When tech entrepreneur David passed away suddenly at age 45, his family faced an unexpected crisis. Despite having a comprehensive will and trust, David’s $200,000 in cryptocurrency, his profitable online business, and thousands of family photos stored in cloud accounts were completely inaccessible. His passwords died with him, and his estate planning documents made no mention of his substantial digital assets.
“We knew about his traditional investments and real estate,” his widow Sarah explained, “but we had no idea how to access his Bitcoin wallet or even his business email accounts. It took us over a year and $15,000 in legal fees to recover just a fraction of his digital assets.”
David’s story illustrates a growing challenge in estate planning: the need to address digital assets that didn’t exist when traditional estate planning laws were written. In 2025, the average person has over 100 online accounts, and digital assets can represent significant portions of modern estates.
Understanding Digital Assets
Digital assets encompass any electronic record or file that you own or control, including:
Financial Digital Assets
– Cryptocurrency (Bitcoin, Ethereum, etc.)
– Online banking and investment accounts
– Digital payment accounts (PayPal, Venmo, etc.)
– Reward points and loyalty program balances
– Digital wallets and stored value accounts
Business Digital Assets
– Domain names and websites
– Online businesses and e-commerce stores
– Digital intellectual property (software, apps, etc.)
– Social media business accounts
– Email lists and customer databases
Personal Digital Assets
– Photos and videos stored in cloud services
– Social media personal accounts
– Email accounts and communications
– Digital music and movie libraries
– Gaming accounts and virtual assets
Sentimental Digital Assets
– Family photos and videos
– Digital correspondence and messages
– Social media memories and posts
– Digital journals and personal writings
– Online memorial accounts
Legal Framework for Digital Assets in NC and SC
North Carolina Digital Assets Law
North Carolina adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) in 2016, codified in N.C. Gen. Stat. Chapter 32C.
Key Provisions:
– Fiduciary access to digital assets with proper authorization
– Three-tier consent system for access
– Privacy protection for communications
– Terms of service considerations
Access Hierarchy:
1. Online tool designations (highest priority)
2. Will or trust provisions
3. Default state law (lowest priority)
South Carolina Digital Assets Law
South Carolina enacted similar legislation based on RUFADAA, found in S.C. Code § 62-1-501 et seq.
Similar framework with slight variations:
– Fiduciary access rights
– User consent requirements
– Privacy protections
– Service provider cooperation requirements
Federal Considerations
Federal laws also impact digital asset access:
– Stored Communications Act (SCA)
– Computer Fraud and Abuse Act (CFAA)
– Terms of service agreements
– Privacy policies of service providers
The Three-Tier Consent System
Both NC and SC follow a hierarchical system for determining digital asset access:
Tier 1: Online Tools (Highest Priority)
Online tools are features provided by service providers that allow users to designate who can access their accounts after death.
Examples:
– Google Inactive Account Manager
– Facebook Legacy Contact
– Apple Digital Legacy
– Microsoft Account Recovery
Advantages:
– Direct authorization from the user
– Immediate access upon death
– No court involvement required
– Service provider cooperation
Tier 2: Will or Trust Provisions
Estate planning documents can grant access to digital assets if properly drafted.
Required elements:
– Specific language granting digital asset access
– Clear identification of covered assets
– Proper authority for fiduciaries
– Compliance with state digital asset laws
Tier 3: Default State Law
If no other authorization exists, state law provides limited default access rights for fiduciaries.
Limitations:
– No access to communications content
– Limited account information only
– Service provider discretion
– Potential legal challenges
Cryptocurrency and Digital Currency Considerations
Unique Challenges
Cryptocurrency presents special estate planning challenges:
– Private keys required for access
– No central authority to contact
– Irreversible transactions if keys are lost
– Volatile values requiring quick action
– Tax implications for inheritance
Planning Strategies
Secure Storage Solutions:
– Hardware wallets with backup recovery phrases
– Multi-signature wallets requiring multiple keys
– Safe deposit boxes for key storage
– Trusted third parties for key management
Documentation Requirements:
– Inventory of all cryptocurrency holdings
– Location of private keys and recovery phrases
– Instructions for accessing wallets
– Exchange account information and passwords
Example: Successful cryptocurrency estate planning might involve storing recovery phrases in a bank safe deposit box, with detailed instructions in a will about how to access and transfer the digital currency.
