commerce stores, and SaaS platforms
- Domain names, social media accounts, and digital intellectual property
- Cloud-stored files with financial or sentimental value
Unlike traditional assets, many digital assets are decentralized and do not rely on banks or centralized institutions. Therefore, access – not just ownership becomes the most critical estate planning concern.
Cryptocurrencies are treated as property under federal tax law, according to Internal Revenue Service guidance on virtual currency.
Why Estate Planning in the Age of Crypto, NFTs, and Digital Wealth Requires a New Approach
Traditional estate planning documents were not designed with digital assets in mind. As a result, many plans fail to address the realities of modern wealth.
First, access can be a major issue. If no one knows where a crypto wallet is stored or how to unlock it, those assets may be lost permanently. Second, authorization presents legal challenges. Privacy laws and platform terms of service can prevent executors from accessing digital accounts unless explicit permission is granted. Finally, technical knowledge matters. Even with access, an executor may not know how to manage or transfer digital assets correctly.
Unlike banks, blockchain platforms offer no recovery options. If private keys are lost, the assets are gone and often, forever.
Common Pitfalls to Avoid with Estate Planning in the Age of Crypto, NFTs, and Digital Wealth
One of the most common mistakes is assuming that a will or trust automatically covers digital assets. In reality, many estate plans fail because they do not account for how digital wealth is accessed or controlled.
Another frequent issue is storing passwords or private keys directly in a will. Since wills often become public during probate, this can create serious security risks. Additionally, failing to update estate plans as digital portfolios evolve can leave new assets completely unaddressed.
Avoiding these pitfalls requires intentional planning and ongoing review.
Best Practices for Estate Planning in the Age of Crypto, NFTs, and Digital Wealth
Although laws and technology continue to evolve, several best practices have emerged that can help protect digital assets effectively.
Create a Detailed Digital Asset Inventory
Start by documenting every digital asset you own. This inventory should clearly identify what the asset is, where it is stored, and why it has value. However, sensitive access credentials should never be included directly in legal documents.
Securely Store Access Information
Access details should be stored using secure methods such as encrypted password managers, hardware wallets, or digital vault services. Your estate plan should explain how fiduciaries can retrieve this information when needed.
Explicitly Authorize Digital Asset Access
Clear authorization through a properly drafted power of attorney can help fiduciaries manage digital assets during incapacity or after death.This authorization helps overcome legal and platform-based restrictions that might otherwise block access.
Choose the Right Executor or Trustee
Managing digital wealth requires trust and technical competence. Depending on your situation, this may mean appointing a tech-savvy executor, a professional trustee familiar with digital assets, or co-executors who combine legal and technical expertise.
Provide Clear Instructions
A separate letter of instruction can explain how you want specific digital assets handled. This document may address whether assets should be held, sold, or transferred and can distinguish between financial and sentimental value. Because it is not a legal document, it can be updated easily as your digital portfolio changes.
In Connecticut, Connecticut General Assembly law governing fiduciary access to digital assets allows executors access only when proper authorization exists
Legal and Practical Challenges of Estate Planning in the Age of Crypto, NFTs, and Digital Wealth
Digital assets present unique legal challenges. Ownership is often recorded on blockchains rather than traditional ledgers, asset values can fluctuate significantly, and laws governing digital wealth continue to evolve.
NFTs present additional complexity. Ownership of an NFT does not always include intellectual property rights or licensing rights. Estate plans should clarify whether NFTs should be transferred or liquidated, how royalties are handled, and who benefits from future income.
For creators and entrepreneurs, these details are essential to preserving long-term value.
Final Thoughts
Estate planning in the age of crypto, NFTs, and digital wealth is no longer optional. Without proper preparation, digital assets can become inaccessible, undervalued, or permanently lost.
Proper digital planning also simplifies estate administration, reducing delays, confusion, and the risk of lost assets.
At Farrell & Grochowski in Wallingford, estate planning strategies are designed to reflect how people actually live, invest, and build wealth today both online and off.
Your assets may be digital. Your responsibility to those you leave behind is not.
