United States: crypto estate planning guide
The US has no single "inheritance law": each state sets its own rules for wills, trusts, probate and intestacy, while the IRS handles federal estate, gift and income tax. Sections are tagged by level, so beginners can read the Beginner parts first and come back for the rest.
Printable companions: letter of instruction · US supplement · executor guide · inheritance checklist. Real example: the Matthew Mellon estate.
New in this guide: which document does what Beginner, how US exchanges handle a death and the executor's and trustee's duties Intermediate, small estates and transfer-on-death Intermediate, which states have enacted RUFADAA, small-estate limits in six states and survivorship in Texas and California Intermediate, Forms 706 and 1041 Intermediate Expert and two worked US scenarios Beginner Intermediate.
At a glance: the five things that matter most Beginner
- A current will (and possibly a revocable trust) that mentions digital assets and gives your executor or trustee power to deal with them.
- A durable power of attorney covering digital assets, so someone can act if you are incapacitated rather than dead.
- A letter of instruction, kept separately and with no secrets in it, explaining what you hold, where the backups are, and who can help technically.
- Records: cost basis, exchange accounts and wallet list, so your executor can value the estate and file tax returns.
- A plan for practical access that no single person can abuse (e.g. multisig with a key held by your executor or a collaborative-custody provider) and that has been tested.
How the US treats crypto Beginner
- For federal tax, the IRS treats digital assets as property, not currency (IRS digital assets).
- For estate tax, the Form 706 instructions define digital assets as "any digital representations of value that are recorded on a cryptographically secured distributed ledger or any similar technology", expressly including NFTs, cryptocurrencies and stablecoins; they are reported on Schedule F (other miscellaneous property) (Instructions for Form 706).
- Crypto is part of your estate and passes by will, trust, beneficiary designation (where a provider offers one) or, if you have no will, under your state's intestacy rules.
- Estate tax must be paid in US dollars: the IRS states that digital assets are not accepted as payment (Form 706 instructions). An estate that is mostly crypto may have to sell to pay tax.
- Form 1040 (and, for estates and trusts, Form 1041) asks every year whether you received or disposed of digital assets.
Step 1 — Will or revocable living trust? Intermediate
| Item | Will | Revocable living trust (RLT) |
|---|---|---|
| Probate | Assets go through probate court | Assets titled to the trust generally avoid probate |
| Privacy | Probate filings are usually public | Trust terms generally private |
| Incapacity | Does nothing while alive | Successor trustee can step in |
| Cost / effort | Lower | Higher; must be "funded" |
| Crypto-specific | Executor needs letters testamentary before acting | Successor trustee can act quickly; some custody providers support trust-owned vaults |
- Decide on a will-only plan or an RLT with a "pour-over" will.
- If using an RLT, fund it: exchange accounts can often be retitled to the trust; for self-custody, document an assignment of the wallet's contents to the trust and design key access for the successor trustee (e.g. one multisig key).
- Include a digital-assets provision referencing RUFADAA powers and authorising technical experts.
- Keep seeds, passphrases and PINs out of the will and trust document.
- Review after every big change: a new coin, a new wallet setup, marriage, divorce, children or a move to another state. A will that predates your crypto may not mention it at all (see Mellon).
Signing formalities vary by state
- The Uniform Probate Code model (§2-502) requires a will in writing, signed by the testator and by at least two witnesses; it also allows an alternative of acknowledgement before a notary, and recognises holographic (handwritten) wills without witnesses if the signature and material portions are in the testator's handwriting (UPC §2-502 text).
- Not every state follows the UPC: many do not recognise holographic wills, and few have adopted the notarised-will option (Colorado's version is an example: C.R.S. §15-11-502). A "self-proving" affidavit can make probate easier. Ask your attorney what your state requires.
