Cryptocurrency belongs in your estate plan like any other asset, but it has one added risk: if no one can access the wallet or account, the holdings can be lost. A good plan identifies your crypto, names who will manage it, and gives that person a secure way to reach it.
Here are the main challenges and the tools Colorado law provides.
Why Crypto Needs Special Planning
Crypto held in a wallet you control depends entirely on private keys or a recovery phrase. Your will or trust decides who inherits, but neither helps if the keys cannot be found.
The difference between a will and a trust also affects how crypto passes and how private the process is.
Crypto held on an exchange is different, because the exchange is a custodian with account records. Your plan should cover both kinds of holdings.
Colorado’s Digital Assets Law
Colorado has adopted the Revised Uniform Fiduciary Access to Digital Assets Act. It recognizes an online tool, a service a custodian provides that lets you give directions for disclosure of your digital assets, separate from the terms-of-service agreement.1
Unless you prohibited it or a court directs otherwise, a custodian must give your personal representative a catalog of your communications and your other digital assets.2 The representative must first provide the required documentation, and these rules reach only what a custodian holds, not keys that you alone controlled.
Access planning for crypto has to balance security with the need for someone to reach it later. Johnson Law Group offers a no-pressure consultation to build that into your plan, so schedule a consultation before you update your accounts.
Will or Trust for Crypto?
A will generally must go through probate, a court process, before it is effective to transfer property.3 A funded living trust can hold crypto accounts and let a successor trustee act without probate.
Whichever you choose, name a fiduciary who understands digital assets or authorize them to hire help.
How to Plan for Access Safely
- Keep an inventory. List wallets, exchanges, and the types of holdings, and update it regularly.
- Do not put keys in your will. Store access instructions separately in a secure location your fiduciary can reach.
- Use custodian tools. Set up any legacy or online tool options your exchanges offer.
- Consider tax effects. Digital assets are treated as property for federal tax purposes, so sales and transfers can have tax consequences.4
Keep the Plan Current
Holdings, platforms, and laws change quickly. Review your crypto inventory and access instructions whenever you open or close an account.
Talk With a Colorado Estate Planning Attorney
Crypto that cannot be accessed cannot be inherited, so planning for access is as important as deciding who receives it. Johnson Law Group is here to help.
The attorneys at Johnson Law Group help clients include digital assets in wills and trusts and will give you a clear read on your options. Schedule a free consultation through our Colorado offices, and we will serve as your North Star from here.
Sources
[2] C.R.S. § 15-1-1508 – Disclosure of other digital assets of a deceased user to the personal representative | https://colorado.public.law/statutes/crs_15-1-1508
[3] C.R.S. § 15-12-102 – A will must be declared valid by informal probate or adjudication of probate to prove the transfer of property, with listed exceptions | https://colorado.public.law/statutes/crs_15-12-102
[4] Bloomberg Tax – Digital assets are treated as property for federal tax purposes | https://pro.bloombergtax.com/?p=24983