Over the years, I’ve helped countless clients in Atlanta, Georgia, and elsewhere, develop comprehensive estate plans, and today I want to focus on an increasingly significant topic: estate planning for cryptocurrency and other digital assets.

The rise of crypto has changed the financial landscape, making it crucial for anyone holding these assets to ensure they’re properly accounted for in their estate plan. Unlike traditional holdings, crypto is decentralized, often anonymous, and tied to sensitive private keys that can be lost forever if mishandled. Let’s explore why estate planning for crypto is vital, common challenges, and the steps you can take to protect yourself and your loved ones.

 

1. Why Crypto Deserves Special Attention

Cryptocurrency has moved from a niche interest to a widely recognized asset class, with potentially substantial financial worth. Many people hold Bitcoin, Ethereum, and various other tokens, sometimes representing a sizable share of their total wealth. Yet, a surprising number of crypto investors neglect to include these holdings in their estate plans. Why?

 

Decentralization
Unlike a bank or brokerage account, there’s usually no centralized entity controlling crypto assets. If heirs lose access to a wallet’s private key, those funds could be gone for good.

 

Rapidly Evolving Laws
While Georgia has made strides to address digital assets in estate planning, crypto regulations can shift quickly at both state and federal levels. An estate plan created five years ago might be outdated today if it never addressed crypto.

 

Volatility
Crypto markets can skyrocket or plunge rapidly. Your plan should account for how price fluctuations might affect distribution, especially if large swings in value occur near the time of your passing.

 

 

Ensuring your estate plan addresses these unique characteristics is essential. If you don’t, your loved ones may face legal and technical hurdles that can result in lost assets.

 

2. Crypto Basics for Estate Planning Purposes

 

Private Keys and Wallets
At the heart of any crypto asset is the private key—a unique code granting control over the funds. Many users store these keys in “hot” wallets (online or on a phone) or “cold” hardware wallets (offline). The principle is simple: if someone has the private key, they control the crypto.

 

Exchanges and Custodians
Some investors rely on exchanges or custodians to hold their crypto. This arrangement can simplify estate administration if those entities have user-friendly processes for transferring accounts upon death. However, you still need to note login credentials and instructions for your executor.

 

NFTs and Other Tokens
Non-fungible tokens (NFTs) can represent digital art, collectibles, music rights, or even metaverse real estate. Despite their variety, the estate planning concept is the same: if you don’t properly record how to access them, they may become inaccessible forever.

 

3. Common Pitfalls in Crypto Estate Planning

1. Lost Keys
   Many crypto holders know someone who misplaced a seed phrase or forgot a password, losing access to their funds. Without a backup plan, this can become permanent.
2. Outdated Documents
   Language that vaguely references “digital assets” but fails to name specific tokens or storage methods may cause confusion for executors and beneficiaries.
3. Inexperienced Heirs
   Crypto can be daunting to those unfamiliar with private keys, exchanges, or wallet security. Lack of knowledge increases the risk of mistakes that might erase assets.
4. Failure to Update for New Laws
   Because legislation is evolving, an older estate plan might not accurately reflect current requirements, potentially exposing your heirs to tax complications or legal disputes.

 

4. Key Elements of a Strong Crypto Estate Plan

1. Inventory of Assets
   Draft a thorough list of your crypto holdings, including coins, tokens, and NFTs, along with wallet information and instructions. This inventory should be updated regularly as crypto portfolios can change quickly.
2. Secure Private Key Storage
   Whether you store private keys in a password manager, a fireproof safe, or a specialized hardware device, ensure your executor can locate and use them without compromising security.
3. Detailed Instructions
   Specify in your will or trust how you want the assets distributed. Will beneficiaries receive the tokens directly, or should the executor liquidate them first?
4. Tax Planning
   As property in the eyes of the IRS, crypto can incur capital gains or losses when sold. Larger estates may also face federal estate taxes. An informed approach to gifting or trust creation can help mitigate these burdens.
5. Durable Power of Attorney
   If you become incapacitated, a designated agent should be able to manage your crypto. Standard documents may not cover digital assets, so it’s vital to include customized language for your private keys and accounts.