Which document does what: will, trust, letter, power of attorney Beginner
Each document has a different job. The common mistake is to expect one of them to do everything, or to put secrets in the one that becomes public.
| Document | When it works | Public? | What it should say about crypto | What it must never contain |
|---|---|---|---|---|
| Will | At death, through probate; the executor usually needs letters from the court first (see Step 7) | Probate filings are usually public | That digital assets exist, who the executor is, RUFADAA powers and authority to hire technical help | Seed words, passphrases, PINs or exact hiding places |
| Revocable living trust | While you are alive (once funded), on incapacity and at death; the successor trustee can act without letters | Trust terms generally private | Which wallets and accounts the trust owns, retention powers, technical agents (see Step 4) | Secrets; assets "funded on paper" while only you hold the keys |
| Letter of instruction | Whenever it is read; not legally binding | Private, if you keep it so | Inventory of wallets and accounts, where backups are (in general terms), who can help, how multisig is set up | The seed itself or anything that, alone, unlocks funds |
| Durable power of attorney | During your life, if you cannot act; at death the personal representative takes over the estate (IRS Publication 559) | Private unless recorded | Express digital-asset authority (see Step 3) | Secrets |
| Beneficiary or transfer-on-death designation | At death, outside probate, where the provider offers one | Private | Coinbase, Kraken and Gemini say they do not offer one (see below) | n/a |
Pros of a separate letter of instruction
- Easy to update when you change wallets, without re-signing a will
- Stays private: it is not filed with the court
Cons
- Not legally binding: it guides the executor but cannot override the will or trust
- Easy to forget; an out-of-date letter can mislead
Pitfalls
- Writing the seed into the will because "it is the safe document": it may end up in a public court file
- A letter that names wallets the will or trust never mentions, leaving it unclear who owns them
Community advice (labelled: experience shared by users and practitioners, not official guidance)
- Community advice: estate lawyers commonly suggest the will refers to the letter of instruction in general terms only, and the letter refers to backups without containing them
- Community advice: date every page of the letter and review it at the same time as your records
Printable: letter of instruction with the US supplement.
Step 2 — RUFADAA: what it does and doesn't do Intermediate
The Revised Uniform Fiduciary Access to Digital Assets Act (2015) has been enacted in the large majority of states, sometimes with local changes; a few states have their own statutes (Delaware, for example, has a separate Fiduciary Access to Digital Assets and Digital Accounts Act). Check the ULC's legislative report by state and your state code. It sets a three-tier priority for fiduciary access to accounts held by custodians (online service providers):
- The user's choice in an online tool provided by the custodian;
- Otherwise, directions in a will, trust or power of attorney;
- Otherwise, the custodian's terms of service.
Which states have enacted RUFADAA? (checked 25 October 2026) Intermediate
The Uniform Law Commission's enactment map and bill list for the Revised Uniform Fiduciary Access to Digital Assets Act (data stated as at 24 October 2026, 23:06 UTC) record 49 enactments among the 53 jurisdictions it tracks (50 states, the District of Columbia, Puerto Rico and the US Virgin Islands). The table groups them by the year the ULC lists.
| Year listed | Jurisdictions |
|---|---|
| 2016 (20) | Arizona, Colorado, Connecticut, Florida, Hawaii, Idaho, Illinois, Indiana, Maryland, Michigan, Minnesota, Nebraska, New York, North Carolina, Oregon, South Carolina, Tennessee, Washington, Wisconsin, Wyoming |
| 2017 (17) | Alabama, Alaska, Arkansas, Iowa, Kansas, Mississippi, Montana, Nevada, New Jersey, New Mexico, North Dakota, Ohio, South Dakota, Texas, Utah, Vermont, Virginia |
| 2018 (5) | Georgia, Maine, Missouri, West Virginia, US Virgin Islands |
| 2019 (2) | New Hampshire, Rhode Island |
| 2020 (2) | Kentucky, Pennsylvania |
| 2021 (1) | District of Columbia |
| 2024 (2) | California (SB 1458), Oklahoma (HB 3778) |
| Not enacted (4) | Delaware (has its own Fiduciary Access to Digital Assets and Digital Accounts Act), Louisiana, Massachusetts (bills H 4639 / S 1110 / S 1048 were reported favourably by committee on 29 January 2026 and sent to the Senate Ways and Means committee; not law when we checked) and Puerto Rico |
- "Enacted" can mean "with changes". The ULC records enactment of the act, not identical text. California is a good example: its version (Probate Code §870 onwards) has applied to wills, trusts and deaths from 1 January 2017, but originally covered only personal representatives and trustees. SB 1458 (Chapter 799, Statutes of 2024, approved 27 September 2024) added conservators and agents under a power of attorney, for conservators appointed and powers of attorney executed before, on or after 1 January 2025 (§§871–872, 879.1–879.3). That is why the ULC lists California under 2024.
