Cryptocurrency is the new wave of finances and Callifornians are no stranger to it. But unlike traditional bank accounts, these assets don’t come with a clear “next steps” manual if something happens to you. In recent years working as an estate planning attorney I have met with many clients who’ve built impressive crypto portfolios but haven’t thought about how to protect them, or how their loved ones would access them later.
Including cryptocurrency in your estate plan isn’t as simple as adding it to your will. It takes a thoughtful approach blending technology, security, and tax law. That’s where an experienced estate lawyer can make all the difference, and we do everything we can to stay up to date with the latest financial trends that impact your estate.
Start the Estate Planning Process Early
Estate planning starts with understanding what you own and how it’s held. With cryptocurrency, you need inventory of digital wallets, exchange accounts, and any NFTs or tokens you control.
Unlike traditional accounts, crypto assets don’t have a paper trail or customer service team. If you pass away without documenting access keys, your heirs could lose everything. A qualified estate planning attorney can help you securely record your digital asset information and other factors in a way that’s private, legal, and retrievable only by the right people.
Beginning the estate planning process early ensures your crypto is integrated with your overall estate plan (wills, trusts, and other key documents) so that everything works together. Most people are reactive instead of proactive when adding cryptocurrency in your estate plan, which makes all the difference in protecting remaining assets.
Secure Access the Smart Way
When dealing with digital assets, privacy and accessibility often clash. On one hand, you obviously don’t want anyone hacking into your wallet. On the other, someone else (an executor or heir) must be able to retrieve it after your passing.
An experienced estate planning attorney will strike the right balance. For example, you might:
- Store private keys in a sealed document inside a safety deposit box.
- Use a password manager with estate access permissions.
- Include access instructions in your trust and estate administration documents.
These steps make sure your heirs can reach your funds without compromising security. An estate lawyer familiar with California law and legal affairs can also incorporate these directions into your trust to avoid probate and maintain privacy when adding cryptocurrency in your estate plan.
Account for Estate Taxes and Valuation
Under IRS guidelines, cryptocurrency is treated as property, not currency. That means your estate may owe estate taxes on digital assets, especially if their value has appreciated since purchase.
We can collaborate with your CPA or financial advisor to determine the fair market value of your holdings and include them in your estate’s total worth. Depending on your situation, your plan may include:
- Charitable giving strategies to offset estate taxes.
- Gifting portions of crypto during your lifetime.
- Creating an irrevocable trust to minimize future tax exposure.
If your estate is substantial, you’ll want an estate lawyer who understands how California’s property laws and inheritance taxes interact with federal regulations. Careful planning today to navigate your legal needs can save your beneficiaries a massive headache (and a hefty tax bill) later.
Choose the Right Executor, Trustee, and Power of Attorney
This can be daunting, but we help you select someone trustworthy, tech savvy, and, if needed, coordinate professional assistance for them. During trust and estate administration, your trustee will be responsible for transferring crypto according to your instructions, maintaining accurate records of trust documents, and handling any related estate taxes.
If you’re not sure where to find the right professional, let’s connect! We’re constantly navigating these waters and can also connect you with experienced professionals on the financial side who specialize in digital assets and cryptocurrency if needed.
Protect Your Family and Heirs
Your crypto wealth is part of your family’s financial future. In the event of your death, a solid plan ensures your loved ones benefit from your investments rather than face confusion or conflict.
Family law can overlap with estate planning, especially for married couples or blended families. California’s community property rules can affect how crypto assets are managed between spouses. A qualified estate planning attorney can make sure your documents clearly define what’s separate property versus shared property, avoiding disputes later in the event of a divorce.
Working with a law and tax professional who understands both estate planning and family law protects your spouse and minor children and keeps your plan enforceable in California courts.
Keep Your Plan Updated
Your estate plan needs to evolve as fast as crypto. Several factors like new wallets, new laws, major life events, new business transactions, and fluctuating values can change how your plan functions. We recommend annual meetings to review holdings, update instructions, ensure compliance with current tax law, and all other estate planning documents. Even without any major updates, it is good to practice getting in the habit of a periodic review.
Why Working with an Estate Lawyer Matters
When it comes to cryptocurrency, estate planning isn’t a DIY project. You need an estate attorney who understands technology, tax strategies, and California estate law. At Best Coast Estate Law, P.C., our law firm assists clients through the entire estate planning process, from protecting their private keys and personal property to structuring trusts that minimize estate taxes.
Our approach is personal, practical, and forward-thinking. We combine modern digital awareness with traditional legal expertise so you can rest easy knowing your crypto funds and every other part of your estate is protected with the appropriate legal documents.
Whether you own one coin or a million, your legacy deserves the same level of care. Work with a California estate planning attorney who can help you safeguard your digital assets, protect your family, and keep your future secure.
