[Reviewed by: Attorney Name, Bar No. XXXXX — add reviewing attorney byline before publishing]
If you hold cryptocurrency, you may have already solved the hard part — buying it, securing it, maybe even growing it. Most people haven’t solved the easy-sounding part: making sure anyone can actually get to it after you die.
Why crypto breaks the traditional estate plan
A conventional estate plan assumes a bank, brokerage, or title company that your executor can contact with a death certificate and letters testamentary, after which the institution transfers the asset. Cryptocurrency doesn’t work that way. Whoever holds the private key or seed phrase is the asset’s owner, in a very literal sense — there’s no customer service line to call, no institution to compel access, and no password-reset option if the key is lost. If your executor doesn’t know an account exists, doesn’t have the private key, or can’t access a hardware wallet’s PIN, the asset isn’t just difficult to transfer — it can be permanently, irretrievably lost. Estate planning publications have increasingly flagged this as a rapidly growing category of “orphaned” assets, distinct from anything prior generations of estate planning had to account for (American Bar Association, “Digital Assets and Estate Planning”).
The law is trying to catch up
Most states have adopted some version of the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), a model law drafted by the Uniform Law Commission specifically to give executors and trustees a legal right to access a decedent’s digital assets — including cryptocurrency, online accounts, and cloud storage — when the estate plan authorizes it (Uniform Law Commission, official RUFADAA act text). Critically, RUFADAA generally requires that the account holder have affirmatively granted that access — either through a platform’s own “legacy contact” tool or through explicit language in a will, trust, or power of attorney. Without that authorization, a fiduciary’s legal right to demand access can be far weaker, and for a self-custodied crypto wallet with no platform intermediary at all, RUFADAA’s institutional-access framework doesn’t help much regardless — the private key is the only key.
Yes, the IRS cares too
Cryptocurrency isn’t a gray area for tax purposes. The IRS has treated virtual currency as property, not currency, since 2014 (IRS Notice 2014-21), a classification the agency continues to apply and has expanded on in more recent digital asset guidance (IRS: Digital Assets, official page). That property classification matters enormously at death: beneficiaries who inherit crypto generally receive a stepped-up basis to its fair market value on the date of death, which can significantly reduce capital gains tax if they later sell — but only if the estate can establish what was owned and its value at that date. An asset your executor doesn’t know exists can’t be reported, valued, or stepped up; it can just as easily become a tax problem as a family conflict if it surfaces years later.
What an actual plan looks like
A workable digital-asset estate plan typically separates two things that people often conflate: legal authorization (language in your will or trust naming a digital fiduciary and granting RUFADAA access) and practical access (a secure, updated method — not a sticky note, and not the will itself, which becomes a public record in probate — for your executor to actually locate wallets, exchange accounts, and keys). Solving only one of those two problems is a common and expensive mistake.
This post is for general informational purposes and is not legal advice or tax advice. Digital asset and estate laws vary by state and change frequently — consult a licensed estate planning attorney and a tax professional about your specific holdings.
Sources
- American Bar Association: Digital Assets and Estate Planning
- Uniform Law Commission: Revised Uniform Fiduciary Access to Digital Assets Act (official final act text)
- IRS Notice 2014-21: Virtual currency treated as property (official IRS guidance, PDF)
- IRS: Digital Assets (official IRS page, current guidance)
