Updated August 6, 2026. Quick answer: crypto held on an exchange and crypto held in your own wallet are two completely different inheritance problems. The exchange account is an account, with a company that can be asked and a statute that tells it whose instruction to follow. A self-custodied wallet has no company to ask. If the keys die with the owner, the asset is gone — not frozen, not recoverable, gone — and no law changes that.
Two assets that look the same and behave nothing alike
On an exchange, crypto is an account. There is a custodian holding it, a terms-of-service agreement governing it, and a process — however slow — for a personal representative to make a claim. It behaves much like a brokerage account whose provider is unusually cautious.
In self-custody, crypto is a secret. The asset is controlled by whoever holds the private key or seed phrase, and there is no third party in the middle. That is the entire design goal, and at death it is the entire problem.
Almost every mistake in this area comes from treating the second like the first.
The digital-assets statute does not reach a wallet
Nearly every state has adopted the Revised Uniform Fiduciary Access to Digital Assets Act, and it sets a strict order of priority for who may access a dead person’s online accounts — the three tiers, quoted from the statute.
Read what that statute actually operates on. Every tier is an instruction to a custodian: it tells the company holding the account whose direction to follow. That is our reading of the enacted text rather than a quotation of a rule about crypto, and it has an obvious consequence — where there is no custodian, there is nobody for the statute to instruct. A hardware wallet in a drawer is not covered by a law about custodians, however well drafted your will is.
The statute’s own limiter points the same way: it “does not give a fiduciary or a designated recipient any new or expanded rights other than those held by the user” (Fla. Stat. §740.004(2)). The user’s right to a self-custodied wallet was the key. Inheriting the right without the key inherits nothing.
The tax treatment is the settled part
The IRS has been clear since 2014 and says so on its own virtual-currency page: Notice 2014-21 explained that “virtual currency is treated as property for federal income tax purposes”, and that “longstanding tax principles applicable to transactions involving property apply to virtual currency.”
Property treatment is what makes the rest of the estate machinery work normally: it is an estate asset, it is inventoried, and the ordinary rules about basis at death apply the way they do to other property — how basis is treated at death and, where the estate is in a common-law state, why only half steps up.
One caveat straight from the IRS page: it states that those FAQs “generally apply to transactions involving digital assets completed before Jan. 1, 2025.” The property principle from Notice 2014-21 is not in doubt; the detailed reporting rules have been moving, and anyone filing for an estate should check the current guidance rather than a page like this one.
In probate, the problem is the inventory, not the law
A personal representative has to inventory estate assets, and cannot inventory what nobody knows exists. Crypto is uniquely bad here: no statements arrive, no institution writes to the estate, and a wallet leaves no paper. The other things executors find out too late.
Two consequences worth planning around. An estate can be closed without ever knowing about the asset — which is a different failure from the asset being contested. And the value can move enormously between the date of death and the date anyone finds it, which matters for both the estate’s tax reporting and for fairness between beneficiaries.
What the settlement itself costs, computed by state, is at the cost of dying index.
What actually works
Write down that it exists. Not the keys — the fact. Which exchange, or that there is a hardware wallet and roughly where. An executor who knows to look can follow the trail; one who does not know cannot.
Never put a seed phrase in a will. A will becomes a public court record in probate. This is the single most expensive mistake available in this category, and it is made by people trying to be helpful.
Use the exchange’s own beneficiary or access feature where one exists — the statute ranks a platform tool above a will, so where a custodian offers one it is the strongest instrument available.
For self-custody, the plan is physical and it has to be tested. Whatever the arrangement — a sealed instruction with a trusted person, a split backup, a safe-deposit route — a plan nobody has ever rehearsed is a plan that will be attempted for the first time by grieving people under time pressure.
The planning frame: crypto estate planning and digital assets in estate planning.
Sources, and what we could not read
IRS, Frequently Asked Questions on Virtual Currency Transactions (irs.gov), read 2026-08-06, quoting Notice 2014-21. Fla. Stat. §740.004 read at the Florida Senate the same day. The reading that RUFADAA operates on custodians and therefore does not reach a self-custodied wallet is ours, drawn from the enacted text, and is presented as reasoning rather than as a quoted rule.
What is not on this page: the death-claim process at any named exchange. We tried three on August 6, 2026 — Coinbase, Kraken and Gemini — and all three support pages returned 404. Rather than describe a process from memory or from someone else’s blog, we have left it out. If you are settling an estate with an exchange account, the exchange’s current support site is the only reliable source, and it will ask for a death certificate and letters of appointment.
See methodology and corrections. General information, not tax or legal advice. No affiliate links, nothing sold, and no exchange, wallet or custody product is recommended on this page.