Don’t Let a Crypto Inheritance Get Stuck on the Blockchain
This article explains the legal complexities of passing cryptocurrency to heirs, noting that it is treated as a digital asset rather than traditional currency. It highlights the differences between custodial and noncustodial wallets in terms of estate planning.
Why it matters
With the rise of digital assets, many investors risk losing their wealth upon death due to a lack of clear beneficiary planning for private keys.
In the US, cryptocurrency is considered a digital asset rather than money in terms of probate and estate law. With money and physical assets, you can sign a beneficiary form and create an estate plan or write a last will and testament naming who should get what when you die. With digital assets, however, the law says we should not assume that a deceased person wanted their private materials—everything from emails to photos—given to another person unless they explicitly said so. This puts cryptocurrency, as a digital asset, in an awkward position.
The options for arranging a transfer of cryptocurrency upon one's death or incapacitation breaks down by one big division: whether the crypto is held by a custodian or in a noncustodial crypto wallet.
Two Types of Wallets
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in