Social Media and Online Account Planning
Business Accounts
For business-related social media:
– Transfer ownership to business entities
– Designate successors in account settings
– Document login credentials securely
– Plan for ongoing management
Personal Accounts
Options for personal social media:
– Memorialize accounts (Facebook, Instagram)
– Delete accounts automatically
– Transfer to family members
– Preserve content for family access
Platform-Specific Considerations
Each platform has different policies:
– Facebook: Legacy contacts and memorialization
– Google: Inactive account manager
– Apple: Digital legacy contacts
– Twitter/X: Account deactivation policies
– LinkedIn: Memorial accounts
Practical Steps for Digital Asset Planning
1. Create a Digital Asset Inventory
Comprehensive list should include:
– All online accounts and usernames
– Financial accounts and cryptocurrency
– Business assets and domain names
– Personal files and cloud storage
– Subscription services and memberships
2. Secure Password Management
Best practices:
– Password manager with master password
– Two-factor authentication backup codes
– Recovery questions and answers documented
– Regular updates and security reviews
3. Document Access Instructions
Create detailed instructions for:
– How to access password managers
– Location of hardware devices and keys
– Contact information for service providers
– Step-by-step recovery procedures
4. Update Estate Planning Documents
Include specific language for:
– Digital asset access authority
– Fiduciary powers for online accounts
– Privacy considerations and limitations
– Specific bequests of digital property
5. Use Online Tools When Available
Take advantage of platform-provided tools:
– Set up legacy contacts on major platforms
– Configure inactive account managers
– Designate digital asset beneficiaries
– Review and update settings regularly
Common Mistakes to Avoid
Inadequate Documentation
Failing to maintain current inventories
Not updating access information
Insufficient instructions for recovery
Missing backup access methods
Security Vulnerabilities
Storing passwords in unsecured locations
Sharing access information inappropriately
Not using two-factor authentication
Ignoring security updates and changes
Legal Compliance Issues
Violating terms of service agreements
Ignoring privacy laws and regulations
Inadequate estate planning document language
Not considering federal law restrictions
Family Communication Problems
Not informing family about digital assets
Unclear instructions for access
Missing contact information for help
Inadequate training for family members
Working with Professional Advisors
Estate Planning Attorneys
Choose attorneys who understand:
– Digital asset laws in NC and SC
– Technology platforms and their policies
– Cryptocurrency and digital currency issues
– Privacy and security considerations
Technology Professionals
Consider working with:
– Cybersecurity experts for secure storage
– IT professionals for system setup
– Digital asset management services
– Cryptocurrency specialists
Financial Advisors
Ensure advisors understand:
– Digital asset valuation methods
– Tax implications of digital inheritance
– Investment strategies for digital assets
– Estate planning integration
Tax Considerations for Digital Assets
Income Tax Issues
Digital assets may generate:
– Ordinary income from business operations
– Capital gains from appreciation
– Cryptocurrency mining income
– Royalty income from intellectual property
Estate Tax Implications
For larger estates:
– Valuation challenges for unique digital assets
– Timing issues for volatile assets
– Professional appraisal requirements
– Tax planning opportunities
Gift Tax Considerations
Lifetime transfers of digital assets:
– Valuation discounts for partial interests
– Annual exclusion planning opportunities
– Generation-skipping transfer considerations
Future Trends and Considerations
Evolving Technology
New challenges emerging:
– NFTs and digital collectibles
– Virtual reality assets and property
– Artificial intelligence created content
– Blockchain-based identity systems
Legal Developments
Anticipated changes:
– Updated digital asset legislation
– Federal regulatory frameworks
– International coordination efforts
– Privacy law evolution
Planning Adaptations
Estate planning must evolve:
– Regular review and updates required
– Technology training for fiduciaries
– Flexible planning strategies
– Professional expertise increasingly important
Taking Action to Protect Your Digital Legacy
Digital assets are becoming increasingly important components of modern estates, but they require specialized planning to ensure proper transfer to your beneficiaries. The combination of evolving technology, complex legal frameworks, and security considerations makes digital asset planning both crucial and challenging.
Start by creating a comprehensive inventory of your digital assets and implementing secure access management systems. Work with estate planning professionals who understand both the legal and technical aspects of digital asset planning.
Don’t let your digital legacy become inaccessible to your family. Take action now to ensure your online accounts, cryptocurrency, and digital property can be properly managed and transferred according to your wishes.
Schedule a consultation with an experienced estate planning attorney who can help you navigate the complex intersection of technology and estate planning law. Your digital assets deserve the same careful planning attention as your traditional property.
This article provides general information about digital assets and estate planning and should not be considered specific legal advice. Digital asset laws are rapidly evolving and vary by jurisdiction and individual circumstances. Always consult with qualified legal and technology professionals for advice specific to your situation.