- What it says about self-custody. As amended, California Probate Code §880(c) gives a fiduciary with authority over a decedent's or settlor's property a right of access to digital assets that are not held by a custodian, and §880(e) gives a fiduciary with authority over tangible personal property (for example a computer or a hardware wallet) a right of access to it and to digital assets stored in it, but both say they do not require a custodian to share passwords or decrypt protected devices (SB 1458 text). The law can confirm the executor's authority; it cannot recover a seed nobody wrote down.
- Not enacted does not mean no rules. In Delaware, Louisiana, Massachusetts and Puerto Rico, check the local statute and the custodian's terms; we have not verified what, if anything, Louisiana, Massachusetts or Puerto Rico provide instead.
How major US exchanges handle a death Intermediate
An exchange account is the easy part of a crypto estate: there is a company, a claims process and an account that can be frozen and transferred. What follows is what each exchange's own help page said on 24 October 2026; processes change, so check the current page.
| Exchange | Name a beneficiary? | What the estate is asked for | How to start |
|---|---|---|---|
| Coinbase | No: "Coinbase doesn't currently support naming a beneficiary for individual accounts"; ownership follows estate documents or state intestacy law | Death certificate; probate documents (probate, letters testamentary, letters of administration, affidavit for collection or small estate affidavit); photo ID of the person named in them; a signed letter directing transfer to a named Coinbase account | The claimant signs in to (or creates) their own Coinbase account and uses the Executor Services form (Coinbase Help) |
| Kraken | No: Kraken "doesn't currently offer the option to add a beneficiary" | A complete colour image of the official death certificate (funeral-home certificates are not accepted); the document appointing the legal representative; their photo ID; a signed, dated letter confirming the death; more documents may be requested | Submit a claim through Kraken's deceased client page; its compliance team handles it (Kraken Support, updated 17 March 2026) |
| Gemini | No: "we do not offer the ability to designate beneficiaries"; Gemini suggests an estate-planning attorney may treat the account like a brokerage account | Not listed on the page we checked | Contact Gemini support (Gemini Support) |
Exchange processes cannot reach self-custody wallets, including an exchange's own self-custody app: for those, the heirs need the backup and your instructions. RUFADAA's tier 1 (an online tool) matters only where a provider offers one.
The executor's and trustee's duties, applied to crypto Intermediate
The IRS describes the personal representative's primary duties as collecting all the decedent's assets, paying the decedent's creditors and distributing the rest to the heirs or other beneficiaries (Publication 559). Trustees also have the investment duties in Step 4. In crypto terms:
- Collect and secure: find every account and wallet (the letter of instruction and records help), and move self-custody coins only under a written plan, with a witness, after a small test transaction.
- Keep estate property separate: recover to a wallet set up for the estate or trust, not to the executor's personal wallet, and record every transaction with date, amount, fee and transaction ID.
- Value and report: record date-of-death values with sources; the same values set the heirs' basis (see step-up) and feed Form 706 and Form 1041 (see below).
- Pay before distributing: creditors and taxes come first, and tax is payable in dollars.
- Account to beneficiaries: a written log of who held what, and when, protects the executor in any later dispute.
Exchange-held crypto: pros for an estate
- A documented claims process with a named team
- No seed needed: court papers or a small estate affidavit are enough at Coinbase
Cons
- No beneficiary designation at the three exchanges above, so the claim goes through the estate
- Exchange and firm-failure risks during the claim (see custody)
Pitfalls
- An executor who does not know the account exists: list every exchange in the letter of instruction
- Answering "support" messages or calls about the claim that you did not start (see safety)
Community advice (labelled: experience shared by users and practitioners, not official guidance)
- Community advice: executors are often advised not to sign in as the deceased, even if they know the password, and to use the exchange's claims route instead
- Community advice: ask for a statement of balances on the date of death early, because the estate needs it for valuation
Step 3 — Durable power of attorney Beginner
- A durable financial power of attorney lets an agent act if you are incapacitated. Add explicit digital-asset authority (RUFADAA requires specific consent for content of communications).
- Pair with practical access (e.g. the agent holds one multisig key; a collaborative-custody provider supports agent access).
- Incapacity is often harder than death: there is no death certificate, and you may recover. Design access so the agent can act without being able to drain everything unnoticed (e.g. 2-of-3 multisig where the agent holds one key and a professional or second person another).
Step 4 — Trusts, trustees and the prudent investor rule Expert
Trustees in most states are bound by a version of the Uniform Prudent Investor Act. Section 3 says a trustee "shall diversify the investments of the trust unless the trustee reasonably determines that, because of special circumstances, the purposes of the trust are better served without diversifying". Section 1(b) makes this a default rule that the trust document may expand, restrict or eliminate (UPIA text reproduced by the FDIC).
