Houston Estate Planning and Elder Law Attorney Blog
Smartphones, hard drives, and cloud accounts store value far beyond family photos. Cryptocurrency wallets can hold six-figure sums, and NFTs sometimes trade for more than downtown condos. Digital art also carries copyright rights that affect future royalties. Unlike traditional property, these assets are invisible during a walk-through of the deceased’s home, so executors must dig for passwords and seed phrases to even know what exists. Ignoring the virtual side of an estate risks losing wealth permanently, because blockchain transactions are irreversible and private keys cannot be recreated once lost.
Locating and Valuing Crypto Holdings
The first hurdle is discovery—finding exchanges, mobile apps, or hardware wallets linked to the decedent. Bank statements may reveal ACH transfers to Coinbase or Kraken, and email accounts often store trade confirmations. After locating the coins, executors must record fair-market value on the date of death for tax basis purposes. That figure can fluctuate wildly in a single day, so using reputable price aggregators or blockchain-explorer snapshots is essential. Finally, the executor moves the assets into an estate-controlled wallet to prevent hacks or unauthorized withdrawals while probate progresses.
NFTs and Intellectual Property Concerns in Probate
Non-fungible tokens combine proof of ownership with potential copyright obligations. Some NFTs include licensing terms that limit commercial use, while others grant broad rights to reproduce the underlying artwork. Executors need to read the smart-contract metadata and any off-chain agreements to understand ongoing duties. If the artwork generates revenue—think virtual gallery showings or merchandise deals—those royalties become estate income requiring accurate accounting. When the NFT itself appreciates, capital gains tax applies upon sale, so a correct stepped-up basis is critical. Handling these complexities without legal help can expose the estate to breach-of-fiduciary-duty claims.
Security and Access: Keys, Wallets, and Exchanges
Crypto security hinges on private keys, and losing them means losing the asset forever. Executors should create an offline, encrypted vault or use a reputable multi-sig wallet requiring consensus from two trusted parties. When assets sit on centralized exchanges, the executor must provide death certificates and letters testamentary before support teams will transfer control. Two-factor authentication tokens or SMS verifications tied to the decedent’s phone present additional obstacles that a well-prepared executor can anticipate. Taking these steps early shields beneficiaries from the heartbreak of unrecoverable digital wealth.
Strategies an Austin Probate Lawyer Uses to Streamline Digital Asset Transfers
An Austin probate lawyer drafts access authorization clauses consistent with the federal Stored Communications Act and Texas’s adoption of RUFADAA. They work with cybersecurity professionals to inventory wallets, verify balances, and set up estate accounts on major exchanges. The attorney also guides appraisals, choosing valuation methods that satisfy IRS scrutiny while reflecting volatile market conditions. Clear, legally sound procedures reduce disputes among heirs who may be skeptical of intangible property. By building a documented chain of custody from discovery to distribution, the lawyer protects you from allegations of mismanagement and maximizes the value transferred to loved ones. To learn more, call McCulloch & Miller today to schedule a no-obligation consultation.