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  • Cindy Wysocki

The Fundamentals of Estate Planning with Crypto Assets

Cryptocurrency's appeal lies in decentralization, but its unregulated nature means challenges in transferring assets after death or disability. Plan for access to prevent permanent loss.

Why Estate Planning for Crypto Assets is Crucial 

Cryptocurrency is a decentralized and unregulated form of currency, which is a major part of its appeal. However, this lack of regulation poses significant challenges if the owner dies or becomes disabled. Unlike traditional financial assets, there is no help desk or financial administrator to assist with the transfer and management of crypto assets upon your disability or death. 

The saying, "Not my key; not my coin" highlights the importance of access. Without a succession plan, your crypto assets could be lost forever. If you do not have the keys to the cryptocurrency, you cannot access it. Therefore, it's essential to ensure that someone else can access your crypto assets in the event of your death or incapacity. 

A Brief History of Crypto Assets 

Since the launch of Bitcoin in 2009, cryptocurrencies have grown in popularity despite their volatility and incidents like the 2022 FTX collapse. As of October 2023, there are an estimated 100 million cryptocurrency wallets globally, holding assets valued at approximately $1.27 trillion. This growth underscores the importance of proper estate planning for crypto assets. 


Understanding Crypto Assets 

Crypto assets are digital representations of value that use distributed ledger technology (DLT), such as blockchain, to securely conduct and record transactions without a central authority. Each transaction on a blockchain is verified through a consensus protocol and is publicly accessible, ensuring transparency. Popular crypto assets include cryptocurrencies like Bitcoin and unique digital assets like non-fungible tokens (NFTs). 


Key Considerations for Estate Planning with Crypto Assets 

The legal treatment of crypto assets is still evolving, and many laws related to cryptocurrency and estate planning have yet to be tested in court. Therefore, it's crucial to stay updated on legal changes and adjust your planning accordingly. 


Unlike traditional financial assets, crypto assets generally cannot currently be jointly owned or have beneficiary designations. Instead, they can be referenced in Schedule A of a Revocable Living Trust (RLT) or included in a personal property memorandum in a will. If a third-party custodian allows, you may also be able to transfer your crypto account into your RLT. 


When including crypto assets in your estate, it is vital to clearly and securely document how to access them. This includes creating detailed guides and secure memoranda for passwords, keys, PINs, and other access-related information. Information to document includes the type of wallet (paper, hardware, software), the network (e.g., Bitcoin or Ethereum), and purchase dates for tax purposes. Also, note where private keys are stored and whether you use custodial or self-custody wallets. 


To ensure the proper administration of your estate, store your access guide in a secure place, such as a safe deposit box, or consider hiring a licensed and insured third-party custodian. Never include private keys in public documents, such as wills. When selecting beneficiaries, consider their familiarity with crypto assets to decide between direct inheritance or liquidation. 


Provide special instructions for your fiduciary handling the crypto assets, considering the unique challenges of managing volatile assets. Fiduciaries are supposed to keep things safe, which means generally they are not supposed to be holding volatile assets. If you want your fiduciary to hold and manage crypto assets, you may choose to opt out of the prudent investor rule with respect to such assets.  Many fiduciaries are not equipped to securely handle cryptocurrencies, so specific guidance is necessary to ensure your assets are managed according to your wishes. 


Crypto assets are treated as property for tax purposes and are subject to capital gains rules. Consider strategies like using volatility to your advantage by offsetting gains with losses or donating appreciated assets to charities. For example, you can gift cryptocurrency when its value is low to reduce estate taxes, or donate it when the value is high for a full fair market value tax deduction. The charity can then sell the cryptocurrency without incurring taxes and use the proceeds for their causes. 



Cryptocurrency offers unique benefits but requires meticulous estate planning to ensure the secure management of assets during disability and transfer of assets to heirs. As technology and regulations continue to evolve, staying informed and prepared will help in the effective management of your crypto assets. For personalized advice on handling crypto assets in your estate plan, contact our experienced team. 

The information provided on this blog is for general informational purposes only and does not constitute legal advice. While we strive to ensure that the content is accurate and up-to-date as of the time of the writing, we make no guarantees regarding the completeness, accuracy, or reliability of any information contained herein or linked to from this blog. It is not intended, and should not be used, as a substitute for taking legal advice in any specific situation.

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