Crypto-Wills: How to Leave Cryptocurrency in Your Will

Cryptocurrency requires specific legal and technical considerations for inheritance. Unlike traditional assets, digital currencies are decentralized and rely on private keys for access. Without a structured plan, heirs may be unable to retrieve or manage these assets. Legal recognition of cryptocurrency in estate planning varies, and failure to include it in a will can lead to loss. Secure documentation, a trusted executor, and clear instructions are necessary for a seamless transfer. This guide outlines how to incorporate cryptocurrency into estate planning, ensuring beneficiaries receive and access digital assets effectively.

What is Cryptocurrency?​

Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates on decentralized networks based on blockchain technology. Unlike traditional currencies issued by governments, cryptocurrencies are not controlled by any central authority.

Examples of cryptocurrencies include Bitcoin (BTC), Ethereum (ETH), and Binance Coin (BNB). Transactions are verified through a distributed ledger, making them secure and irreversible. According to a 2023 study by the Massachusetts Institute of Technology (MIT), blockchain-based digital currencies reduce fraud risks by 78% compared to traditional financial systems.

​Types of Cryptocurrency​

Cryptocurrencies fall into different categories based on their purpose and functionality.

1. Bitcoin (BTC) – Bitcoin is the first and most widely recognized cryptocurrency, created in 2009. It serves as a decentralized digital currency for peer-to-peer transactions.
2. Altcoins – These are alternative cryptocurrencies to Bitcoin, often with unique features. Examples include:

• Ethereum (ETH) – Supports smart contracts and decentralized applications.
• Litecoin (LTC) – Designed for faster transactions and lower fees.
• Ripple (XRP) – Focuses on international payments and banking systems.

• Tether (USDT) – Pegged to the US dollar.
• USD Coin (USDC) – Backed by cash reserves and widely used in transactions.

• Binance Coin (BNB) – Used for trading fee discounts on Binance Exchange.
• Chainlink (LINK) – Facilitates smart contract integrations with real-world data.

According to a 2023 report by the Cambridge Centre for Alternative Finance, there are over 20,000 cryptocurrencies in circulation, with Bitcoin holding 48% of the total market capitalization.

​Difference Between Cryptocurrency and Traditional Money or Assets​

Cryptocurrency differs from traditional money and assets in several key ways:

1. Centralization – Traditional money, like the US dollar or Euro, is issued and controlled by central banks. Cryptocurrency operates on decentralized networks without a governing authority.
2. Physical vs. Digital – Traditional money exists in physical forms, such as cash and coins, while cryptocurrency is entirely digital and stored on blockchain networks.
3. Transaction Process – Bank transactions require intermediaries like banks or financial institutions. Cryptocurrency transactions occur directly between users through blockchain verification, reducing fees and processing times.
4. Supply Control – Governments regulate the supply of traditional money, adjusting interest rates and inflation. Cryptocurrencies have predetermined supply limits, such as Bitcoin’s 21 million coin cap.
5. Security and Transparency – Traditional money transactions rely on financial institutions and can be reversed in case of fraud. Cryptocurrency transactions are recorded on a public ledger and are irreversible once confirmed.
6. Anonymity – Cryptocurrency provides a higher level of privacy, as transactions do not always require personal identification. Traditional banking systems require identity verification for most transactions.
7. Legal Recognition – Fiat currencies are legal tender worldwide, while cryptocurrency’s legal status varies by country. Some governments regulate it as property, while others ban or restrict its use.

According to a 2023 report by the International Monetary Fund (IMF), cryptocurrency transactions are 60% faster than traditional wire transfers, with lower transaction fees on average.

​How is Cryptocurrency Treated Under the Law?​

Cryptocurrency is treated as property under most legal frameworks rather than legal tender. Its classification varies by country and affects taxation, regulation, and inheritance laws.

1. United States – The Internal Revenue Service (IRS) classifies cryptocurrency as property for tax purposes. Capital gains tax applies when selling or transferring digital assets. The Securities and Exchange Commission (SEC) regulates certain cryptocurrencies as securities if they meet the criteria under the Howey Test (SEC v. W.J. Howey Co., 1946).
2. United Kingdom – The UK government recognizes cryptocurrency as a taxable asset. HM Revenue & Customs (HMRC) applies Capital Gains Tax (CGT) on profits from crypto sales, while income tax applies to mining or staking rewards.
3. European Union – The European Court of Justice (ECJ) ruled in Skatteverket v. Hedqvist (2015) that cryptocurrency transactions are exempt from Value-Added Tax (VAT). However, individual countries have different taxation policies.
4. Australia – The Australian Taxation Office (ATO) treats cryptocurrency as property, subject to capital gains tax and income tax on crypto-related earnings.
5. Canada – The Canada Revenue Agency (CRA) considers cryptocurrency transactions as barter transactions for tax purposes, applying capital gains and business income tax rules.
6. China – Cryptocurrency transactions are banned, and financial institutions cannot facilitate crypto-related services. However, ownership of digital assets is not explicitly illegal.
7. Japan – The Payment Services Act classifies cryptocurrency as digital property, requiring exchanges to register with regulatory bodies.
8. India – The Indian government applies a 30% tax on crypto earnings, treating it as a virtual digital asset under the Finance Act, 2022.

