Non-Fungible Tokens and Estate Planning

Jeffrey S. Glaser

I am a member of American College of Trust and Estate Counsel (ACTEC), a national association of estate planning attorneys and law professors who are elected by peers based on reputation, skill, and contributions to the field. ACTEC publishes short podcasts that touch on estate planning issues. A recent podcast covered the new and emerging digital phenomenon of Non-Fungible Tokens, or #NFTs. You may have heard about NFTs - - earlier this year, Christie’s sold an NFT by an artist known as Beeple for over $69 million!  A few takeaways from the podcast:

• An NFT is data created on a blockchain, and can represent any digital file such as photos, videos, audios, artwork. Duplication of the data on the NFT is impossible.
• An NFT has no intrinsic value; it is simply a link to a specific item of intellectual property.
• The value of an NFT is its uniqueness as applied to the linked digital work and is a way to monetize the digital work. Its transferability and its scarcity are critical. 
• Some people see a future where NFTs will have other uses: authenticating physical items, as a means of securing transfer of real estate and other assets, storing a Will and other critical records.
• NFTs could have significant value, both real and sentimental. Given the unique characteristic, it is not unreasonable that family fights can erupt over inheriting an NFT.
• As with any other valuable asset, steps should be taken to protect and preserve an NFT.  Once lost, the NFT cannot be replaced.  Moreover, a record of cost basis should be maintained.

Don’t overlook NFTs as they become more ingrained in our culture as a means of verifying authenticity and ownership of assets.  If you are doing your own estate planning, include your NFTs with any memorialization of your digital assets, and maybe even on your balance sheet. If you’re an advisor, ask whether the client owns any NFTs, explore what the client’s intentions are with them, and perhaps identify planning opportunities. 


Jeffrey S. Glaser