 

5. Step-by-Step: Incorporating Crypto into Your Estate Plan

Step 1: Catalog Your Holdings

List out each type of cryptocurrency or token you own, which wallets or exchanges they’re in, and the approximate dollar values if possible. This consolidated inventory will guide the drafting process.

 

Step 2: Determine Your Distribution Method

Do you want to pass along the coins themselves, allowing your heirs to keep investing? Or would you prefer the executor to sell them and distribute the proceeds? This decision depends on your heirs’ familiarity with crypto and your comfort with future market volatility.

 

Step 3: Update (or Create) Your Will or Trust

Ensure your documents explicitly include your crypto holdings. Trusts may be especially advantageous for privacy and can allow faster transfer of control than a will alone. If your estate plan hasn’t been updated in years, don’t assume a generic “digital assets” clause will suffice.

 

Step 4: Address Tax Implications

Consult a professional who understands crypto taxation. If your estate is large enough, you may need strategies to minimize estate taxes or capital gains taxes on any eventual sale of the assets.

 

Step 5: Powers of Attorney for Digital Assets

Draft a specific power of attorney that covers your crypto. If you’re incapacitated, your agent needs clear authority to manage, sell, or move your crypto to protect your interests.

 

Step 6: Secure Your Plan’s Execution

Confirm your executor knows how to access your keys and can interpret your instructions. You might store seed phrases in multiple secure locations or use a multi-signature wallet that requires more than one key.

 

Step 7: Communicate with Key Parties

While you don’t have to disclose sensitive details like private keys, let trusted individuals or your executor know where the keys are stored. This prevents confusion or frantic searches later.

 

6. The CRYPTO TRUST: Trusts as a Powerful Tool

A well-structured trust can offer several advantages for crypto assets:

• Privacy: Probate proceedings make wills public record, whereas trusts generally stay private.
• Continuity: Trusts don’t require probate, allowing swift access and management of your crypto without waiting for court approvals.
• Flexibility: You can add or remove cryptocurrencies as your portfolio evolves.
• Tax Benefits: Certain trust structures may reduce estate tax liabilities, though you must balance these benefits against giving up some control over the assets.

If privacy and efficient transfers matter to you, a trust-centered estate plan could be ideal. However, setting up a trust for crypto involves additional work, such as legally transferring the assets into the trust and ensuring the trustee can manage them as intended.

 

Using one or more trusts for cryptocurrency can offer many of the same benefits as using trusts for other assets, including probate avoidance, state and federal income tax planning, and estate tax planning. While it’s true that control over crypto hinges on private keys and seed phrases, it’s equally important to maintain precise, regularly updated instructions so that a successor can access the crypto at the right time. In my experience, directly holding private keys in a trust works best for relatively small amounts of cryptocurrency.

 

By contrast, placing crypto in a trust via a qualified custodian (e.g., Anchorage Digital or Unchained Capital) combines the usual advantages of a trust with a streamlined private key succession process—ensuring that only the correct individuals gain access when necessary.

 

For example, if a revocable living trust (RLT) owns the custodial account, the trust’s terms will govern when and how a successor trustee can access the crypto. And if the trust is irrevocable for tax purposes, a multi-signature or MPC-based custodial account can limit any single party’s control while still allowing the client and named successors, acting as Investment Trust Advisors, to approve transactions (buying, selling, etc.) under the watch of independent signers. Overall, having a trust own the crypto—particularly through a reliable custodian—achieves key estate planning objectives while reducing the likelihood of loss or theft.

 

7. The Importance of Incapacity Planning

Estate planning isn’t only about what happens after death; it’s also about protecting you if you become unable to manage your affairs. A durable power of attorney (POA) gives a designated agent authority to make financial decisions on your behalf if you’re incapacitated.

 

Because crypto is so specialized, your POA must explicitly address digital assets, private keys, and encrypted accounts. If your agent can’t show valid authority to a crypto exchange or lacks the private key to a wallet, they’ll be powerless to safeguard those holdings. Without such authority, your family might need to pursue a court-ordered conservatorship—a time-consuming and expensive process—while your crypto values potentially fluctuate dramatically.

 

8. Tax Considerations in Georgia

Most crypto investors are aware of capital gains taxes at the federal level, but you should also consider estate taxes if your total assets exceed certain thresholds. Although Georgia currently does not impose a separate estate tax, laws can change. If you’re domiciled in multiple states or own property outside of Georgia, you could face additional complications.

