I've spent years helping high-net-worth individuals and international families with tax planning and wealth management. But when clients started asking about their crypto holdings, I noticed something troubling: almost none of them had a plan for what happens to their digital assets when they're gone.

This isn't just about taxes. It's about making sure the wealth you've built doesn't vanish into the blockchain forever.

Here's a reality that keeps me up at night: billions of dollars in cryptocurrency are permanently lost because owners died without leaving access instructions.

I recently spoke with an estate attorney who worked on a case where a family lost access to tens of millions of dollars in crypto. The deceased had the private keys memorized. He never wrote them down. He never told anyone. When he passed unexpectedly, that wealth — which could have supported his children and grandchildren — became permanently inaccessible.

Gone. Forever. On a blockchain that will exist for centuries, holding wealth that can never be touched.

This is the unique challenge of digital assets: your heirs don't just need to know the assets exist — they need the technical keys to access them.

If you own stocks, bonds, or real estate, the transfer process is straightforward. Your executor contacts the brokerage or files paperwork with the county. There are institutions, records, and legal processes designed to transfer ownership.

Crypto is different.

A will that says "I leave my Bitcoin to my daughter" is meaningless if your daughter can't access the wallet.

Before diving into solutions, let's address the tax landscape.

The federal estate tax exemption for 2025 is $13.99 million per individual ($27.98 million for married couples). But here's the critical deadline: this exemption is scheduled to drop to approximately $7 million on January 1, 2026 when the Tax Cuts and Jobs Act sunsets.

If your crypto holdings have appreciated significantly — and many early investors are sitting on massive gains — you could face a 40% federal estate tax on amounts above the exemption.

This creates urgency for two reasons:

Your family can't inherit what they don't know exists.

Create a comprehensive list that includes:

Important: Don't store private keys in your will. Wills become public documents during probate. Instead, reference that the information exists and where to find it.

This is where crypto estate planning gets technical — and where most people fail.

Keep crypto on a major exchange like Coinbase, Kraken, or Fidelity.

Pros:

Cons:

Store crypto in a hardware wallet (Ledger, Trezor) with detailed written instructions.

What to document:

Storage options for sensitive information:

A multi-sig wallet requires multiple private keys to authorize transactions. For example, a 2-of-3 setup means any two of three designated keyholders can access the funds.

Example setup:

If you pass away, your spouse and attorney can access funds together. No single person can steal the assets.

A revocable trust allows you to:

Critical language to include:

Without explicit digital asset language, your trustee may lack legal authority to access or manage your crypto.

If you don't want a trust, your will should:

Some exchanges allow direct beneficiary designations. Under RUFADAA (Revised Uniform Fiduciary Access to Digital Assets Act), adopted by most states:

Check your exchange settings. A beneficiary designation on Coinbase could override instructions in your will.

This is where I see families make costly mistakes.

Your executor or trustee needs to either:

I've seen cases where institutional trustees refused to accept responsibility for crypto assets because they lacked expertise. The family had to go to court to appoint a special trustee — months of delays and thousands in legal fees.

Questions to ask your potential fiduciary:

If your trustee is your 75-year-old aunt who's never used a smartphone, you need a backup plan.

Here's the good news: inherited crypto gets a step-up in cost basis.

If you had sold that Bitcoin during your lifetime, you'd owe capital gains tax on $95,000 of profit. By holding until death, that gain disappears.

This makes holding appreciated crypto until death a legitimate tax strategy — but only if your heirs can actually access it.

You can gift up to $19,000 per person per year (2025) without using your lifetime exemption. For larger gifts:

Warning: Unlike inherited assets, gifts retain your original cost basis. Your heir inherits your tax liability.

Since spot Bitcoin and Ethereum ETFs launched in 2024, there's now a simpler option: hold crypto exposure through ETFs like IBIT (iShares Bitcoin Trust) or FETH (Fidelity Ethereum Fund).

Benefits:

Tradeoff:

For clients who prioritize simplicity over self-custody, this solves most estate planning complications.

Most financial advice for crypto holders stops at "buy low, sell high." That's not financial planning — that's speculation.

True wealth planning means integrating your digital assets into your complete financial picture: tax optimization, asset protection, estate transfer, and family security. It means treating crypto like the real wealth it has become, not like a lottery ticket.

I started focusing on digital asset planning because I saw a gap. Crypto holders were getting trading tips from Twitter and tax advice from Reddit. What they weren't getting was serious, professional guidance on how to protect and transfer the wealth they'd built.

Your Bitcoin isn't just an investment. For many families, it's generational wealth. It deserves to be planned for accordingly.

Your crypto won't transfer itself. Without a plan, your family could lose access to everything you've built — not because of theft or fraud, but simply because they don't have the keys.

The technology that makes crypto secure is the same technology that makes it unforgiving. There's no "forgot password" link. No customer service to call. No court order that can unlock a wallet without the private key.

Plan now. Document everything. Make sure your wealth survives you.

This article is for informational purposes only and does not constitute tax, legal, or financial advice. Estate planning involves complex considerations unique to your situation. Consult qualified professionals for advice specific to your circumstances.

By Ran Chen, EA, CFP®