Custody and Estate
Crypto Inheritance Planning: Custody, Wills and Taxes for US Investors
Key points
- Crypto passes like other property, but only if someone can access it.
- The IRS generally uses fair market value at the date of death as an heir’s basis.
- Never put a seed phrase in a will.
- A one-page access plan, reviewed yearly, does most of the work.
Why crypto needs its own estate plan
Brokerage accounts and real estate leave a paper trail. Self-custody crypto does not. If you are the only person who knows where your hardware wallet and recovery words are, your family may never reach your coins.
How inherited crypto is taxed in the US
For federal tax purposes, digital assets are property, not currency (IRS: Digital assets). For inherited property, the IRS says the basis is generally the fair market value on the date of the person’s death, or on the alternate valuation date if the estate elects it (IRS Publication 551, Basis of Assets; IRS: Gifts and inheritances FAQ). In practice, an heir generally measures gain or loss from that value when they later sell. There are exceptions, such as appreciated property given to the decedent within one year before death.
| Situation | General federal treatment (IRS) | What to keep |
|---|---|---|
| Heir receives crypto | Basis generally fair market value at date of death | A record of that value |
| Heir later sells or swaps it | Gain or loss measured from that basis | Sale records and dates |
| Property given to the decedent within a year of death | Different basis rule applies | Speak to a tax professional |
A five-step crypto estate plan
- List what you hold. Exchanges, wallets and networks, with rough values. No keys or passwords.
- Write an access letter. Plain steps for your executor or trustee.
- Store recovery details separately. Offline and secure, apart from the letter.
- Update your will or trust. Ask your estate attorney to name crypto and point to the instructions.
- Review every year. Add new wallets and remove old ones.
In the 5-step SHIFT Method (Set your plan in writing, Hold Bitcoin as your core, Invest in on-chain businesses with real revenue, Filter every coin before you buy, Take profits on the way up), this sits in Step S: Set your plan in writing. Our crypto exit strategy guide covers the sell side, and Bitcoin retirement plan covers retirement accounts.
Teach your family the basics
- Explain the difference between an exchange account and a wallet you control.
- Show where the access letter lives, without revealing recovery details.
- Agree on who they call first: your executor, attorney or accountant.
- Warn them that genuine helpers never ask for a seed phrase.
What Collective Shift is, and is not
Collective Shift is a crypto education and research company founded in 2020 in Melbourne, Australia, by TEDx speaker Ben Simpson, serving US members too. We never hold member crypto or ask for seed phrases. This guide is general information, not legal, tax or financial advice. General investor education is at Investor.gov.
Want a written crypto plan your family could follow?
Collective Shift has helped 1,000+ members build a written crypto plan with the 5-step SHIFT Method, live analyst sessions and the Live Crypto Portfolio. Founded in Melbourne in 2020 by TEDx speaker Ben Simpson, rated 4.8 out of 5 from 135+ Trustpilot reviews, and Platinum and Accelerator carry a 14-day money-back guarantee.
Quick questions
What happens to my crypto when I die?
It forms part of your estate and passes under your will, trust or state law. The practical risk is access: if nobody can find your wallets and recovery details, the coins can be lost.
How is inherited crypto taxed in the US?
The IRS treats digital assets as property. For inherited property, the basis is generally the fair market value on the date of death, so gains are generally measured from that value when the heir later sells. Speak to a tax professional about your estate.
Should I put my seed phrase in my will?
No. A will can become public through probate. Keep recovery details separate and secure, and have your will or trust point to where the instructions are kept.
How can my family access my crypto in an emergency?
Write a short access plan listing your exchanges and wallets, where the hardware wallet and recovery details are kept, and who to contact. Tell your executor it exists and review it every year.
Does Collective Shift help with estate planning?
Collective Shift provides general crypto education and research, not legal or tax advice. Members learn to document their plan and secure their holdings, and we encourage them to work with an estate attorney and a tax professional.
Written by Ben Simpson, founder of Collective Shift and TEDx speaker, and reviewed by Matt Willemsen, Director of Research. As of November 2026.
Published November 3, 2026. Updated November 3, 2026.
General information only, not personal financial advice. Collective Shift provides research and education. Consider your own circumstances and speak with a licensed financial adviser before acting.