Estate planning for investment portfolios has always been somewhat complicated, but in the era of digital currencies, it has gotten significantly more so. It used to be that investors could write out a will and include items like stock certificates in a safe deposit box for their next of kin and that the transfer of investments would move smoothly. Now, there are new laws and protocols which must be observed if an investor wants to be sure that his or her digital assets are safely and securely transferred when the time comes.

Below, we'll explore some of the ins and outs of estate planning when it comes to digital assets. In some cases, the rules haven't changed. In others, there are new considerations to keep in mind that traditional investors may not yet be aware of.

Knowledge and Access are Key

Perhaps the single most important consideration when estate planning with cryptocurrencies is ensuring that the executor of your estate knows which assets you hold and how you can access them. suggests that the accessing of these assets can be the most difficult component in the entire process.

Cryptocurrency investors are notoriously fickle about how they store their digital keys and access codes. This is unsurprising, as these passwords allow for full access to digital wallets. On the other hand, be too tricky about things and you run the risk of losing the code. If this happens, there is often no way to recover access, and a wallet full of cryptocurrency tokens can go permanently unused. Cryptoasset inheritance planning expert Pam Morgan recommends an old-fashioned method: "I'm a big fan of paper and pen" for listing cryptocurrency keys for executors and heirs. Morgan adds that "it's most important to explain [to them] the kinds of assets, key locations, and access controls you're using for security. Access controls are things like PINs, passphrases, multisignature or timelock requirements."

The Legal Side of Things

Even with a clear explanation of where your digital assets are and how your heirs can access them, though, you may be setting your next of kin up for legal trouble if you don't take deliberate action. Ideally, investors will consider both the technical accessibility as well as the legal ramifications. Without considering the legal issues associated with estate planning, investors could be setting up their heirs for lengthy lawsuits. On the other hand, Morgan acknowledges, "without [crypto] keys, a court order is impotent."

Morgan recommends making at least two copies of records of assets and storing them in separate locations. These lists may be worth updating as often as once per week, particularly for highly active cryptocurrency investors. On the other hand, Chicago attorney Michael Goldberg, another expert on cryptocurrency estate planning, suggests that traders who are only active infrequently can probably get away with fewer lists of assets. "I have a pretty wide variety [of tokens]," he explains, adding that he recommends creating and updating a list once per year. From a legal perspective, the majority of states have enacted laws in recent years allowing executors to manage digital assets in a similar way to how they might manage traditional assets. This could help as executors feel the urge to sell off cryptocurrency assets quickly; this can prevent them from feeling the backlash from heirs if the virtual currencies drop in value in the meantime. Still, while the law is hurrying to catch up with crypto estate planning, there is room to grow nonetheless. National College of Probate Judges President Tamara Curry suggests that jurists will have to become better versed in cryptocurrencies. "Courts are going to become more inundated. Judges are going to have to be educated and made aware of what to look for when these assets come before them," Curry stated.