How to Include Cryptocurrency in Your Estate Plan


Cryptocurrencies, such as Bitcoin and Dogecoin, are increasing in prominence in the investment portfolios of many. They are also used for transactions. These assets can add value to an estate, sometimes enough to turn a small estate into a high-net-worth estate.

Due to the confusion of rules around cryptocurrencies, as well as lack of regulation, an estate owner and beneficiaries might not be aware of the value their estate has due to the cryptocurrencies they have. Because there are so many issues unique to cryptocurrency, including how they are stored and traded, older estate planning laws can impact cryptocurrencies or fall short in their inclusivity of them in a variety of ways. This can make estate planning for these complex digital assets more complicated.

If you have cryptocurrency and want to ensure your beneficiaries receive what you intend after you die, it is important to understand what cryptocurrency is and how it is stored. And then how to include any cryptocurrencies you own in your estate plan. This is what you need to know.

What is cryptocurrency?

Cryptocurrency is a type of payment. Different from other currencies, they can circulate without being backed by a government or bank.

Through a process called mining, which is computer-generated, cryptocurrencies are created through cryptography or encryption techniques that give those who possess cryptocurrencies the ability to use them securely. This can help prevent counterfeiting or access to cryptocurrency.

Similar to other currencies, cryptocurrencies can be bought or sold in exchange for goods and services. However, cryptocurrencies themselves are often bought, sold, and traded.

Is cryptocurrency an asset or currency?

Cryptocurrency, contrary to its name, is an asset, not a currency. Specifically, it is a decentralized digital asset that is spread through computers and exists beyond government or banking authorities.

Because cryptocurrency is not backed by a centralized authority, it is not a currency. It is an asset that functions similarly to currency, with its primary advantage being that it is cheaper and faster to make money transfers using a decentralized system. The primary disadvantage of cryptocurrency is its volatility, meaning its value experiences extreme fluctuations. This can make assessing its value harder for estate planning purposes.

How can you make cryptocurrency a part of your estate plan?

If you own cryptocurrency, it is important your estate’s beneficiaries know what you have and how to access it. Because of its decentralized nature, cryptocurrency can be lost easily. Here are a few ways to make cryptocurrency part of your estate plan and prevent this from happening.

Include cryptocurrency in your will.

The first step to making cryptocurrency part of your estate plan is the simplest but needs to be stated nonetheless: include cryptocurrency in your will. If an asset is not listed specifically in your will, then it may fall into the residue, or remainder, of your estate, meaning it could be unaccounted for.

For conventional pieces of property, this does not pose as much of an issue, as concrete objects can be seen. Cryptocurrency, however, would be difficult to find if your beneficiaries do not know how to access it, let alone know that you possess it.

Describe your digital wallets in your will.

Cryptocurrency is stored in a digital wallet, which functions as a bank account for your cryptocurrency. Your beneficiaries need to be able to access your cryptocurrency, which means you should also explain where to find your digital wallets and how to get into them.

There are many different types of digital wallets, as well as trading platforms for cryptocurrency, so you need to be clear with your beneficiaries where to find each asset. For instance, there is a distinction between hot wallets and cold wallets. Hot wallets include desktop, mobile, and hybrid wallets. Cold wallets are hardware and paper wallets.

If your wallet is a hot wallet, for example, or otherwise requires a particular device for access, be sure to include the necessary device in your will. By doing so, you can consolidate your digital wallets, making it easier for your beneficiaries to find and access what they need.

List your passwords and pins in your will…sort of.

In order to access your digital wallet, your beneficiaries will need the necessary passwords and PINs. However, putting that information in your will can present a security issue: when filed for probate, your will becomes part of the public record, which could put you at risk of getting hacked.

Instead, you can opt to create a memorandum to your will. Referenced within your will but not part of the will itself, a memorandum is a separate document that does not usually become part of the public record. This affords you the privacy you need for sensitive content, such as passwords.

Because the memorandum is not part of your will, it can be updated as necessary. For instance, if you need to add, delete, or change passwords, as well as wallets and devices, you can do so at your convenience.

In your memorandum, you should include pertinent information, such as the following:

  • The number of digital wallets you own
  • What type of wallet each one is (hot or cold)
  • Any devices required for accessing wallets
  • Websites used for managing passwords or exchanging cryptocurrency
  • Any additional login information needed for each wallet

Be sure the executor of your will is able to access your memorandum. It should be kept with the will alongside other estate planning documents.

Provide directions about how to access and handle cryptocurrency.

While you might be familiar with cryptocurrencies, your beneficiaries might not be. Some people know nothing about cryptocurrencies at all. Given its complexity, it can take a while to get up to speed. It is equally important to keep up with changes and innovation in the industry.

To help facilitate your beneficiaries’ access to your cryptocurrency, be sure to include a detailed but straightforward guide that explains in lay terms how to access and handle cryptocurrency. Be painstakingly clear in your instructions. Assume that your beneficiaries know nothing about cryptocurrency; it is better to be too detailed than to not provide enough detail. Then, test your instructions to make sure that they are effective by letting someone or a few people you know read them.

You can include this guide in your password memorandum or in a new document. Again, be sure to keep all of your documents concerning cryptocurrency with the rest of your estate planning documents. If you include passwords and pins for cryptocurrency in your estate planning documents, it may be wise to secure these documents in a home safe, to prevent theft or accidental viewing. Just be sure that the executor of your will knows how to access the safe.

Create a trust for cryptocurrency.

An alternative to including your cryptocurrency in a will is to create a trust, preferably a revocable living trust. Because you would be the grantor of the trust, you would still be able to maintain your cryptocurrency during your lifetime. Then, once you die, your cryptocurrency would transfer to your chosen beneficiaries.

Your beneficiaries would still need access to your cryptocurrency’s private key. However, a revocable living trust can do a better job than a will to protect your privacy because a trust avoids the question of authority concerning who is able to access your digital wallet once you pass away.

Don’t leave the disposition of cryptocurrency to chance, and hire a Seattle estate planning lawyer today.

In many ways, the laws and regulations around cryptocurrency are very much like the Wild West. In addition to frequent changes, a lot is still not understood about cryptocurrency — about how it is exchanged, stored, and transferred upon death. Our knowledgeable Seattle estate planning lawyers can help.

The estate planning team in our Seattle office keeps abreast of breaking news and ongoing changes in cryptocurrency to ensure these complicated digital assets are and remain protected. Call us today.   


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