High-net-worth individuals with large portfolios of cryptocurrency are rightly concerned about what could happen to those assets after death. This issue gained public attention after the 2018 death of a young cryptocurrency exchange founder, which led to the platform’s collapse. Investigators later determined the exchange, QuadrigaCX, was a fraud that resulted in massive client losses. This doesn’t have to happen to you. At Sishodia PLLC, our New York City estate planning attorneys can help create a comprehensive plan to transfer cryptocurrency and other digital assets securely to intended beneficiaries.
Without a well-structured estate plan, digital assets can become inaccessible or even lost forever. Sishodia PLLC can help clients safeguard their cryptocurrency holdings through tailored estate planning strategies that account for security, tax implications, and seamless asset transfer. A New York City estate planning attorney can guide you through all aspects of the process, such as structuring a trust, designating beneficiaries, and correctly documenting private keys and access credentials. Protecting your digital wealth starts with proactive planning. Contact Sishodia PLLC at (833) 616-4646 to schedule a consultation and secure your digital assets for the future.
The Challenge of Estate Planning With Digital Assets
The first and most basic step in protecting your digital assets is making sure that your New York City estate planning attorney is always up to date on all information regarding your online personal and business accounts, including:
- Web Hosting and Email;
- Credit Card, Airline, and Hotel Rewards Programs;
- PayPal and other online banking, investment, and brokerage accounts;
- Professional management accounts and customer databases; and
- Cryptocurrencies.
It is important to review digital assets with an estate planning attorney because both state and federal laws restrict third-party access, even after death, to protect user privacy. Providers’ terms of service often prohibit third-party access, including by fiduciaries after incapacity or death. These limits help providers comply with federal laws such as the Electronic Communications Privacy Act (ECPA) (which includes the Stored Communications Act) and the Computer Fraud and Abuse Act (CFAA). Without legal access to email accounts, it may be impossible to locate all of a person’s accounts with financial institutions and contracts with customers. That’s why it’s important to hire an estate planning attorney in New York City who has a thorough understanding of financial digital asset access protocols and how to ensure their safe succession.
Create a Comprehensive Digital Asset Inventory
Start by listing every account and file that holds value or personal data. Include bank and brokerage logins, retirement portals, PayPal or Venmo, crypto wallets and NFTs, domain names, websites and online stores, cloud storage, photo libraries, email and social media, loyalty points, streaming and software subscriptions, and medical portals. For each entry, note the platform, account owner, username, account or wallet identifiers, approximate value, renewal dates, two-factor method, recovery codes, and any devices tied to authentication. Add a brief instruction, such as close, memorialize, or transfer. Include accounts used for family photos.
Do not put passwords or seed phrases in your will. Store them in a password manager with emergency access, or in a sealed letter kept in a safe place, and reference that location in your estate papers. For crypto, describe the wallet type and custody method. Keep recovery phrases offline and never copied into email. Turn on provider tools like Google Inactive Account Manager and Facebook Legacy Contact and set your preferences now.
Make the inventory easy to find. Save a PDF and a printed copy. Share the location with your chosen fiduciary and your estate planning attorney. A New York City attorney can prepare consent language so fiduciaries may lawfully access content, address terms of service limits, appoint a digital fiduciary in your will or trust, and tie the inventory to your broader plan. Review and update the list twice a year or after major life events so your loved ones are not left guessing.
New York Adopted The Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA)
In September 2016, New York enacted its version of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) by amending Article 13-A of the Estates, Powers, and Trusts Law (EPTL), titled “Administration of Digital Assets.” Holders of online accounts are now called “users” and may appoint fiduciaries with the right to access their digital accounts. Users can provide these instructions in wills, trusts, and powers of attorney, ensuring that their digital accounts and online information are properly handled after death or incapacity.
The law enables fiduciaries, such as executors, trustees, and agents under a power of attorney, to access a user’s online accounts, subject to the user’s express consent. It also allows users to utilize online service provider tools such as Facebook’s Legacy Contact or Google’s Inactive Account Manager to specify who may manage their accounts posthumously.
Importantly, if the user gave express consent (either through a provider’s online tool, which overrides contrary will or trust language, or in a will, trust, or power of attorney), custodians must disclose the content of communications to a properly documented fiduciary. Without such consent, the custodian may limit disclosure to a “catalogue of electronic communications” and non-content digital assets per EPTL § 13-A-3.1 and § 13-A-3.2. EPTL § 13-A-2.2 confirms that a user’s online tool directions can override contrary terms of service.
New York City Estate Planning Attorney – Sishodia PLLC
Natalia A. Sishodia, Esq., LL.M.
Natalia A. Sishodia, Esq., LL.M., is the Managing Partner of Sishodia PLLC and a New York City attorney known for meticulous planning and calm, “stress-free” closings. Fluent in English and Russian, she advises domestic and international clients, including high-net-worth individuals, celebrities, businesses, and major mortgage lenders, across real estate, business law, elder law, estate planning, and taxation.
