WHAT HAPPENS TO CRYPTO, NFTS, AND DIGITAL ASSETS WHEN YOU DIE
Your parent dies. The will is read. They had $250,000 in Bitcoin stored in a digital wallet.
No one knows the password.
The Bitcoin is gone. Not inherited, not stolen—just inaccessible. Forever.
This scenario plays out constantly in California probate courts and estate planning offices. Families discover their deceased relatives owned crypto, NFTs, online businesses, or valuable digital accounts. But without the private keys, passwords, or account access, the assets might as well not exist.
Digital asset inheritance isn't just a technical problem. It's a legal one. California law hasn't fully caught up with the reality of digital property, and most families have no plan for what happens to their digital lives after death.
Andrew Kern
Sonoma County Estate Planning, Trust Administration, and Probate Attorney
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The Digital Asset Problem: Locked Out Forever
A generation of Californians owns significant wealth in digital form. Cryptocurrency, NFTs, online businesses, domain names, email accounts tied to money, cloud storage with irreplaceable files.
Most of them haven't told anyone where it is or how to access it.
This creates a practical nightmare. Unlike a house deed or a bank account, digital assets don't have a clear chain of ownership visible in probate court. The property exists—but only the person with the password knows it's there.
When that person dies without sharing access information, beneficiaries face three problems:
They don't know the asset exists (no paper trail)
They can't access it even if they know it exists (passwords are encrypted)
The company hosting the asset won't let them in (terms of service prohibit password sharing and account recovery)
In Petaluma and throughout Sonoma County, attorneys are increasingly seeing families lose significant digital assets because the deceased never documented what they owned or how to access it.
What Happens to Your Crypto When You Die
Cryptocurrency operates on a principle that terrifies estate planners: private key access is absolute ownership.
If you own Bitcoin, Ethereum, or any other cryptocurrency, your wealth lives in a digital wallet. That wallet is accessed with a private key—a long alphanumeric code. Whoever has the private key controls the cryptocurrency. There's no customer service to call. There's no "forgot password" recovery. The blockchain doesn't care who your beneficiaries are.
Here's the problem: If you die without sharing your private key, your cryptocurrency is permanently locked away.
Many people store crypto on exchanges (Coinbase, Kraken, Gemini). These platforms maintain account recovery procedures, but they require identity verification and proof of death. Your executor can eventually access the account if they have a death certificate and go through formal procedures. It takes time and money, but it's possible.
But many people store crypto in self-custodial wallets (Ledger, MetaMask, hardware wallets). These wallets have no company backing them. There's no "contact us" option. The private key is the only way in. Lose the key, lose the crypto.
Estimates suggest $20 billion in Bitcoin alone is permanently inaccessible because the owners died without sharing their private keys. That's wealth that simply disappeared from the economy.
California courts treat cryptocurrency as property; it can be inherited, taxed, and distributed through probate. But the practical reality is harsher: without the key, your heirs get nothing.
NFTs and Digital Collectibles: Ownership and Access
NFTs are different from crypto but face similar problems.
An NFT (non-fungible token) represents ownership of a digital asset stored on a blockchain. You might own a digital artwork, a collectible, or a virtual real estate parcel. That ownership is recorded on the blockchain, and anyone with the private key to your crypto wallet can control the NFT.
The difference: NFTs can be transferred without the original password.
If your NFT is stored in a crypto wallet, and someone gains access to your private key, they can transfer ownership to themselves or to your heirs. The blockchain will record the new owner. This is theoretically clean.
The problem: people often forget or don't realize their NFTs are tied to private keys. They buy an NFT on OpenSea or another platform, then store it in a wallet they created years ago and haven't documented. When they die, their family doesn't know where the NFT is or how to access the wallet containing it.
Some NFT platforms (such as certain gaming or metaverse platforms) don't allow asset transfers after death. The terms of service explicitly state that upon account closure, all virtual assets are deleted. Your child can't inherit your digital land in Decentraland or your avatar in Roblox, even if it's valuable, because the platform prohibits it.