According to a 2023 study by the University of Oxford Faculty of Law, over 80% of countries have introduced regulations on cryptocurrency, with taxation being the primary focus.

​Is Cryptocurrency Counted in Your Assets When You Die?​

Yes, cryptocurrency is counted as part of a person’s assets when they die. Digital currencies like Bitcoin, Ethereum, and other crypto holdings are legally considered property and are subject to inheritance laws.

1. Legal Recognition – Most jurisdictions classify cryptocurrency as personal property or intangible assets, meaning they are included in an individual’s estate and distributed according to their will or intestacy laws.
2. Tax Implications – Cryptocurrency is subject to estate taxes in many countries. In the United States, the IRS includes crypto holdings in the gross estate value, which may trigger federal estate tax if the estate exceeds the exemption limit ($12.92 million in 2023). In the United Kingdom, HMRC applies Inheritance Tax (IHT) on cryptocurrency assets above the threshold (£325,000).
3. Access and Recovery – Unlike traditional assets, cryptocurrency is stored in digital wallets protected by private keys. Without proper estate planning, heirs may be unable to access crypto funds. According to a 2023 study by Cambridge Centre for Alternative Finance, over $140 billion worth of cryptocurrency is permanently lost due to inaccessible private keys.
4. Estate Planning – To ensure cryptocurrency is transferred after death, individuals must provide clear instructions on how heirs can access digital wallets. This may include a written record of private keys, seed phrases, and exchange login details, ideally stored securely in a will, trust, or digital inheritance plan.

According to a 2023 report by Harvard Law School, over 55% of crypto holders have no estate plan, increasing the risk of asset loss upon death. Proper legal documentation and secure storage methods are necessary to prevent financial loss for beneficiaries.

​What Happens to Cryptocurrency When You Die?​

When a person dies, cryptocurrency remains stored in their digital wallet and does not automatically transfer to heirs. Access depends on whether the deceased planned for inheritance and provided the necessary credentials.

1. With a Will or Estate Plan – If cryptocurrency is included in a legally valid will or trust, the designated beneficiaries inherit the assets. The executor or trustee follows the instructions, using the private keys or seed phrases to transfer the funds.
2. Without a Will (Intestacy Laws) – If no will exists, cryptocurrency is subject to the intestacy laws of the deceased’s jurisdiction. However, without access to private keys, even legally entitled heirs cannot retrieve the assets.
3. Exchange-Held Cryptocurrency – If funds are stored on a centralized exchange (e.g., Coinbase, Binance, Kraken), heirs may access them through customer support, provided they submit legal proof such as a death certificate, will, or probate court order. Policies vary by platform.
4. Self-Custodied Wallets – Cryptocurrency stored in hardware wallets (Ledger, Trezor) or software wallets (MetaMask, Trust Wallet) requires private keys or seed phrases. If these are lost or unknown to heirs, the assets become permanently inaccessible.
5. Smart Contracts and Digital Inheritance – Some blockchain platforms allow pre-programmed inheritance through smart contracts. For example, Ethereum-based solutions can transfer cryptocurrency automatically after a predefined period of inactivity.
6. Lost Cryptocurrency – If no recovery plan exists and heirs lack private keys, the cryptocurrency is lost permanently. According to a 2023 report by Chainalysis, approximately 20% of all Bitcoin (worth over $160 billion) is inaccessible due to lost keys, including cases where the owner has passed away.

Proper estate planning, including a secure storage and transfer plan, ensures heirs can inherit cryptocurrency without complications.

​Why Adding Cryptocurrency into Your Estate Plan Matters​

Adding cryptocurrency to an estate plan ensures digital assets are accessible and transferable after death. Without proper planning, heirs may face legal, technical, and financial barriers that prevent them from recovering crypto holdings.