Focusing on high-end real estate, Ms. Sishodia has successfully negotiated and closed hundreds of transactions, from condo and co-op deals to multifamily and new development purchases, conversions, deed transfers, leasing, lending, and 1031 exchanges. Her private-client practice extends to multijurisdictional wealth management, cross-border tax strategy, and sophisticated estate planning, covering wills, trusts, and digital assets (including cryptocurrency).
Committed to service, Ms. Sishodia has contributed pro bono work that expands access to justice, informed by experience at the United Nations (DESA and the Convention on the Rights of Persons with Disabilities). She supports community education through seminars and partners with nonprofits such as Travelogion. Her recognitions include the Award for Outstanding Achievement in International Law and the Avvo Client’s Choice Award. She is admitted to practice in New York.
Capital Gains and Estate Taxes on Digital Investments
Digital investments, including cryptocurrencies, have become significant components of many investment portfolios, necessitating careful consideration of both capital gains and estate taxes. For New York residents, understanding state-specific tax implications is crucial, especially for those with high-value crypto assets.
Any realized gains from the sale or exchange of cryptocurrency are subject to capital gains tax. For federal tax purposes, the IRS treats digital assets as property, meaning gains are taxed similarly to other capital assets. Long-term gains, which are held for more than a year, are taxed at 0%, 15%, or 20%, depending on income level, while short-term gains are subject to ordinary income tax rates. New York follows the federal capital gains tax treatment but also applies its state income tax, which can reach up to 10.9% for high earners.
In 2025, New York applies an estate tax to estates valued over $7.16 million. Estates exceeding 105% of this exemption, approximately $7.52 million, lose the exemption entirely due to the state’s “estate tax cliff,” resulting in tax rates up to 16%. For federal estate taxes, IRS Form 706 must be filed for estates exceeding the federal exemption, which is $13.99 million in 2025. This form requires detailed valuation of all assets, including cryptocurrencies, as of the decedent’s date of death.
Gifting digital assets during the holder’s lifetime can help reduce taxable estate value. The federal annual gift tax exclusion for 2025 is $19,000 per recipient, allowing asset transfers without reducing the lifetime exemption. Another strategy involves transferring assets to an irrevocable trust, removing them from the taxable estate while maintaining oversight through designated trustees.
Investing in Qualified Opportunity Funds (QOFs) can still defer eligible federal capital gains until the earlier of a sale or December 31, 2026, and a 10-year hold may allow exclusion of post-investment appreciation in the QOF. The prior 5- and 7-year basis step-ups (10%/15%) are no longer available for new investments because the deferral period ends in 2026. New York State decoupled from the federal OZ benefits for tax years beginning in 2021, so the federal deferral/exclusion generally does not apply to NY income tax.
For New York residents with significant digital assets, integrating these strategies into an estate plan can provide substantial tax benefits and ensure smoother asset transfers to beneficiaries. Engaging with a knowledgeable New York City estate planning attorney is recommended to align these strategies with individual estate planning goals.
| Topic | Key Points |
|---|---|
| RUFADAA in New York | Allows fiduciaries to access digital assets via wills, trusts, and POAs, overriding “terms of service” agreements. Platforms like Facebook and Google provide tools for access. |
| Estate Planning for Cryptocurrency | Many attorneys lack expertise in handling crypto assets. Blockchain lacks traditional safeguards, making unauthorized transfers irreversible. “Cold storage” secures access. |
| Legal Guidance Importance | High-net-worth individuals with crypto should consult specialized estate attorneys for security and compliance. |
Quality Estate Planning Services For High-Net-Worth Individuals With Investments in Cryptocurrency
Despite attempts to modernize federal and state laws to facilitate the transfer of digital assets to intended beneficiaries, most estate planning attorneys in New York City are not up to speed on how to handle estates for high-net-worth individuals with investments in cryptocurrency.
Cryptocurrency uses blockchain technology to create an immutable, decentralized public ledger where individuals can earn, purchase, and sell it through a network of independent computers that track it with sophisticated algorithms. Cryptocurrency doesn’t utilize the safeguards that most financial institutions require for fiduciaries to access accounts, such as powers of attorney, original death certificates, or testamentary letters. Once a fiduciary obtains the required passcode for the accounts, there is no oversight, and unauthorized transfers are virtually impossible to recover.
That’s why experienced digital asset and cryptocurrency estate planning attorneys use methods such as “cold storage” to hold offline cryptocurrency information. This method can allow fiduciaries to transmit the password without personally knowing it. Properly structured estate plans can incorporate cold storage solutions to allow fiduciaries to retrieve access credentials without exposing them to unnecessary risk.
If you’re heavily invested in cryptocurrency, consulting a New York City estate planning attorney with experience in digital assets is essential. Contact Sishodia PLLC at (833) 616-4646 to ensure your investments are properly protected and integrated into your estate plan.
For more information, please contact Natalia Sishodia, Sishodia PLLC, or email natalia@sishodialaw.com
