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Understanding digital assets

What every beneficiary needs to know

June 14, 2026
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Key takeaways

  • Digital assets require specific estate planning. Unlike traditional assets, they often face legal hurdles related to ownership, privacy laws (like the Stored Communications Act) and platform-specific terms of service. A standard will may not be sufficient to ensure beneficiaries can access online accounts, photos or cryptocurrency.
  • You may not be able to inherit all digital content. Be aware of the legal distinction between owning and licensing. Assets like digital books, movies and music purchased on platforms are often just licensed for use and cannot be legally passed on to an heir.
  • Cryptocurrency and other high-value digital assets are especially vulnerable to loss. Assets like Bitcoin and NFTs are "self-custodied," meaning they’re only accessible with private keys or recovery phrases. Without these specific access details, the assets may be permanently lost, as there’s no central authority (like a bank) to help beneficiaries.
  • Be proactive and work with legal professionals. To claim digital assets, you will need to locate account information yourself and provide a death certificate and proof of identification. For complex assets, such as cryptocurrency, you may need an attorney experienced in digital assets to help you establish your legal right to them.
  • A separate "letter of instruction" makes digital asset inheritance easier. This document should contain all the sensitive access details — including usernames, passwords and the location of physical storage for any offline wallets.

No matter how active an online life we lead, we all have a digital footprint. In fact, nearly all aspects of our daily lives are now to some extent tied to our electronic devices. And while these digital assets represent irreplaceable personal memories — they can also hold substantial financial value.

Therefore, like any valuable asset, they require careful planning. But unlike traditional assets, digital assets present unique estate planning challenges both to the individual bequeathing them as well as to their beneficiary.

Unfortunately, current estate and privacy laws don’t yet fully address the challenges presented by modern life in a digital world.

What are digital assets?

Broadly speaking, the term ”digital assets” can be used to describe any electronic asset to which an individual has rights of ownership or control. Typically these fall into four main categories:

Personal

Assets such as photos, videos, emails, medical records, music files, digital books and games, frequent flyer programs, credit card points, and hotel or similar loyalty programs.

Social

Any information, blogs and images stored on social media sites.

Financial

Online access to bank and investment accounts, cryptocurrency accounts, non-fungible tokens (NFTs), central bank digital currencies as well as virtually stored tax documents, bill pay services, etc.

Business

Domain names, business blogs, intellectual property, customer/client information, digital images and file storage, etc.
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Be aware that since many digital assets held in online accounts are technically only licensed (not owned) by the user, their heirs may not have an automatic right to access them. And privacy laws such as the federal Stored Communications Act (SCA) restrict access to the content of a deceased person's electronic communications (e.g., texts and emails). Often, explicit user consent prior to death is required for an executor to access this content. 

Additionally, only digital content for which a deceased individual held the copyright may be passed down to an inheritor. There is a clear legal distinction between “full ownership” and “right-to-use” licenses such as in software, digital music, films and books — and there’s legal precedent for denying resale or bequest of these assets.

Key inheritance challenges with digital assets

Unlike traditional assets such as bank and brokerage accounts, many digital assets are self-custodied, meaning they are only accessible to the individual holding the access passwords or private keys. Without those, proving ownership and/or recovering the assets may be impossible.

In some instances, even when beneficiaries are given digital account usernames and passwords, it still may not be enough due to:

  • Access restrictions: Many online platforms have Terms of Service (TOS) agreements that prohibit a user's accounts from being transferred or accessed by another person, even after death.
  • Privacy laws: In the U.S., the federal Stored Communications Act (SCA) limits access to the content of a person's online communications, creating legal barriers for fiduciaries. The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), adopted by most states, can override a TOS, but only if the user gives explicit consent in a will or through an online tool.
  • Asset ownership vs. license: With many digital assets, like streaming service subscriptions or e-books, you are only purchasing a license to use the content, not ownership. This means you cannot legally bequeath them to an heir.
  • Crypto and NFT access: For cryptocurrencies and non-fungible tokens (NFTs), private keys and recovery phrases are essential for access. Without these, the assets are permanently lost, and there is no centralized company to assist heirs.
  • Hidden assets: If heirs are unaware of the existence of certain digital assets, they may be lost or forgotten forever.

71%

Approximately 71% of high-net-worth individuals (HNWIs) currently hold or have held digital assets.1

Without clearly documented digital asset instructions in the estate plan, beneficiaries can find themselves facing significant emotional and financial losses.