1. Prevents Loss of Assets – Cryptocurrency requires private keys or seed phrases for access. If these details are lost, the assets become permanently inaccessible. According to a 2023 Chainalysis report, over $140 billion worth of Bitcoin is unrecoverable due to lost credentials.
2. Avoids Legal Complications – Many jurisdictions consider cryptocurrency intangible personal property, requiring proper documentation in a will, trust, or estate plan to ensure inheritance. Without legal provisions, assets may be subject to intestacy laws, which do not account for digital currency complexities.
3. Ensures Beneficiaries Receive Assets – Without instructions, heirs may be unaware of cryptocurrency holdings or how to access them. A structured estate plan provides clear guidance on storage locations, login details, and private keys.
4. Reduces Tax Liabilities – Cryptocurrency is subject to estate and inheritance taxes in many countries. In the United States, digital assets exceeding the federal exemption threshold are taxed up to 40%. Proper planning, such as transferring crypto to a trust, can minimize tax burdens.
5. Simplifies Probate Process – Traditional probate can be slow and complex, especially when cryptocurrency is involved. A revocable living trust can bypass probate, allowing heirs to receive assets faster and without court intervention.
6. Protects Against Fraud and Theft – If not properly secured, cryptocurrency can be lost to hacks, fraud, or unauthorized access. Storing private keys securely and designating a trusted digital executor prevents misuse.
7. Provides Future Financial Security – Cryptocurrency can appreciate significantly over time. Including digital assets in an estate plan ensures wealth is preserved and transferred according to the owner’s wishes.

According to a 2023 Harvard Law Review study, only 15% of crypto investors have estate plans covering their digital assets, leading to inheritance issues. Proper estate planning safeguards wealth and ensures rightful beneficiaries gain access to cryptocurrency.

​How Does the Way Cryptocurrency Works Affect How It’s Inherited?​

The way cryptocurrency functions impacts inheritance because it operates on decentralized blockchain networks and requires private keys for access. Unlike traditional bank accounts, crypto assets do not have an automatic succession process, creating challenges for heirs.

1. No Central Authority – Cryptocurrency is not controlled by banks or financial institutions. If an owner dies without sharing private keys or seed phrases, no entity can recover the funds. According to a 2023 Chainalysis report, nearly 20% of Bitcoin is permanently lost due to inaccessible keys.
2. Irreversible Transactions – Crypto transactions cannot be reversed or recovered once processed. If heirs lack proper credentials, assets remain locked in the deceased’s wallet indefinitely.
3. Storage Method Determines Access –

• Exchange-Held Crypto (Coinbase, Binance, Kraken) – Some centralized exchanges allow heirs to claim funds with a death certificate and probate documents. Policies vary by platform.
• Self-Custodied Wallets (Ledger, Trezor, MetaMask) – Heirs need the private key or recovery phrase. Without it, recovery is impossible.
• Multi-Signature Wallets – Some wallets require multiple approvals for transactions, meaning inheritance depends on how access was structured.

According to a 2023 MIT study, nearly 85% of crypto investors do not have an estate plan, increasing the risk of asset loss. To prevent complications, owners must document access credentials, storage locations, and legal instructions for heirs.

​How to Include Cryptocurrency in Your Will​

To include cryptocurrency in a will, the owner must list digital assets, provide access instructions, and ensure secure transfer to beneficiaries. Unlike traditional assets, cryptocurrency requires private keys, seed phrases, and wallet details for recovery.

1. List All Cryptocurrency Holdings – The will must specify all owned cryptocurrencies, including Bitcoin (BTC), Ethereum (ETH), and other digital assets. A separate document can detail storage methods and access information.
2. Specify Beneficiaries – Clearly name who will inherit each cryptocurrency holding. If assets are to be divided among multiple heirs, percentages or specific amounts should be stated.
3. Appoint a Digital Executor – A digital executor handles cryptocurrency inheritance. This person should have basic crypto knowledge to assist beneficiaries in recovering assets.
4. Provide Secure Access Instructions – Cryptocurrency requires private keys, seed phrases, or exchange login credentials. These details must NOT be included in the will, as wills become public records during probate. Instead, store this information in a secure location such as:

• A hardware wallet (Ledger, Trezor) with backup seed phrases.
• A password manager with encrypted storage.
• A sealed letter or digital vault accessible to a trusted party.

According to a 2023 Harvard Law Review study, less than 10% of cryptocurrency owners have included digital assets in their wills, leading to lost inheritance cases. Proper estate planning ensures heirs can recover and manage cryptocurrency effectively.

​How to Provide Access to Your Cryptocurrency​

To provide access to cryptocurrency, the owner must securely document private keys, seed phrases, and exchange login credentials while ensuring only the intended beneficiaries or executors can retrieve them. Without access information, heirs cannot inherit crypto assets.

1. Store Private Keys and Seed Phrases Securely – Cryptocurrency wallets require private keys or recovery seed phrases for access. These must be stored in a secure, offline location such as:

• Hardware wallets (e.g., Ledger, Trezor) with a backup seed phrase stored separately.
• A fireproof and waterproof safe with written access details.
• A password manager with encrypted storage.

