Cryptocurrency is no longer a novelty—it’s an investment with real financial value that should be treated like any other part of your estate. Including digital assets such as Bitcoin, Ethereum, or NFTs in your estate plan ensures that your loved ones can access, manage, and benefit from them when you’re gone. Without proper planning, your crypto could become permanently inaccessible. Understanding the benefits of cryptocurrency estate planning can help protect both your assets and your family’s financial future.
Why Include Cryptocurrency in Your Estate Plan
Unlike bank accounts or real estate, cryptocurrency is stored in digital wallets protected by private keys. If those keys are lost, the assets are gone forever. Including cryptocurrency in your estate plan allows you to:
- Name trusted beneficiaries for your digital assets
- Provide instructions for accessing wallets and keys
- Prevent permanent loss of assets due to forgotten credentials
- Protect your crypto from hackers or unauthorized users
In California, the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) helps ensure personal executors and trustees can manage your digital property legally after your death. However, your estate plan must clearly identify these assets and specify who has authority to handle them.
How to Protect Your Digital Assets
Effective cryptocurrency estate planning requires clear, detailed documentation. Consider these key steps:
- Maintain an updated inventory. Keep a record of all wallets, accounts, and types of cryptocurrency you hold.
- Secure your access information. Store private keys, recovery phrases, and passwords in a safe but accessible location, such as a digital vault or encrypted file.
- Designate a digital executor. Choose someone tech-savvy who understands how to manage and transfer cryptocurrency.
- Provide legal authorization. Your estate planning documents should grant your personal representative or trustee explicit permission to access your digital accounts.
These steps ensure your loved ones can recover and manage your assets without unnecessary delay or conflict.
Using Trusts to Manage Cryptocurrency
Trusts offer important benefits for cryptocurrency estate planning, particularly when you want to maintain privacy and avoid probate. By placing your cryptocurrency into a trust, you can:
- Prevent your assets from being frozen or lost
- Keep digital holdings out of public probate court records
- Protect against theft and scams targeting heirs
- Reduce the tax impact of rapidly appreciating assets
High-value crypto portfolios may also benefit from irrevocable trusts, which remove the assets from your taxable estate. For 2025, the federal estate tax exemption is $13.99 million for individuals and $27.98 million for married couples. Strategic timing, such as transferring assets during market dips, can help minimize potential tax exposure.
Keep in mind that cryptocurrencies gifted or transferred to others may be subject to federal gift tax rules, which apply to transfers exceeding $19,000 per person in 2025.
Common Mistakes to Avoid
Even experienced investors can overlook the legal and technical aspects of passing down cryptocurrency. Some of the most common missteps include:
- Failing to mention crypto holdings in your estate plan
- Keeping wallet credentials only in your memory or personal devices
- Naming personal representatives who lack digital literacy
- Assuming crypto exchanges will automatically grant access to heirs
A properly structured plan ensures your heirs receive the full benefit of your investments without facing unnecessary obstacles.
Protecting Your Crypto Legacy with Professional Guidance
Digital assets are redefining what an estate includes, and we’re here to help you keep up. We help Californians incorporate cryptocurrency and other digital property into comprehensive estate plans that safeguard access, privacy, and value.
Contact OC Wills & Trust Attorneys today to learn how we can help you protect your cryptocurrency as part of your estate plan and ensure your assets are handled according to your wishes.
Frequently Asked Questions About Cryptocurrency Estate Planning
Why should I include cryptocurrency in my estate plan?
You should include cryptocurrency in your estate plan to ensure your loved ones can access and inherit your digital assets. Without documented wallet keys or access instructions, your crypto could be permanently lost. Estate planning protects your investments and prevents loss due to inaccessibility.
How do I protect my cryptocurrency after I pass away?
The best way to protect cryptocurrency after death is to document your holdings, store private keys securely, and name a trusted executor or trustee with clear legal authorization to manage your digital assets. A trust can also add extra protection and privacy.
What tax issues should I consider with cryptocurrency estate planning?
Cryptocurrency is treated as property for federal tax purposes. If your digital assets appreciate in value, they may increase your estate’s taxable amount. Using trusts or making strategic lifetime gifts can help reduce potential estate or gift tax exposure.
