New York City Estate Planning Attorney Natalia Sishodia Discusses Protecting Digital Assets After Death

New York City estate planning attorney Natalia Sishodia (https://sishodia.com/how-to-protect-digital-assets-after-death/), of Sishodia PLLC, highlights the importance of safeguarding digital assets after death to prevent loss, legal complications, and financial burdens for beneficiaries. As digital assets become an increasingly significant part of personal and financial portfolios, estate planning must evolve to account for these virtual holdings.

High-net-worth individuals, particularly those with cryptocurrency investments, face unique challenges when securing their digital wealth. A well-documented estate plan helps ensure that assets such as online banking accounts, digital investments, and even loyalty rewards programs are properly transferred according to the owner's wishes. New York City estate planning attorney Natalia Sishodia emphasizes that without proactive planning, these assets may become inaccessible, lost, or even subject to legal disputes.

The legal framework surrounding digital estate planning is complex, with both state and federal laws restricting third-party access to online accounts. To avoid complications, New York City estate planning attorney Natalia Sishodia advises individuals to work with a legal professional who understands the evolving landscape. Sishodia explains, "Protecting your digital wealth starts with proactive planning," stressing the importance of clear instructions and legally recognized estate planning tools.

Estate planning for digital assets presents challenges that differ from those associated with traditional financial holdings. Unlike real estate, stocks, and other tangible assets, digital properties do not automatically transfer to heirs upon death. Many online service providers include restrictive terms of service agreements that prevent unauthorized access, even by fiduciaries acting on behalf of the deceased. Natalia Sishodia explains that a lack of proper planning can make it difficult for loved ones to locate or manage financial accounts, contracts, and digital property.

Digital estate planning includes a wide range of assets. These may include web hosting and email accounts, credit card and travel rewards programs, online banking and investment accounts, customer databases, and cryptocurrencies. Without a structured estate plan, these assets may be lost forever.

New York has taken steps to address the challenges of digital asset management through legal reforms. In 2016, the state adopted the Revised Uniform Fiduciary Access to Digital Assets Act, known as RUFADAA. Under this law, individuals can appoint fiduciaries with the right to access their digital accounts through wills, trusts, and powers of attorney. The legislation allows a designated executor or trustee to manage digital assets without violating privacy policies or federal regulations.

New York City estate planning attorney Natalia Sishodia advises clients to use service provider tools such as Google's Inactive Account Manager or Facebook's Legacy Contact. These tools allow users to specify who may handle their accounts after death. In cases where such options are unavailable, legally documented estate planning is necessary to facilitate the smooth transition of digital assets.

One of the most important aspects of RUFADAA is its ability to override restrictive terms of service agreements that might otherwise block access to online accounts. However, these legal protections only apply if individuals take proactive steps to grant fiduciary access. Sishodia stresses that including digital assets in an estate plan is essential to avoiding complications and providing heirs access to necessary financial and personal records.

Tax considerations also play a critical role in estate planning for digital assets, particularly for those who hold cryptocurrency or other online investments. Digital assets are subject to capital gains and estate taxes, which can significantly impact the value of an estate. Cryptocurrency, for example, is classified as property for tax purposes, meaning that profits from its sale or exchange are subject to capital gains tax.

For long-term holdings, gains are taxed at different rates depending on income levels, while short-term gains are taxed as ordinary income. New York follows federal tax guidelines but imposes additional state income taxes, which can be as high as 10.9% for high-income individuals. In addition to capital gains taxes, estates valued above New York's exemption threshold of $7.16 million in 2025 are subject to the state's estate tax. Due to the "estate tax cliff," estates exceeding this threshold by just 5% lose the exemption entirely and may face tax rates as high as 16%. Federal estate taxes apply to estates exceeding $13.99 million in 2025, requiring a detailed valuation of all assets, including cryptocurrencies.

Natalia Sishodia advises clients to explore estate planning strategies that minimize tax burdens and facilitate a seamless transition of digital wealth. Some strategies include gifting digital assets during one's lifetime to reduce taxable estate value or transferring assets into an irrevocable trust, which removes them from the taxable estate while maintaining oversight through designated trustees. Another option is investing in qualified opportunity zones, which can provide tax incentives for reinvested cryptocurrency gains.

Despite legal advancements, estate planning for digital assets remains a rapidly evolving field. Many individuals assume that their online wealth will transfer automatically to beneficiaries, but in reality, accessing and managing these assets requires careful planning. One effective method for securing digital wealth is cold storage, which involves storing cryptocurrency keys offline to protect them from cyber threats. Estate planning attorney Natalia Sishodia explains that properly structured estate plans can incorporate cold storage solutions to allow fiduciaries to retrieve access credentials without exposing them to unnecessary risk.

About Sishodia PLLC:

Sishodia PLLC is a New York City-based law firm dedicated to providing estate planning solutions for individuals and families. Led by Natalia Sishodia, the firm helps clients manage the complex aspects of estate law, further ensuring that their digital and traditional assets are protected and transferred in accordance with their wishes.

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Email: natalia@sishodialaw.com

Website: https://sishodia.com/

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