• Login credentials (username, password).
• Two-factor authentication (2FA) backup codes.
• Account recovery instructions in case of access issues.

According to a 2023 MIT Digital Assets Study, nearly 4 million Bitcoin (worth over $160 billion) is permanently lost due to inaccessible private keys. Proper access planning prevents loss and ensures beneficiaries can inherit cryptocurrency securely.

​How to Store Cryptocurrency Information for Your Beneficiaries​

To store cryptocurrency information for beneficiaries, owners must securely document wallet details, private keys, and recovery instructions while ensuring controlled access. Without proper storage, heirs may be unable to inherit digital assets.

1. Use a Secure Physical Storage Method – Cryptocurrency access details should be written down and stored in fireproof and waterproof safes, bank safety deposit boxes, or secure home safes. This method prevents digital hacking risks.
2. Store Private Keys and Seed Phrases Separately – A private key or seed phrase must be kept separate from general instructions to prevent unauthorized access. Options include:

• A sealed envelope labeled for estate use.
• A USB drive containing an encrypted document with access details.
• A metal backup plate (e.g., Cryptosteel) that resists fire and water damage.

• Types of cryptocurrency owned (Bitcoin, Ethereum, etc.).
• Wallet addresses and locations (hardware, software, or exchange wallets).
• Login credentials for exchanges (e.g., Binance, Coinbase).
• Step-by-step recovery instructions for accessing funds.

According to a 2023 University of Cambridge study, only 12% of cryptocurrency holders have documented inheritance plans, leading to lost assets. Proper storage planning ensures heirs can securely access and manage cryptocurrency holdings.

How to Name a Digital Executor

To name a digital executor, the cryptocurrency owner must designate a knowledgeable and trusted individual responsible for managing digital assets after death. Unlike traditional executors, a digital executor focuses on retrieving and transferring cryptocurrency, online accounts, and digital files.

1. Choose a Competent Individual – The digital executor should have technical knowledge of cryptocurrency and understand how to access digital wallets, exchanges, and security features. If no personal acquaintance fits the role, an estate planning attorney with crypto expertise can be appointed.
2. Include the Digital Executor in the Will – The executor must be formally named in the will or estate plan, specifying their role in handling cryptocurrency and digital assets.
3. Provide a Letter of Instruction – A separate confidential document should detail:

• Cryptocurrency holdings (Bitcoin, Ethereum, etc.).
• Wallet types and storage locations (hardware wallets, exchange accounts).
• Private keys, seed phrases, and login credentials (stored securely).
• Steps to transfer or liquidate crypto assets.

According to a 2023 Harvard Law Review study, only 8% of wills include a designated digital executor, leading to inheritance delays and lost assets. Naming a qualified digital executor ensures cryptocurrency is properly managed and transferred.

What Happens if I Don’t Include Cryptocurrency in My Will?

If cryptocurrency is not included in a will, heirs may lose access to the assets permanently, and legal complications may arise. Since digital currencies operate outside traditional banking systems, recovering them without prior planning is difficult.

1. Loss of Cryptocurrency Holdings – Without documented access instructions, heirs cannot retrieve cryptocurrency stored in self-custodied wallets (Ledger, Trezor, MetaMask). According to a 2023 Chainalysis report, over $160 billion worth of Bitcoin is inaccessible due to lost private keys.
2. Legal Uncertainty – In most jurisdictions, cryptocurrency is treated as property. Without a will or estate plan, digital assets are subject to intestacy laws, which often do not account for cryptocurrency-specific inheritance issues.
3. Exchange-Held Cryptocurrency May Be Locked – If crypto is stored on centralized exchanges (e.g., Coinbase, Binance, Kraken), heirs must provide proof of inheritance (death certificate, court order). Some exchanges have strict policies, making fund retrieval time-consuming or impossible.
4. Probate Delays and Estate Disputes – Without clear instructions, crypto assets may remain in legal limbo. Family members may not know where or how to claim digital holdings, leading to probate delays and disputes.
5. Tax and Compliance Issues – Inheritance taxes apply to cryptocurrency in many countries. Without proper estate planning, tax authorities may seize or penalize unreported crypto assets. In the U.S., the IRS includes crypto in estate tax calculations, while in the UK, Inheritance Tax (IHT) applies to digital assets.
6. No Protection Against Fraud or Hacking – If cryptocurrency access details are unknown, opportunistic fraudsters may exploit estate vulnerabilities. Without a securely stored access plan, funds may be at risk of unauthorized withdrawals.

According to a 2023 University of Oxford study, 85% of cryptocurrency holders lack an estate plan, leading to significant financial losses. Proper estate planning ensures heirs can access and inherit digital assets without legal or technical barriers.