California law hasn't specifically addressed NFT inheritance, so disputes are resolved through general probate law, meaning courts treat them like any other property. But platform policies can override that.
Online Accounts: Email, Banking, Cloud Storage
Most digital assets are actually less exotic than crypto. They're the everyday accounts that hold significant value and personal data.
Email accounts (Gmail, Outlook) contain access to everything else. Password recovery flows through email. If someone can access your email, they can reset passwords on financial accounts, social media, and banking portals. Yet email providers' terms of service typically prohibit sharing login credentials. When you die, your family can't access your email unless Google or Microsoft allows account recovery, which requires death certification and legal proof.
Online banking is similar. Most accounts require two-factor authentication tied to a phone number or an email address. If the executor doesn't have access to those recovery methods, they're locked out, even with a death certificate.
Cloud storage (Google Drive, Dropbox, iCloud) often contains irreplaceable files. Photos, documents, and financial records. Many people store their cryptocurrency private key backups in the cloud. When the account holder dies, the service provider may delete the account after months of inactivity, destroying the files and any backup recovery information.
PayPal and payment platforms hold money. Stripe, Square, or other payment processors may freeze business accounts upon learning of the owner's death.
The common thread: platforms require passwords for access, but their terms of service forbid password sharing. Executors face a catch-22: they can't get in without the password, and the company won't help.
Online Accounts: Email, Banking, Cloud Storage
Facebook, Instagram, Twitter, LinkedIn, and TikTok all have policies for handling deceased users' accounts.
Facebook and Instagram allow you to name a "legacy contact" who can manage your memorialized account after death. They can write a pinned post, approve friend requests, and respond to messages. But they can't access the full account or download everything.
Twitter/X doesn't allow inheritance. The account is typically deleted or memorialized with no access granted to anyone.
LinkedIn allows profiles to be memorialized with the date of death displayed.
TikTok has no clear account succession policy, though they claim to handle deceased users' accounts "privately and with respect."
The problem: most people don't name a legacy contact. When they die, the account is either deleted or frozen. Families lose access to photos, messages, and memories. In some cases, valuable content (a popular blog, YouTube channel with earnings, Instagram account with commercial value) becomes inaccessible and potentially lost.
YouTube is particularly valuable. If someone ran a monetized channel generating ad revenue, that income stream dies with them unless the channel can be transferred. YouTube's terms require the account holder to explicitly authorize succession. Without that authorization, the channel is either deleted or frozen, and all future earnings stop.
Digital Businesses: Ecommerce Stores and Content Creators
Some people in Petaluma and Sonoma County run online businesses as their primary income: Etsy shops, Shopify stores, Amazon seller accounts, freelance platforms (Upwork, Fiverr).
These accounts generate recurring income. When the owner dies, the income continues—unless the platform detects the account owner's death and freezes the account pending verification.
Etsy shops can be transferred to heirs if the proper legal documentation is provided. But it takes time and requires the executor to navigate Etsy's support process.
Amazon seller accounts are more restrictive. The account is typically tied to a single person's tax ID. Upon death, Amazon may freeze the account and hold any accumulated seller funds pending legal proof of inheritance rights.
Shopify stores can be transferred, but Shopify requires the new owner to verify identity and update payment information.
Upwork and Fiverr accounts are strictly personal. Most freelance platforms prohibit account transfer. If you're a freelancer and you die, your client relationships die with you. Your reputation (and the income tied to it) vanishes.
The financial impact can be substantial. A successful Etsy shop generating $3,000 monthly or an Upwork freelancer billing $50 hourly suddenly loses all revenue when the account is locked.
California Law and Digital Property
California recognizes digital assets as property. They can be included in wills, trusts, and probate estates.
