How are digital assets addressed in a will

I recently spoke with a client, David, who was distraught. His father had passed away unexpectedly, and David quickly discovered a significant problem: access to his father’s online accounts. There was a brokerage account holding substantial value, years of family photos stored in the cloud, and even a valuable domain name. Despite having a valid will, David couldn’t get anyone at Google, Facebook, or the brokerage to even listen to him without a court order. He faced thousands in legal fees just to unlock these digital possessions—assets his father clearly intended him to inherit.

What Exactly Are Digital Assets?

Digital assets are any form of digitally stored information that has value. This isn’t limited to cryptocurrency, though that’s a major concern for many. It includes online bank and brokerage accounts, social media profiles, email accounts, photographs, videos, domain names, loyalty points, digital art (NFTs), and even software licenses. The challenge is that traditional estate planning tools weren’t designed to handle these types of assets.

Why a Standard Will Isn’t Enough

A will directs the distribution of personal property, which historically meant tangible items—furniture, jewelry, real estate. While digital assets technically fall under this definition, service providers aren’t legally obligated to honor a will’s instructions without further authorization. They’re rightfully concerned about privacy and security; they don’t want to allow just anyone claiming to be an executor to access someone’s personal information. Without specific language, these platforms will legally deny access, even if your will clearly names an executor.

The Importance of RUFADAA Language

California, like many states, has adopted the Revised Uniform Fiduciary Access to Digital Assets Act – or RUFADAA (Probate Code § 870). This law provides a framework for fiduciaries (executors, trustees) to access digital assets, but it’s not automatic. Your will must include specific RUFADAA language granting your executor the authority to manage and control your digital assets. This language typically defines the scope of authority—what types of assets are covered and what the executor is permitted to do with them.

I’ve been practicing estate planning and serving as a CPA for over 35 years, and I’ve seen firsthand how crucial this is. As a CPA, I understand the tax implications of digital assets – especially cryptocurrency – and can help clients structure their estate plans to minimize potential capital gains taxes. Stepping up the basis on inherited digital assets, just like with traditional assets, is a significant advantage that requires careful planning.

What Should Your RUFADAA Clause Include?

A comprehensive RUFADAA clause should address several key points:

• Specific Authority: Clearly grant your executor the power to access, manage, and control your digital assets.
• Asset Definition: Be as specific as possible about what constitutes a “digital asset” in your case.
• Account Information Location: Create a secure, confidential document (separate from your will) listing your digital accounts, usernames, and passwords. This isn’t stored with the will but referenced within it.
• Consent for Providers: Include language directing service providers to comply with the executor’s requests, as permitted by RUFADAA.
• Digital Asset Disposal: Specify how you want your digital assets handled – whether they should be distributed to beneficiaries, sold, or deleted.

Addressing Cryptocurrency Specifically

Cryptocurrency presents unique challenges. Not only is it a digital asset, but it’s also subject to complex tax rules. Without proper planning, your beneficiaries could face significant tax liabilities. The executor needs the ability to access wallets, transfer funds, and accurately report any gains or losses to the IRS. Furthermore, securing these assets is vital, as crypto wallets are often targets for hackers.

The Pitfalls of Ignoring Digital Assets

Ignoring digital assets in your estate plan can lead to significant problems. Beneficiaries may be unable to access valuable accounts, leading to lost funds or sentimental items. Executors may face legal challenges and delays. And, as David discovered, the cost of resolving these issues can quickly escalate.

If combined ‘probate assets’ (excluding the AB 2016 residence) exceed $208,850 (the threshold effective April 1, 2025), they are subject to formal probate; a Will alone does not allow you to bypass this limit.

How do probate courts in California evaluate intent when a will is challenged?

In California, a last will and testament operates within a probate system that emphasizes intent, clarity, and procedural compliance. When properly drafted, a will does more than distribute property—it creates legally enforceable instructions that guide courts, fiduciaries, and beneficiaries through administration with fewer disputes and less uncertainty.

For California residents, understanding how intent, authority, and compliance interact is one of the most effective ways to protect family harmony and estate integrity. A will that anticipates probate scrutiny is far more likely to be honored as written and far less likely to become the source of unnecessary conflict.

Resources for Asset Management & Transfer

• Property Tax Reassessment: California State Board of Equalization (Prop 19)
  This page details the “Base Year Value Transfer” rules. It explains that heirs can only avoid a property tax reassessment if the inherited home becomes their primary residence and the Homeowners’ Exemption is filed within one year of the date of death.
• Real Estate Probate (AB 2016): California Probate Code § 13151 (Petition for Succession)
  The specific statute for the AB 2016 process. It outlines the requirements for using a court-approved “Petition” (not an affidavit) to transfer a primary residence worth $750,000 or less (gross value) for deaths occurring after April 1, 2025.
• Small Estate Affidavit: California Probate Code § 13100 (Personal Property)
  Access the statutory language for the “Small Estate Affidavit.” This procedure is strictly for Personal Property (cash, stocks, vehicles) and is limited to estates with a total value of $208,850 or less (effective April 1, 2025).
• Federal Estate Tax Exemption: IRS Estate Tax Guidelines
  The authoritative federal resource for estate valuation. It reflects the 2026 exemption increase to $15 million per person, which is critical for high-net-worth asset planning and determining if an IRS Form 706 is required.
• Unclaimed Assets: California State Controller – Unclaimed Property
  The primary portal for executors and heirs to search for “lost” assets—such as forgotten bank accounts, uncashed dividends, and insurance benefits—that have been remitted to the State of California for safekeeping.
• Business/LLC Compliance: FinCEN – Beneficial Ownership Information (BOI)
  The official portal for corporate transparency reporting. Most domestic and foreign entities (LLCs, Corps) must file a report. Executors must verify compliance, as failure to update control information within 30 days of death can result in federal civil penalties.