Why it matters for crypto
- A trustee holding a concentrated, volatile position may feel obliged to sell and diversify, even if you wanted the coins held long-term
- Estate lawyers interviewed about the Mellon estate expected the children's trustee might need to sell for exactly this reason (Daily Dot)
Drafting options to discuss
- An express power to retain, hold and not diversify named digital assets
- Authority to use self-custody, multisig or regulated custodians, and to hire technical agents
- An exculpation clause for losses from volatility when the trustee follows the trust terms
Pitfalls
- Naming an individual trustee with no idea how to secure keys
- Funding the trust "on paper" while keys remain only with you
- Giving one trustee sole control of all keys
Practical advice
- Give each trustee (or trustee plus a professional) one key of a multisig, never a full seed
- Store the wallet descriptor/config with the trust records so recovery does not depend on one app or company
Irrevocable trusts (for estate-tax planning, asset protection or generation-skipping) raise further issues — gift-tax reporting on funding, the loss of step-up for assets moved out of the estate, and trustee key management. These need specialist advice.
Step 5 — Federal estate & gift tax Intermediate
| Item | 2026 figure / rule |
|---|---|
| Basic exclusion (estate & lifetime gifts) | $15,000,000 per person for 2026 deaths, indexed for inflation after 2026 (Form 706 instructions; IRS; P.L. 119-21) |
| Annual gift exclusion | $19,000 per recipient (IRS FAQ) |
| Top rate | 40% |
| Form 706 due date | 9 months after death; automatic 6-month extension to file with Form 4768 (IRS) |
| Portability | A surviving spouse can use the deceased spouse's unused exclusion (DSUE) if a timely Form 706 is filed. Estates with no filing requirement can elect late, up to the fifth anniversary of death, under Rev. Proc. 2022-32 |
| Alternate valuation | The executor may elect to value the whole estate six months after death (IRC §2032), but only if this lowers both the gross estate and the tax; it cannot be applied to only part of the property and, once made, cannot be revoked (IRS). Relevant if prices fall sharply after death |
| Consistent basis | Where Form 706 is required, the estate files Form 8971 so heirs' basis matches the estate-tax value |
| Gift return | Form 709 when gifts to one person exceed the annual exclusion |
Step-up in basis — very important for crypto
- Inherited property generally takes a basis equal to fair market value at the date of death (or the alternate valuation date, if elected) — whether or not a Form 706 is filed (IRS FAQ; IRC §1014). Heirs who sell soon after may owe little capital-gains tax.
- Lifetime gifts carry over the donor's basis (§1015) — gifting highly appreciated coins can cost heirs more tax than inheriting them.
- Executors should document date-of-death values per asset (exchange statements and reputable price sources, with time stamps).
Income tax reporting
- Brokers issue Form 1099-DA for digital-asset sales from 2025; cost-basis reporting by brokers begins for certain assets acquired from 1 January 2026 (IRS instructions). Self-custody activity still has to be tracked by you.
- Report sales on Form 8949 / Schedule D.
- An estate must file Form 1041 if it has gross income of $600 or more in a tax year (e.g. from staking rewards or sales during administration); the form includes its own digital-asset question (Instructions for Form 1041).
