Despite its flash-bang struggles the past year, cryptocurrency is still an investment a lot of Research Triangle people are willing to make right now, albeit tentatively… and with good reason. 

The dissolution of FTX and the volatility of the banking world as a result make it clear that the world of cryptocurrency needs some regulation right now.

And while the EU has recently jumped on that kind of legislation with its own Markets in Crypto Assets (MiCA) law, the House is still two months away from getting some serious legislation on the docket and seeing it pass.

Time for America to catch up. 

But, if you’re still putting your assets in the crypto basket, I know you want some help figuring out just how that will affect your tax standing… especially when new legislation blows back on you (whenever Washington can get their act together on that point).  

If you’re just thinking about getting started in crypto investing… well, I can’t advise you as to the best investments, but what I can do is help position you taxwise to help ensure that the investment you’re making stays an asset and not a liability with the IRS. 

Want to talk cryptocurrency investments and their impact on your taxes? I’m right here: 

Now, making these kinds of investments is not only for your own benefit, but often as a legacy or inheritance for someone you love. That’s why today I want to talk about digital estate planning and bequeathing cryptocurrency…

Your Research Triangle Guide to This Aspect of Digital Estate Planning
“People thought that Andy Warhols and Jackson Pollocks should not have value. People thought that sports cards should not have value. People thought that sneakers should not have value …” – Entrepreneur Gary Vaynerchuk

Even with its headline volatility, the reality is that cryptocurrency will likely be around long after all of us. It often seems to be worth a lot, so you might wonder — can you leave it to your heirs? 

Possibly… but crypto isn’t as straightforward to bequeath as other types of assets. So, let’s take a look at where cryptocurrency assets fit in your digital estate planning so you can pass it on to your Research Triangle heirs the right way.

Digital Estate Planning: Big year for crypto

Though it’s been down lately, bitcoin is up 66% since the start of the year and could, experts say, hit a value of a hundred grand by the end of 2023. No wonder it’s increasingly popular: Did you know more than one in five people have owned crypto as of last year? 

More people are coming to believe that crypto is on par with stocks, property, and other conventional assets to add to an estate and be a potentially big windfall for your heirs. But what happens to your crypto when you die? 

Well, it could be lost to your heirs. Easily. 

Leaving stock or accounts to someone often means just listing them as a beneficiary. Signing over real estate usually means just shuffling papers. 

Cryptocurrency isn’t physically real like those assets; it can only be used digitally. Its security rests on private keys, security passwords that allow holders (you or your heirs) to access the funds. Your legal heirs will need these long strings of numbers and letters in order to take possession of the crypto. 

No problem, I’ll just put the passwords in my will … 

Bad move. Wills are part of public record — and therefore so is anything in the body of the will itself, like your crypto passwords. That’s all a thief would need …  

So here’s what you need for digital estate planning

You’ll want a memorandum, which is a separate document that your will refers to but isn’t part of the will (or the public record). But before writing that up… 

First, look at the people involved in your estate plan. Likely the first professional whose help you need will be an experienced Research Triangle attorney experienced with this asset in estate plans. You can get a sense of who they might be and what qualifications to look for here

Do your beneficiaries know much about crypto? Maybe, or maybe they don’t but they’re bright and can learn. Maybe they probably won’t learn, and you don’t want to chance leaving a potentially lucrative asset to someone who doesn’t understand what to do with it. In this case, you should have an executor with tech know-how — an unusual requirement in an estate plan, we know, but possibly indispensable if you’re leaving cryptocurrency behind. 

Your executor should also know the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), a law that allows your estate plan folks to access your online accounts after your death. (You can find different states’ versions of the law here.) 

Next comes your memorandum (which, remember, is not public information). In it, you list your cryptocurrency, including its description and location (this is often where your secure digital wallet, aka where you keep your crypto, is stored). You should also list website names and URLs to your digital currency exchanges where you buy and sell. 

Most importantly, list your usernames, passwords, personal ID numbers, and keys needed to log in to access your wallets, exchanges, websites, accounts, and devices associated with your digital assets. 

Keep this memorandum with your will or with your estate plan in a separate location — remember, it’s not in your will itself so it won’t become public information. 

You’ll also want a guide with general instructions on how to access your digital wallets and exchanges and how to buy and sell cryptocurrency. 

Digital estate planning final thoughts

Real quick, let’s talk taxes: What’s Uncle Sam going to think about your heirs’ new tax situation? 

The IRS’s take on cryptocurrency has changed frequently, but right now crypto is considered property for tax purposes (and subject to gain and loss reporting requirements on a tax return).

The IRS has been getting steadily stricter about reporting crypto transactions. It’s a fair bet they’ll be even more so in years to come. 

Trusts: These are another way to keep information in your estate private. One is a revocable living trust, but other kinds of trusts can work. We can help you explore this option if you’re interested. 

Updating: No estate plan is static — but a plan involving crypto needs updating more than most. Do not forget to do this, or all your extra work in bequeathing this valuable asset could be defeated. 


As your finances and taxes change over time, know that we’re here to help. Cryptocurrency fluctuates more than most assets, so always feel free to reach out with questions. And determining how best to handle said assets in your digital estate planning can be a part of that discussion.

Here for you

William Barton