 

Step-Up in Basis
When heirs inherit your crypto, they may receive a step-up in basis, adjusting the cost basis to the current market value at the time of your death. This can significantly reduce capital gains if they sell it later. However, if your estate is large enough for the federal estate tax to come into play, proper planning is vital to minimize the tax burden.

 

Gifting Crypto
You may opt to gift some crypto assets during your lifetime to reduce your estate. Keep in mind that annual and lifetime gift limits apply. A strategic gifting approach might help reduce future estate taxes, but it must be balanced with your own long-term financial needs.

 

9. Securing and Protecting Your Crypto

Cold Storage
Hardware wallets like Ledger or Trezor store your private keys offline, making them far less susceptible to hacking. Keep these in a safe or another secure location, and let your estate’s executor know how to access them.

 

Hot Wallets and Exchanges
If you keep funds on an exchange, compile your login credentials, two-factor authentication (2FA) details, and any other security measures. Confirm that the platform has a policy or procedure for transferring accounts upon the account holder’s death.

 

Backups and Redundancy
Because private keys cannot be easily recovered if lost, consider multiple backups of your seed phrase—stored in separate secure locations. Alternatively, use multisignature (multi-sig) wallets that split control between multiple keys. This can protect against accidental loss but adds complexity.

 

10. Special Attention to NFTs

Non-fungible tokens (NFTs) can be tricky because they’re often linked to digital media that may be stored separately from the token. While the blockchain verifies ownership, the underlying asset could be hosted on external servers or IPFS (InterPlanetary File System).

 

From an estate planning perspective:

• Document Ownership: Clearly note which NFTs you own and where they reside (e.g., in which wallet or marketplace).
• Intent for Distribution: Decide if specific NFTs should go to particular individuals or if they should be sold.
• Ongoing Maintenance: If the NFT has utility (like access to online communities), specify how you’d like that utility to continue—or if it should be sold or transferred.

Like other digital assets, NFTs require comprehensive documentation and secure storage of the private keys. Without a straightforward way to transfer these assets, your beneficiaries could lose valuable collectibles or art.

 

11. The Value of Professional Guidance

Even under the best circumstances, estate planning can be complex, and cryptocurrency adds another layer of difficulty. That’s why working with professionals who understand both Georgia’s estate laws and the intricacies of digital assets is crucial.

 

Initial Consultation
We start by discussing your crypto holdings, current estate documents, and long-term goals. Whether you want to protect your family, minimize taxes, or ensure your digital assets remain private, defining your priorities is the first step.

 

Customized Strategies
After reviewing your needs, I’ll recommend a plan that might include a will, trust, power of attorney, or other specialized documents. We’ll address private key management, instructions for liquidation, and potential tax-saving techniques.

 

Collaboration with Financial Experts
Your CPA or financial advisor should be looped in to optimize your estate plan from a tax and financial perspective. With crypto values so volatile, consistent communication among your professional team ensures your plan remains current.

 

12. Conclusion: Secure Your Crypto Legacy

Cryptocurrency is no longer just a fad; it’s a major part of many people’s wealth portfolios. But its decentralized and often anonymous nature can turn these valuable assets into a liability if they’re not addressed in a proper estate plan. By:

• Identifying and documenting all your holdings,
• Specifying how you’d like them handled (whether sold or passed along as tokens),
• Ensuring your executor or trustee has the keys and authority needed to act,
• Accounting for tax implications,
• Setting up proper trusts or powers of attorney...

...you’ll protect your digital wealth and give your heirs the best possible chance of benefiting from it. That’s the peace of mind any crypto holder should strive for.

 

If you live in or near Atlanta, or anywhere in Georgia, and need help creating or updating an estate plan that includes crypto, I’m here to assist. My goal is to ensure that all your assets—traditional and digital—are secured for the next generation. Don’t let a lack of planning lead to irretrievable losses; reach out to my office to schedule a consultation and take the first step toward protecting your crypto legacy. Contact Slowik Estate Planning today and let’s discuss how to ensure your crypto assets are protected and your legacy is ensured to benefit you, your family, and your business.