Lost or stolen crypto: what the IRS sources say Intermediate Expert
| Situation | What the sources show |
|---|---|
| Personal theft or casualty losses | From 2018 the Tax Cuts and Jobs Act limited personal casualty and theft losses (on property not used in a business or a profit-seeking transaction) to losses from federally declared disasters (IRC §165(h)(5)). That limit was due to end after 2025. Section 70109 of Public Law 119-21 (the "One Big Beautiful Bill Act", approved 4 July 2025) removed the end date, and from 2026 it also allows losses from certain state-declared disasters. The IRS describes the rule as "made permanent" (Public Law 119-21, IRS, 26 U.S.C. §165). |
| Scams where you invested for profit | Chief Counsel Advice 202511015 (released 14 March 2025) concluded that some scam victims, including a crypto "pig butchering" investment victim, had a deductible theft loss under §165(c)(2). The conditions were that the loss was a criminal theft under state law, there was no reasonable prospect of recovery, and the money was transferred in a transaction entered into for profit. Victims of scams with no profit motive were denied under §165(h)(5). The deductible amount is your basis, not the promised balance. Publication 547 (2025) repeats the three conditions (CCA 202511015, Publication 547). |
| Lost keys, or a coin that collapsed | Chief Counsel Advice 202302011 (released 13 January 2023) concluded that a fall in value is not a loss while a token still trades and you can still sell or transfer it; worthlessness must be complete, and abandonment needs an affirmative act. It added that, even if there were a loss, it would be a miscellaneous itemised deduction, which §67(g) suspended for 2018–2025 (CCA 202302011). Section 70110 of Public Law 119-21 removed the 2025 end date from §67(g) (Public Law 119-21, 26 U.S.C. §67). Publication 547 says the "simple disappearance of money or property isn't a theft". We found no IRS guidance specifically on keys that are simply lost. |
| Frozen accounts and bankruptcies | The Taxpayer Advocate Service says there is no loss to claim while an account is frozen or in bankruptcy, because there is no closed and completed transaction yet. A settlement, however small, is treated as a sale (TAS tax tip). |
Chief Counsel Advice is written for IRS staff and "should not be used or cited as precedent", but it shows how the IRS reads the law. For the UK equivalent (losing a key is not a disposal; a negligible value claim may be possible) see HMRC CRYPTO22400 and the UK guide. Prevention is far cheaper than any deduction: see Safety.
Form 706 and Form 1041 basics Intermediate Expert
| Return | What it is for | Crypto notes |
|---|---|---|
| Form 706 | The federal estate (and generation-skipping transfer) tax return. It is required where the gross estate plus adjusted taxable gifts exceeds the basic exclusion amount, which is $15,000,000 for 2026 deaths (IRS what's new; Instructions for Form 706). It is also filed to elect portability for a surviving spouse | Digital assets go on Schedule F; tax is paid in dollars, not crypto (both in the IRS instructions cited above) |
| Form 1041 | The fiduciary of a domestic decedent's estate or trust files it to report the income, deductions, gains and losses of the estate or trust, income distributed or held for beneficiaries, and any income tax liability (IRS: About Form 1041) | Sales of crypto by the executor during administration are reported here; gain or loss is generally measured from the date-of-death value (step-up; 26 U.S.C. §1014). The return asks the digital-asset question |
| Final Form 1040 | The decedent's own income for the year of death (executor timeline) | Includes crypto sold before death, at the decedent's original basis |
| Form 56 and Form 8971 | Notice of the fiduciary relationship, and basis statements to beneficiaries where a Form 706 is required (executor timeline) | Form 8971 tells each heir the value to use as basis for the coins they receive |
Most estates are far below the federal exclusion and file no Form 706, but may still face a state estate or inheritance tax with much lower limits (see the state table) and will often need Form 1041 if the estate earns income or sells assets at a gain.
Step 6 — State taxes and state variation Intermediate
Twelve states and the District of Columbia levy an estate tax and five states levy an inheritance tax (paid by or charged on recipients); Maryland has both. Exemptions are often far lower than the federal $15m. Figures below are as at 1 October 2026 according to the Tax Foundation — verify with the state revenue department before relying on them.
| State | Estate tax exemption | Estate tax rate | Inheritance tax |
|---|---|---|---|
| Connecticut | $15,000,000 | 12% | — |
| District of Columbia | $4,988,400 | 11.2%–16% | — |
| Hawaii | $5,490,000 | 10%–20% | — |
| Illinois | $4,000,000 | 0.8%–16% | — |
| Kentucky | — | — | Yes: 0%–16%, exemption by beneficiary class (max $1,000) |
| Maine | $7,160,000 | 8%–12% | — |
| Maryland | $5,000,000 | 0.8%–16% | Yes: 0%–10%; none if the estate is $50,000 or less |
| Massachusetts | $2,000,000 | 0.8%–16% | — |
| Minnesota | $3,000,000 | 13%–16% | — |
| Nebraska | — | — | Yes: 0%–15%, exemption by class (max $100,000) |
| New Jersey | — | — | Yes: 0%–16%, exemption by class (max $25,000) |
| New York | $7,350,000 | 3.06%–16% | — |
| Oregon | $1,000,000 | 10%–16% | — |
| Pennsylvania | — | — | Yes: 0%–15%, no general exemption |
| Rhode Island | $1,838,056 | 0.8%–16% | — |
| Vermont | $5,000,000 | 16% | — |
| Washington | $3,000,000 (from 1 July 2026) | 10%–20% | — |
Inheritance-tax rates usually depend on the heir's relationship to you (close family are often taxed at 0%). Some states tax property located in the state even if you live elsewhere — mostly real estate and tangible property, but check how your state treats intangibles such as crypto.
