A Guide to Cryptocurrency, Digital Accounts, and TUFADAA in Tennessee Estate Planning

What happens to your digital life when you are no longer there to manage it, and what counts as a digital asset in Tennessee? From family photographs stored in the cloud to social media accounts, cryptocurrency, and NFTs, an increasingly important part of what we own—and what we leave behind—exists digitally.

This article will show you how to secure your cryptocurrency, NFTs, and digital legacy under Tennessee law to ensure your family maintains access. We’ll explore the Tennessee Uniform Fiduciary Access to Digital Assets Act (TUFADAA), so you can gain the peace of mind that comes from knowing your digital wealth is protected and accessible to the people who matter most. TUFADAA gives a personal representative—such as an executor or administrator—a legal framework for requesting certain digital assets and account information after your death. But that does not mean your executor automatically gets unrestricted access to everything in your digital life.

Under Tennessee law, a digital asset is defined as any electronic record in which an individual has a right or interest.[i] This definition reaches far beyond cryptocurrency because an electronically stored item can potentially be a digital asset because the individual possesses some legally relevant right or interest in that electronic record.

TUFADAA also defines electronic broadly to encompass technology with electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.[ii]

• In practical terms, the definition is designed to reach electronic records across a wide range of technologies. Common examples of digital assets may include emails, text messages, digital currency, domain names, blogs, digital books, pictures, music, and social media accounts.

What does not count as a digital asset?

TUFADAA distinguishes between the digital record and the property or obligation that the record represents. Think of it this way: just because something can be viewed or managed online does not mean the underlying property itself is a digital asset.

• For example, your electronic bank statements and account records may be digital assets, but the money in your bank account does not become a digital asset simply because you use online banking. Similarly, an electronic record showing that money is owed may be a digital asset, but the debt itself generally is not.

Does TUFADAA Apply? A Quick Checklist

TUFADAA may apply when one or more of the following situations is present:

☐ You are acting under a will or power of attorney. This includes a fiduciary or agent authorized under a will or power of attorney. It does not matter whether the document was signed before, on, or after July 1, 2016.

☐ You are handling the estate of someone who has died. Applies to a personal representative—such as an executor or administrator—acting on behalf of a deceased person whether the person died before, on, or after July 1, 2016.

☐ You are involved in a conservatorship or guardianship proceeding. TUFADAA applies in conservatorship and guardianship proceedings, including proceedings that were already pending when the law took effect and those commenced before, on, or after July 1, 2016.

☐ You are serving as trustee of a trust. A trustee acting under a trust may fall within TUFADAA, regardless of whether the trust was created before, on, or after July 1, 2016.

☐ You are a custodian holding a Tennessee user’s digital assets. Applies to a custodian when the user currently lives in Tennessee or lived in Tennessee at the time of the user’s death. A “custodian” generally means a person or company that carries, maintains, processes, receives, or stores a user’s digital assets.

One Important Exception: is the digital asset your employer’s property that you use for work? If so, TUFADAA does not apply to that digital asset when it belongs to the employer and is used by the employee in the ordinary course of the employer’s business.

While the TUFADAA provides a legal roadmap for executors, cryptocurrency presents a unique technical barrier that a courtroom order simply cannot overcome. Blockchain technology doesn’t have a “help desk” or a central authority to call. If your private keys are lost, your digital wealth is effectively burned, regardless of what your Will says.

If you keep your assets on a centralized exchange like Coinbase, your heirs can often gain access by providing a death certificate and probate documents. With self-custodied cryptocurrency, however, your heirs will need a secure means of obtaining the information necessary to control the wallet. Depending on how the wallet is configured, that may include access to a hardware wallet, seed phrase, private keys, passwords, or other authentication information. Without an effective access plan, even a beneficiary who legally inherits the cryptocurrency may be unable to reach it.

Managing Private Keys and Seed Phrases Safely

A common concern for Tennessee residents is the public nature of probate. Once a Will is filed in a Tennessee court, it becomes a public record. For security reasons, consider keeping sensitive access information in a separate, securely stored record rather than putting it directly in the Will.

Tax Implications for Tennessee Heirs

Cryptocurrency inherited from a deceased owner will generally receive a new federal income-tax basis equal to its fair market value on the date of the owner’s death, subject to applicable exceptions and special valuation rules. This can significantly reduce the taxable gain when an heir later sells appreciated cryptocurrency.

For example, if Bitcoin purchased for $10,000 is worth $100,000 on the owner’s date of death and the beneficiary’s basis is $100,000, a later sale for $110,000 would generally produce $10,000 of gain—not $100,000.

However, this benefit requires meticulous record-keeping. Tax treatment can vary depending on the circumstances, so significant digital-asset holdings should be reviewed with appropriate tax and estate-planning professionals.

• Step 1: Inventory your digital world. Create a comprehensive list of every account you own. This includes email, social media, cloud storage, and crypto exchanges. Do not include passwords in this list; simply identify where the assets live.
• Step 2: Decide on the ultimate disposition. For each account, determine if it should be deleted, archived for sentimental reasons, or transferred to a beneficiary.
• Step 3: Choose the right person to handle your digital assets. Depending on your plan, that responsibility may fall to your personal representative, trustee, agent, or another appropriately designated person. If substantial cryptocurrency is involved, technical competence is an important consideration.
• Step 4: Create secure digital-asset instructions. Maintain a separate, private record explaining how the appropriate person can locate and access your digital assets. Keep sensitive information securely stored rather than placing passwords, private keys, or seed phrases directly in your Will.
• Step 5: Coordinate your legal documents. Review your Will, Trust, and Power of Attorney to ensure they appropriately address digital assets and electronic communications. Also review any legacy-contact or other online planning tools offered by your service providers, because directions made through certain online tools may take priority under Tennessee law.

Attempting to handle digital inheritance without professional guidance often leads to significant roadblocks in Tennessee probate courts. Many DIY templates use generic language that doesn’t trigger the specific powers granted by the Tennessee Uniform Fiduciary Access to Digital Assets Act. This creates a legal disconnect. At Hendrickson Law, we bridge this gap by combining technical precision with a calm, strategic approach that prioritizes your family’s security.

Our firm treats your family like our own. We understand that discussing “invisible” assets can feel overwhelming, especially when the technology moves faster than the law. You don’t have to navigate these technical and legal complexities alone. We’re here to help you bridge the gap between traditional law and the digital world.

Protect your digital legacy—schedule a free consultation with Hendrickson Law today

Next Steps: Schedule Your Consultation

The information provided in this article is for general educational purposes and is not specific legal advice. Every digital portfolio is different, and the laws surrounding blockchain technology continue to evolve. To ensure your plan meets the highest standards of accuracy, you should consult with a qualified attorney. If you’re ready to take the next step, contact Hendrickson Law, PLLC today to secure your digital legacy.

[i] “Digital asset” means an electronic record in which an individual has a right or interest. “Digital asset” does not include an underlying asset or liability unless the asset or liability is itself an electronic record. See Tenn. Code Ann. § 35-8-102.

[ii] “Electronic” means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities. See Tenn. Code Ann. § 35-8-102.