California Probate Code Section 13050-13100 specifically addresses digital assets in trusts. It requires that the trust document include explicit language about digital asset access. Vague language doesn't work.
California also has the Uniform Fiduciary Access to Digital Assets Act, which allows executors and trustees to access digital accounts for estate management purposes—but only if the account holder authorized it in writing or the service provider allows it.
The law is clear: digital property can be inherited. But the practical reality depends entirely on:
Whether the deceased documented their digital assets
Whether they shared access information (private keys, passwords)
Whether the platform allows inheritance
Whether the executor can prove they have authority to manage the account
Most people do none of these things.
Planning for Your Digital Estate in Petaluma and Sonoma County
If you own cryptocurrency, run an online business, have valuable social media accounts, or store important files in the cloud, you need a digital asset plan.
Step 1: Inventory your digital assets. Make a list of everything you own that's digital: cryptocurrency accounts, email, banking, social media, online businesses, cloud storage, domain names, online retirement accounts.
Step 2: Document access information. For each asset, record:
The platform or service
Your username or account email
A description of how to access it (private key, password manager info, two-factor authentication setup)
The value or importance of the asset
Any special instructions for management or liquidation
Step 3: Store access information securely. Don't email passwords or private keys. Use a secure password manager with inheritance features (1Password, Dashlane, LastPass all support account recovery by authorized users). Or use a secure document safe. Update it annually.
Step 4: Update your estate planning documents. Your will and trust should specifically mention digital assets. Name an executor or trustee who understands technology. Include explicit instructions for what should happen to each asset (liquidate, transfer, memorialize, delete).
Step 5: Authorize account recovery on key platforms. For email, banking, cloud storage, and social media, set up account recovery options. Enable two-factor authentication with a backup phone number your executor knows. Name a legacy contact on Facebook if you use it.
Step 6: Tell someone where the information is. Don't keep this secret. Tell your executor or a trusted family member where you've stored your access information. They don't need to know your passwords—they just need to know where to find them.
What to Do If You're Managing Someone's Digital Assets
If someone you know dies and has left behind crypto, online businesses, or valuable digital accounts:
For cryptocurrency:
If it's on an exchange, contact the exchange and provide a death certificate and proof of your relationship. They have recovery procedures.
If it's in a private wallet and you don't have the private key, the cryptocurrency is likely lost. Consult a probate attorney to determine if any recovery options exist.
For online accounts:
Contact the service provider (Google, Facebook, your bank). Provide a death certificate. Most have account recovery procedures for heirs.
It will take time. Google typically takes 30 days. Facebook may take longer.
For online businesses:
Contact the platform and explain that you're the executor of the deceased's estate. Ask about account transfer procedures.
Provide legal documentation (death certificate, letters testamentary if you have them).
Move quickly. Some platforms delete inactive accounts after 90-180 days.
For irreplaceable files:
If they're in cloud storage, contact the service provider immediately to prevent account deletion.
Ask them to preserve the account while you work through the legal process of inheritance.
Get professional help.
A probate attorney in Petaluma or Sonoma County can help navigate the legal side. A tech-savvy accountant or financial advisor can help determine the value of digital assets and tax implications.
The Takeaway
Digital assets are real property. They have financial value. They can be inherited. But they require different planning than traditional assets.
Without a plan, they're often lost. Crypto wallets become inaccessible. Online businesses shut down. Irreplaceable files disappear. Social media accounts are deleted.
Don't let this happen. Document your digital life. Share access information with someone you trust. Update your estate plan to include digital assets.
If you own significant crypto, run an online business, or have valuable digital accounts, talk to an estate planning attorney about protecting them. Most people don't have plans for this yet. You should.
Call Law Office of Andrew Kern at (707) 658-4602 if you need help creating an estate plan that accounts for digital assets. We serve Petaluma, Santa Rosa, and all of Sonoma County. We can help you document your digital life and ensure your heirs can access what you leave behind.