Inheriting high-value digital assets

While most digital assets have great sentimental value, they possess little monetary value. However, some digital assets (such as cryptocurrencies) can carry tremendous monetary value. Often, they will leverage blockchain technology to create secure, decentralized and verifiable ownership. These assets may include:
  • Cryptocurrencies: Digital currencies like Bitcoin and Ethereum that are secured by cryptography and can be used as a medium of exchange or an investment.
  • Stablecoins: A type of cryptocurrency pegged to a more stable asset, such as a fiat currency (like the U.S. dollar), to minimize price volatility.
  • Non-Fungible Tokens (NFTs): Tokens that represent ownership of a unique item, such as a piece of digital art or a video clip. Unlike cryptocurrencies, NFTs are not interchangeable.
  • Security Tokens: Digital assets that meet the definition of a security, like tokenized stocks or bonds. They can also represent fractional ownership in real-world physical assets, like real estate.
  • Central Bank Digital Currencies (CBDCs): Digital assets issued and backed by a country's central bank. 

As cryptocurrencies such as Bitcoin become both more common and more valuable, estate beneficiaries will need to become adept at retrieving these often complex and challenging assets. Be prepared. You may need specific legal and technical assistance in ensuring the assets can be located, accessed and transferred.

Since cryptocurrency isn’t directly tied to an individual’s name, there aren’t any account statements or certificates, so holdings won't automatically transfer as part of the estate. Beneficiaries might never know of a loved one’s cryptocurrency holdings; and even if they do, without an access key those assets may become permanently inaccessible. 

2.3 to 3.7 million Bitcoins

As of early 2025, it’s estimated that somewhere between 2.3 to 3.7 million Bitcoins (11–18% of the total market) have been permanently lost as a result of misplaced private keys.2

Take ownership of inherited cryptocurrency

Unlike traditional brokerage firms, most major crypto exchanges don’t allow users to name account beneficiaries. That means the assets will need to go through the probate process. If you are the beneficiary of a parent’s or other loved one’s cryptocurrency:

Locate the assets.

Look for clues in financial records, including bank account transactions with exchanges like Coinbase, Kraken, or Binance. Check the deceased's computer, mobile devices or password manager for wallet apps (e.g., MetaMask, Tangem, Exodus) or exchange accounts.

Find the keys (or seed phrase).

Accessing these assets requires private electronic keys (or a sequence of words used for digital wallet recovery). This information will likely be stored in a secure location such as a safe, safe deposit box or encrypted computer file.

If applicable, contact the custodian.

If the crypto assets are held on a centralized exchange, you’ll need to contact customer support with a copy of the death certificate, proof of identification and probate documents.

Work with the estate's executor and/or attorney.

Your legal right to the assets must be established through the individual’s will or intestacy laws. The executor is responsible for carrying out their wishes and may need to hire an attorney experienced in digital assets.

Understand the tax implications.

The IRS considers cryptocurrency to be property. Typically, the cost basis for inherited cryptocurrency will be "stepped up" to its market value as of the date of death. This means you only pay capital gains tax on any appreciation that occurs after the inheritance. But make sure to consult your tax professional for guidance. 

Keep in mind that it’s never too early to think about your own crypto holdings and start implementing some proactive estate planning to ensure that your family will still be able to benefit from those assets if you become disabled or die. To get started:

Create your own digital estate plan

Why do you need a plan for your digital assets? First and foremost, it makes everything much easier for family members if you become incapacitated or die.

Without proper planning, families can lose access to thousands of dollars in digital investments, cherished photos stored in cloud storage, and even ongoing business revenue streams. The benefits of comprehensive digital asset management extend beyond individual protection, providing families with peace of mind knowing their digital wealth and memories are secure and accessible to authorized heirs.

Your digital estate plan can include a wide variety of assets — from those with significant monetary value to others whose value is primarily sentimental. Consider the following steps to help you get started:

Take control of your financial future

Don’t wait to talk to your parents about their estate plan. Schedule a relaxed time and place, and approach the conversation with empathy and compassion:

  • Focus on their wishes and legacy rather than just finances.
  • Ask open-ended questions about their legacy goals using a "help me to understand" approach.
  • Encourage them to think about their digital assets and make sure there’s a clearly documented way for your family to access those assets.
  • Remember that this is an ongoing conversation rather than a one-time discussion.

Knowing the scope of your future inheritance can open up a world of new planning opportunities and impact how best to direct your existing portfolio assets.

1 Capgemini, “World Wealth Report 2024,” June 2024.

2 “How Many Bitcoins are Lost,” Ledger Academy, May 2025.

Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results. This material does not take into account a client’s particular investment objectives, financial situations or needs and is not intended as a recommendation, endorsement offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage services. There are important differences between brokerage and investment advisory services, including the type of advice and assistance provided, the fees charged, and the rights and obligations of the parties. It is important to understand the differences, particularly when determining which service or services to select. For more information about these services and their differences, speak with your Merrill financial advisor. 

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