Community property states
- Nine states are community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska, South Dakota and Tennessee offer an optional community property system (IRS Internal Revenue Manual 25.18.1; Publication 555).
- Crypto bought with earnings during the marriage may be community property even if only one spouse holds the keys, which affects what each spouse can leave by will.
- Survivorship in community property states: joint names alone do not always pass assets to the survivor. In Texas spouses can make a written community property survivorship agreement, signed by both, covering existing or future community property; it cannot be inferred merely from an account being joint or marked "JT TEN", the property stays community property during the marriage, and the transfer at death is not testamentary (Estates Code ch. 112, §§112.051–112.052, 112.151–112.152). In California, community property passes to the survivor without administration only if the transfer document expressly declares it "community property with right of survivorship" (Civil Code §682.1). A self-custody wallet has no title document, and we found no authority on how §682.1 applies to it; if you want jointly owned crypto to pass to your spouse, ask a lawyer in your state whether a written agreement, a trust or the will is the right tool.
- On the first death, IRC §1014(b)(6) can give the surviving spouse's half of community property a stepped-up basis too, not just the decedent's half — potentially valuable for appreciated crypto. Take advice on whether your holdings qualify.
Other state differences
- Probate procedures and small-estate affidavits vary widely; some states have streamlined procedures for smaller estates (see small-estate limits in six states).
- Transfer-on-death: some custody providers offer TOD beneficiary designations for accounts (e.g. Unchained); availability depends on state law and provider. Major exchanges do not offer one (exchange claims).
- Safe deposit boxes: rules on who may open a deceased person's box, and when, vary by state and bank. If a backup lives in a box, make sure your plan explains how an executor will lawfully get into it.
- Moving state can change the tax, community property and will-formality rules that apply. Review your plan after a move.
Small estates and transfer-on-death: can crypto skip probate? Intermediate
Small estate procedures. Every state sets its own limits and rules. The table below covers six large states. In California, for deaths on or after 1 April 2025, a successor can usually collect personal property with a small estate affidavit if the gross value of the decedent's California real and personal property (after statutory exclusions) does not exceed $208,850; the figures are adjusted every three years under Probate Code §890, with the next adjustment due on 1 April 2028 (Judicial Council of California). At least 40 days must have passed since the death, and the procedure cannot be used if a probate case is already open without the personal representative's permission (California Courts self-help). Coinbase lists an affidavit for collection or a small estate affidavit among the probate documents it accepts (Coinbase Help). Other states' limits differ: check your state court's self-help pages.
Small-estate limits in six large states (checked 25 October 2026) Intermediate
Each figure below is taken from the statute or the state court's own pages. Thresholds change (California's is re-indexed every three years and Illinois's rose in 2025), and the tests differ: some count all personal property, some exclude homes, vehicles or family allowances, and some need a court order rather than a simple affidavit. Check the current text for the date of death before relying on any of them.
| State | Procedure | Limit | Key conditions | Source |
|---|---|---|---|---|
| California | Small estate affidavit (no court) | $208,850 for deaths on or after 1 April 2025 | Gross value of California real and personal property after statutory exclusions; 40 days after death; next adjustment 1 April 2028 (Probate Code §890) | Judicial Council: §890 amounts; California Courts self-help |
| Texas | Small estate affidavit, approved by the judge | $75,000 | Only if the person died without a will; excludes homestead and exempt property; 30 days after death; no petition for a personal representative pending or granted; sworn by two disinterested witnesses and each distributee. The value is measured on the date of the affidavit, not the date of death | Estates Code §§205.001–205.008 |
| Florida | Summary administration (a court order, not an affidavit) | $75,000, or any value if the person died more than 2 years ago | Value of the estate subject to administration in Florida, less property exempt from creditors; a will must not direct full administration | Florida Statutes §735.201 |
| New York | Voluntary administration (Surrogate's Court Procedure Act Article 13) | $50,000 of personal property (gross value) | Excludes property set off for the family under EPTL 5-3.1(a); real property is outside this procedure (SCPA §1302) | SCPA §1301 |
| Illinois | Small estate affidavit (no court) | $150,000 of personal property, excluding registered motor vehicles, for deaths on or after 15 August 2025 | No letters of office outstanding or pending; debts paid in the statutory order first. Public Act 104-346 raised the limit; Public Act 104-624 (from 1 January 2027) narrows which vehicles are excluded | 755 ILCS 5/25-1 |
| Pennsylvania | Petition to the orphans' court division | $50,000 gross value | Decedent domiciled in Pennsylvania; excludes real estate and payments under §3101; includes property claimed as the family exemption; petition contents set by Pa.R.O.C.P. 5.50 | 20 Pa.C.S. §3102; Rule 5.50 |
- Crypto and valuation dates: a price swing can push an estate over a limit. Texas tests the value on the date of the affidavit; the other statutes word the test differently, so check which date applies. Keep dated valuation evidence (exchange statements or a recognised price source) for whichever date applies.
