Why You Need to Include Digital Assets in Your Estate Plan

April 3, 2024
Bradley Campbell
Cup of coffee and electronic device with the word Digital Assets for an estate planning blog
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 and that your loved ones can access them after you pass.
Bradley Campbell Tyler and Mineola TX Lawyer
Bradley Campbell
Bradley Campbell has over 35 years of experience. A trusted advisor and counselor, Attorney Campbell will help you find solutions for your case by focusing on personal attention, communication, and professionalism. If you need an attorney for probate, business law, or real estate with the experience and understanding to serve you with the individualized care and attention that your case deserves. Attorney Campbell provides consultations throughout the week at our convenient locations in Tyler, TX and Mineola, TX.

A new form of wealth, with different ownership, storage, and transferability terms, has created a new challenge for estate planning from traditional forms of wealth. These are digital assets, electronic records in which an individual has a right or interest, as explained in a recent article, “Planning for Digital Assets 101,” from Wealth Management. This new form of wealth is changing how individuals and families approach estate planning strategies, including wills, trusts, and powers of attorney. This blog introduces digital assets and considerations for Tyler or Mineola residents, and how to incorporate them into their overall estate planning strategy.

What Types of Digital Assets Exist?

Digital assets can be divided into two groups: sentimental digital assets and investment digital assets.

Sentimental digital assets are those with an emotional tie, like photos, videos, social media accounts, etc. For these assets, the goal is to provide access to loved ones after a person’s death. Some platforms allow settings to name a legacy contact. A list of accounts, usernames and passwords will be helpful for family members.

The IRS defines investment digital assets as “any digital representation of value which is recorded on a cryptographically secured distributed ledger, like a blockchain, or any similar technology as specified by the Secretary.” This type of asset includes cryptocurrency, stablecoins, and non-fungible tokens.

Digital Assets and Estate Planning in Texas

The challenge of digital investment assets in estate planning centers on how they are owned and stored - Hot wallets versus cold wallets.

Digital assets are stored in digital wallets, or "hot wallets." Hot wallets are web-based and run on smartphones or computers. Many investors use them for small amounts of cryptocurrency and frequent trading. “Cold wallets” are hardware-based wallets stored on devices not connected to the internet, reducing the risk of unauthorized access. A cold wallet can only communicate with an internet-connected device when plugged in. An investor will have a seed phrase or backup code to access the cold wallet, which the owner must store in a secure place.

Digital Asset Storage Systems

Understanding the storage system is essential for estate planning for two main reasons:

Beneficiary Access. A Mineola or Tyler recipient of a gift or bequest of the digital asset must have access to the relevant storage device to access the actual investment. Sharing this information comes with an element of risk, as access is inherently tied to value. Read our blog, Designating Your Beneficiary, and learn more about beneficiary designations.

Fiduciary Access. If only the owner had access, heirs would have no way to gain access to the digital assets when the owner died. Digital exchanges don’t allow users to name a contact to access the investment information upon death. Most exchanges don’t have centralized entities to record information. Access must be allowed to the heir to ensure the investment is recovered.

Transferring digital assets requires Texas residents to provide access to beneficiaries and fiduciaries. There are several ways to structure such a transfer while minimizing the risk of theft or loss.

How Do You Transfer Digital Assets Securely?

Digital assets can be transferred to a Limited Liability Company, and subject to certain limitations, retain control of the digital assets' management by serving as LLC manager. Transferred LLC interests can also provide a mechanism to discount the value of the transferred interest. In addition, LLCs can provide asset protection since, in most states, LLCs protect a member’s personal assets from an LLC’s liabilities.

A directed trust is another way to transfer digital assets while maintaining control and decision-making with the owner. In some states, a directed trust can have an “investment trustee” or “investment trust director” to exclusively handle investment responsibilities, including managing and storing digital assets. Read our blog, Asset Protection Trust: Secure Your Wealth and Future, for more on trusts.

Even using these two methods, someone other than the original owner must be granted access to the digital assets. One way to do this is by naming a “digital fiduciary”—someone tasked with managing the digital assets.

Key Digital Assets and Estate Planning in Texas Takeaways:

  • Digital Asset Groups: Digital assets can be divided into sentimental digital assets and investment digital assets.
  • Digital Assets and Estate Planning in Texas: The challenge of digital investment assets in estate planning centers on how they are owned and stored - Hot wallets versus cold wallets.
  • Transferring Digital Assets: Someone other than the original owner must be granted access to the digital assets.
  • Estate Planning Attorneys: Work with a Mineola or Tyler estate planning attorney to incorporate digital assets in your estate plan.


Estate plans involving digital assets must clearly outline heirs for the digital investment and its tangible storage devices. The assets can pass with the residuary, and complexities can arise if the residuary beneficiaries differ from tangible property beneficiaries who will receive the storage device. Whether creating or updating an estate plan, request to book a consultation with our estate planning law firm with offices in Tyler or Mineola for a holistic and customized plan to match your needs. Together, we can create a plan that brings peace of mind and security for your future and those you care about.

Reference: Wealth Management (Sep. 19, 2023) “Planning for Digital Assets 101”

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