What Happens to Your Bitcoin When You Die? A 2025 Guide to Digital Asset Estate Planning

By Jamie Hopkins | CEO, Bryn Mawr Trust Advisors
October 29, 2025

The amount of attention and money flowing into digital assets has reached unprecedented levels. Since bitcoin’s resurgence and the rise of countless other cryptocurrencies, the total market capitalization has soared, now exceeding $3 trillion. This massive shift reflects our increasingly digital world, where traditional assets are rapidly moving online.

Business is conducted globally and digitally, often between parties who never meet in person. Digital currencies are no longer a niche interest; they are a significant component of the modern economy. But this explosion of digital wealth brings a critical question: what happens to these assets when the owner dies or becomes incapacitated?

While digital currencies can simplify transactions, they introduce significant complexity to the estate planning process. The traditional approach of writing a will and trusting an executor to locate all physical assets is no longer sufficient for the digital age.

A key piece of legislation governing this area is the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). Understanding this act is crucial for ensuring your clients’ fiduciaries can access and manage their digital legacy.

Understanding Account Control Under RUFADAA

Despite names like “currency,” “coin” or “gold,” the IRS classifies cryptocurrencies as property, not currency. This means they are taxed and treated like other assets, such as stocks or real estate. Because they are digital, they also fall under various state and federal laws governing electronic assets.

Since 2017, most states have adopted RUFADAA, which outlines the access rights for fiduciaries – such as executors or trustees – when a digital asset owner passes away or is incapacitated. The act establishes a clear hierarchy for determining who gets control.
Under RUFADAA, any online tool a service provider offers for designating a beneficiary takes top priority. This means a beneficiary your client names directly on an exchange’s platform will override instructions in your client’s will or trust for that specific account.

If an online tool isn’t used, your client’s will, trust or power of attorney documents will then dictate who has access. Finally, if your client has neither, the platform’s Terms of Service Agreement (TOSA – that lengthy document your client agrees to when signing up – will control access. For many, this default option can lead to unintended consequences.

It’s vital to understand that access does not equal ownership. RUFADAA only grants fiduciaries access to their digital information; it does not transfer ownership of the underlying asset. For example, if your client’s TOSA for a digital media library grants them a lifetime lease, they cannot pass those songs or books to their heirs.

Furthermore, a service provider is not required to grant your client’s fiduciary full access to their account. Under RUFADAA, they have three options:

1. Provide the fiduciary with full access to the account.
2. Provide partial access, limited to what is necessary for estate administration.
3. Provide a “data dump” of the account’s contents.

Many custodians prefer the data dump option to avoid privacy violations or other legal issues, which can complicate the process for their executor.

The Unique Challenges of Cryptocurrencies

With cryptocurrencies, the owner has a property right to the asset itself. Upon death, that ownership can legally pass to an heir. However, accessing it is another matter entirely.

The risk of losing cryptocurrencies is significantly higher than with traditional assets. Because most cryptocurrencies are secured on a blockchain, a lost private key can mean the permanent loss of the asset. The exchanges and platforms where they hold crypto may not be able to help them recover it. The private key is the ultimate proof of ownership, and it is designed to be irrecoverable by anyone but the owner.

This security feature is a double-edged sword. While it makes it nearly impossible for a hacker to steal your client’s assets without their key, it also means that without proper planning, their wealth can be lost forever. A court order is worthless if their executor cannot find the private keys.

Modern Digital Estate Planning

Digital assets have real-world value and must be reported as part of their estate. This requires tracking their cost basis for tax purposes, and for larger estates, these assets may be subject to federal estate taxes.

Despite the challenges, there are benefits. Inherited assets, including cryptocurrencies, often receive a “step-up in basis.” This means the asset’s cost basis is adjusted to its fair market value on the date of death. For example, if your client bought bitcoin for $5,000 and it is worth $100,000 when they die, their heirs inherit it with a $100,000 basis. This erases the tax liability on the $95,000 gain. If they had sold it during their lifetime, they would have owed capital gains tax on that profit.

To ensure your clients’ digital assets are protected and passed on according to their wishes, they should consider these essential planning steps:

• Create a Digital Asset Inventory: Keep a detailed list of all digital assets, including cryptocurrencies, social media accounts, websites and online financial accounts. Note where they are held and their approximate value.
• Securely Document Access Information: For cryptocurrencies, this means meticulously recording private keys, seed phrases and any login credentials for exchanges or digital wallets. Use a secure method like a password manager, an encrypted physical device, or instructions stored with your attorney.
• Consider Cold Storage: For significant crypto holdings, moving them from an online exchange to a “cold wallet” (an encrypted physical device like a USB drive) can increase security. However, your clients must have a plan to protect the device itself and ensure their executor knows of its existence and how to access it.
• Update Your Legal Documents: Explicitly grant fiduciaries the authority to access digital assets in your client’s will, trust and power of attorney. This provision should specifically mention cryptocurrencies and other digital property.
• Name Digital Fiduciaries: Consider appointing a separate executor or instructing the primary executor to hire an expert who is knowledgeable about managing and liquidating digital assets.

The world of digital assets will only continue to grow. Taking proactive steps today is the only way to ensure your clients’ digital legacy is preserved for their loved ones tomorrow.

Jamie P. Hopkins is the Chief Executive Officer of Bryn Mawr Trust Advisors and Chief Wealth Officer of WSFS. Jamie is also the founder and president of the 501(c)(3) non-profit, FinServ Foundation and his new best-selling book is Your Retirement Sketchbook, designed to make retirement planning simple.

Featured Photo Credit: Freepik

The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the position of DACFP or its affiliates. This content is provided for educational and informational purposes only and does not constitute investment, financial, legal, tax, or accounting advice, nor an offer, solicitation, or recommendation to buy or sell any security or other asset. Information is current as of the date of publication and may become outdated; no representation is made as to its accuracy or completeness. Publication does not constitute an endorsement of the author, the author’s firm, or any product or service referenced, and the author may hold positions in the assets discussed. Readers should consult their own qualified professionals before making any financial decisions.