Online Accounts
Broadly, despite state laws (Revised Uniform Fiduciary Access to Digital Assets Act) saying the fiduciary has access to digital assets and information – unless you are prepared to pay significant attorney fees/costs then you aren't getting the data simply by asking for it. You aren't getting the content of that data. Maintaining a list of passwords to provide access to fiduciaries remains the best/primary to manage digital accounts.
Google users of 'retail' accounts (not business, school, gov't, etc.) can name an Inactive Account Manager. The user sets an 'inactive' time from 3 months to 18 months. Google will contact the user 1 month before their set time (SMS and email), if there is still no response they will notify certain people. Can name up to 10. User can also setup an AutoReply message to respond to any future emails. Inactive Account Managers will have 3 months to download a copy of user data. 3 months AFTER this, the information is deleted.
Facebook/Instagram
Meta users set a Legacy Contact or choose to delete their account entirely upon death. A legacy contact manages your profile after your death. They may accept friend requests, change the profile picture, write a pinned post, and change the cover photo. They cannot see your private messages or add/remove friends. Only applies to the primary account, and not any fan pages or subsidiary accounts.
Apple ID
An individual can name a Legacy Contact if your device is sufficiently updated (iOS 15.2, iPadOS 15.2, and macOS 12.1). Data may include photos, messages, notes, files, apps, device backups, and more. Licensed items will not be shared (books, movies, music, subscriptions, etc.). If you want your legacy contact to get access keep the generated access key available and a death certificate. This key is generated at the time you designate them.
Photos might be the most important reason to do this.
Cryptocurrency
Hot/Warm Wallet
The device it is on is connected to the internet. It is not a custodial account. A hot wallet may also be available on multiple devices at one time. I am using device loosely here, it's really more of a software or program that can be installed on multiple devices (USBs, phones, computers, etc.). Assignments of Personal Property could work here. It likely governs the specific device the program is installed on, assuming the underlying asset is owned by the decedent. Careful, some warm wallets look like custodial accounts (see Robinhood wallet account).
Cold Wallet
The device is not connected to the internet (physical hard drive/wallet). The most privacy/security conscious clients will exclusively store their crypto in a cold wallet. The funds are ONLY accessible with the physical device. If this device is lost, stolen, or damaged the funds are lost. This might be one scenario where a safe deposit box makes sense, or a fireproof safe with CLEAR instructions that the random 'hard drive' isn't just pictures… it could hold significant sums of money.
Custodial Wallet (Most Common)
These types of accounts emerged to create a 'retail' cryptocurrency market. They manage all the behind-the-scenes communications with the blockchain. A user simply places trade instructions through their custodian, and the custodian does all the behind the scenes connecting/trading etc. Really these are best conceptualized as just another brokerage account (less regulated – for now).
Coinbase
A trust can own the account! Just like a regular brokerage account it will require closing the individual account, opening a trust account, and transferring funds. Weirdly, they don't offer joint accounts – so married couples can't own jointly… increasing the need for password access or trust ownership. Does not offer beneficiary designations on an individual account. If the account is not owned by a trust, they will not honor an assignment of personal property. Like a brokerage account they will require Letters or Small Estate Affidavit.
Crypto.com
Does not allow joint accounts. Does not currently allow beneficiaries/transfers on death. Provides Death/Inheritance Services only to Private Membership accounts.
Kraken
Not trust accounts, can open an entity account in the trust name. Requires matching checking/savings account. Highly recommends putting public account ID in your will for executor convenience.
Robinhood
No trust accounts. No joint accounts. Can have a custodial account, or a warm wallet.
Manual Storage
Neither the private key, nor the public key, are stored on any device. They are handwritten on a piece of paper. This is the safest storage option, but high risk that paper is lost and there is no way to recover the funds. Only the MOST concerned clients will use this method, and we should plan accordingly to ensure this paper isn't lost. This might be the one scenario that a safe deposit box is appropriate.
Probate Considerations
Know Your Customer Regulations (KYC)
Custodial accounts are now required to monitor for unusual/high volume activities like regular banks and brokerage accounts. The entire alphabet soup cares about this (FinCEN, SEC, FINRA). As of February 2024 the custodial accounts must maintain customer identity information.
Anti-Money Laundering (AML)
AML requires the exchanges to flag unusual activity, pause the transaction and provide additional identity verification. This could mean that a PR/Trustee who is attempting to liquidate the account using just a password and username could trigger this flag. Causing the account to freeze, and even potentially some inquiry as to the criminality of the request.
What Does This All Mean?
If a client has crypto we should identify that earlier, and ask how they are holding it. Cold? Warm? Coinbase? Etc.
Cold Storage: Assignments of Personal Property, and that Personal Property Memorandum become far more important. Personal Property provisions in the trust itself really matter. Make sure we really want the personal property provisions to apply to crypto.
Warm Storage: Similar considerations as above, but now the device that the wallet is stored on will matter.
Custodial Accounts: We should be having far more explicit conversations about the type of account they own, and how to coordinate it with the trust. Transfer to trust name if possible, if not possible, assignment of cryptocurrency. If they have significant wealth in a custodial account, consider rolling it into a cold or warm wallet for easier transfer of assets, but technically more complicated if someone doesn't understand how to do it.
Incapacity planning: Consider adding a co-signer to Coinbase Vaults to require signature authorization from both the owner and trusted individual before transferring. Depending on client's capacity for complexity: consider a crypto LLC. Most custodial accounts are easier to use with an LLC versus a trust.
We specialize in complex digital asset estate planning and can help you navigate the technical and legal challenges of protecting your cryptocurrency and online accounts. Contact us to learn more about how we can help.