- Exchanges decide what they accept: Coinbase lists a small estate affidavit among the documents it accepts (exchange claims); other platforms may want letters from a court. The affidavit gives authority, not the keys to a self-custody wallet.
- Other states: we have not verified limits for the other 44 states and DC. Use the state's court self-help pages or code.
Transfer-on-death (TOD) and beneficiary designations. These let an account pass outside probate where the provider offers them. Coinbase, Kraken and Gemini each say they do not offer a beneficiary option (table above), and a self-custody wallet has no account provider to register a beneficiary with. In practice, the routes that avoid probate for crypto are a funded revocable living trust or a provider that offers an inheritance feature for its own vaults (for example Unchained), with availability depending on state law and the provider.
Small estate route: pros
- Faster and cheaper than full probate where it applies
- Accepted by at least one major exchange (Coinbase)
Cons
- Limits are low compared with many crypto holdings and are measured at the date of death, when prices may be high
- Does nothing for a self-custody wallet without its backup
Pitfalls
- Using an out-of-date threshold: California's changed on 1 April 2025
- Forgetting that crypto counts towards the limit along with other property
Step 7 — What your executor (personal representative) will do Beginner
| When | Task | Crypto-specific notes |
|---|---|---|
| First days | Locate the will and letter of instruction; secure the home, devices and backups | Do not type any seed into a computer or phone; do not move funds until you have authority unless you take advice about urgent protective action |
| First weeks | Petition the probate court; obtain letters testamentary (or letters of administration). A successor trustee of a funded RLT may act without them | Exchanges typically ask for the death certificate and letters; RUFADAA language in the will helps |
| Early | Obtain an EIN for the estate; consider notifying the IRS of the fiduciary relationship on Form 56 (Publication 559) | Needed to file Form 1041; banks and platforms may also ask for it when dealing with the estate |
| Within weeks | Inventory and value assets at date of death | Record per-token values with time stamps and sources; note inaccessible assets and why |
| With help | Recover self-custody wallets with a trusted technical helper following the instructions | Restore on a clean device in your presence; never hand the seed to a "recovery service" that contacted you |
| By 9 months | Form 706 if required (or to elect portability); state estate tax returns where applicable | Liquidity: tax is payable in dollars; consider alternate valuation if prices fell |
| Tax season(s) | Decedent's final Form 1040; Form 1041 for the estate if gross income is $600 or more | Answer the digital-asset questions; report sales during administration |
| Closing | Distribute per the will/trust; Form 8971 statements where required; final accounting | Transfer to heirs' own wallets after a small test transaction; give each heir their basis records |
Two worked US scenarios Beginner Intermediate
Illustrative only: the people and figures are invented to show how the rules on this page fit together, and are not advice. Real outcomes depend on the facts and on state law.
Dana, unmarried, dies in 2026 in California. She has a Coinbase account worth $60,000 and a hardware wallet holding coins worth $90,000, and nothing else of note. Her letter of instruction says the wallet's metal backup is in a fire safe at her sister's house.
- Probate? The California property totals $150,000, under the $208,850 limit for deaths from 1 April 2025, so after 40 days her heir may be able to use a small estate affidavit instead of probate (small estates), subject to the exclusions and conditions on the California Courts pages.
- Coinbase: the heir opens their own Coinbase account and uses the Executor Services form with the death certificate, the affidavit, ID and a signed letter (exchange claims).
- Hardware wallet: no affidavit helps here. The heir follows the letter, restores from the metal backup on a new device with a witness, and sends a small test transaction first. Without the backup, these coins would be lost whatever the paperwork said.
- Tax: no Form 706 is required at this size; the heir's basis is the date-of-death value (step-up).
Alex and Sam bought bitcoin for $40,000 during their marriage in Texas, a community property state. Alex dies when the coins are worth $400,000. Sam later sells them for $400,000.
- If both halves get a stepped-up basis under IRC §1014(b)(6) (see community property; 26 U.S.C. §1014), Sam's basis becomes $400,000 and the sale shows no gain.
- If only Alex's half were stepped up (as for jointly held property in a common-law state), Sam's basis would be $20,000 + $200,000 = $220,000, and the sale would show a $180,000 gain.
- Estate tax: far below the $15,000,000 federal exclusion for 2026 deaths, and Texas is not in the state estate tax table. Filing Form 706 may still be worth discussing to elect portability.
- Practical access: if the coins are in a 2-of-3 multisig where Sam holds one key and a trusted professional another, Sam can move them without Alex's key; if Alex held a single-signature wallet alone, everything depends on the backup and instructions.
Whether coins are community property, and whether the full step-up applies, depends on how they were acquired and held. Take advice before relying on it.
What went right in both
- A letter of instruction that said where backups were, without containing them
- Records good enough to value the estate on the date of death
What could still go wrong
- Prices can fall during a claim or probate, and tax is due in dollars
- A backup kept at a relative's house can be lost in the same disaster as theirs
Pitfalls
- Assuming a small estate affidavit or a will can unlock a hardware wallet
- Gifting appreciated coins to a child late in life without comparing the loss of step-up
Community advice (labelled: experience shared by users and practitioners, not official guidance)
- Community advice: rehearse the heir's side of the plan once, with a small amount, so that the first restore is not the real one
Common US pitfalls and community advice Intermediate
| Pitfall | Why it hurts | What practitioners and experienced holders advise |
|---|---|---|
| Will predates the crypto | The executor may not know the assets exist | Review the will and letter of instruction whenever holdings or setups change |
| Keys scattered with no map | Recovery stalls while prices move | A letter of instruction listing locations and helpers, never secrets |
| No liquidity for tax | Estate tax is due in dollars at 9 months; forced selling in a falling market | Model the tax; hold some cash or plan an orderly sale; know the alternate valuation rules |
| Lock-ups and side agreements | Contractual sale limits can slow liquidation for years | Keep copies of any token-sale, vesting or lock-up agreements with your estate papers |
| Trustee forced to diversify | Default prudent-investor duties may require selling | Draft express retention powers if you want the coins held |
| Gifting appreciated coins late in life | Heirs lose the step-up in basis | Compare gift vs inheritance with a tax adviser |
| Secrets in the will | Probate files are usually public | Seeds stay in the separate backup system; the will refers to it only generally |
| Assuming RUFADAA covers self-custody | No law can produce a seed nobody has | Design and test the technical recovery path |
| Executor alone with everything | Theft or error risk; family disputes | Multisig or two-person recovery; record what was done and when |
Real US case: the Matthew Mellon estate Beginner
Matthew Mellon (died April 2018)
What happened: The banking heir died holding XRP that court documents valued at roughly $193m — about 97% of his estate, according to his estate's lawyers. His will did not mention the cryptocurrency and he reportedly kept keys on devices under other people's names in several places. The lawyers obtained control by approaching Ripple, which experts called an unusual option because most cryptocurrencies have no central company to ask. A pre-death agreement with Ripple limited how much XRP could be sold each day, so staff had to sell the maximum daily amount for years. The value swung by around 30% within weeks of his death; the estate paid about $60m in federal estate tax in late 2020 and settled its debts only in January 2021.
What failed: An outdated will, undocumented key locations, no liquidity for tax, and a little-known lock-up agreement.
Daily Dot investigation of court records (2021) · Forbes (2018)
US checklist
Key sources: IRS digital assets · Instructions for Form 706 · IRS estate & gift tax · IRS estate tax FAQ · IRS Publication 559 · Uniform Law Commission · Tax Foundation: state estate & inheritance taxes 2026 · ABA: the digital executor (2026) · Coinbase: claim a decedent's account · Kraken: deceased client account claims · Gemini: beneficiaries · California: Probate Code §890 amounts · California Courts: small estate affidavit · IRS: About Form 1041 · 26 U.S.C. §1014.
Last reviewed: · Educational information only — verify current details with official sources.