Estate Planning
Cryptocurrency presents estate-planning problems that do not exist with most traditional assets. If you die owning a bank account, investment account, or retirement account, there is generally a financial institution that can work with your personal representative, trustee, or beneficiary to transfer the asset. Cryptocurrency—particularly cryptocurrency held in a private wallet—can be very different.
If no one knows that the cryptocurrency exists, your estate plan does not give the appropriate person authority to deal with digital assets, or your family cannot locate the information necessary to access the wallet, the asset may be extremely difficult or even impossible to recover.
For Maryland residents who own Bitcoin, Ethereum, or other cryptocurrency, simply stating in a Will or Trust who should inherit the asset is not enough. A complete estate plan must address two separate issues: who will have the legal authority to manage and transfer the cryptocurrency, and how that person will obtain the practical information necessary to access it.
As cryptocurrency becomes a more common part of individual and family wealth, Maryland estate plans need to account for the fact that digital assets do not always behave like traditional financial assets.
Traditional financial assets are generally held by institutions with established procedures for dealing with incapacity and death. A bank can recognize a properly appointed personal representative. A brokerage firm can transfer an account after receiving the necessary documentation. Retirement plan administrators have established procedures for paying designated beneficiaries.
Cryptocurrency may not have an institution standing behind it. The first important distinction is therefore between cryptocurrency held through a custodian or exchange and cryptocurrency held directly by the owner.
Cryptocurrency maintained through an exchange such as Coinbase or Kraken is custodial. The exchange controls the private keys, maintains the account, and has procedures governing access after the account owner’s death. Although transferring the account may still involve legal and practical complications, there is at least an institution with which the personal representative or trustee can communicate.
Self-custodied cryptocurrency is fundamentally different. The owner controls the cryptocurrency through a hardware wallet, software wallet, or other private wallet, and access generally depends upon possession of the private key or recovery information, often in the form of a 12- or 24-word seed phrase.
If that information is lost, there may be no bank, exchange, court, or other institution capable of restoring access. A Will stating that your Bitcoin passes to your children does not give your children the ability to access a wallet if no one can locate the necessary credentials.
That is why cryptocurrency estate planning must solve both the legal-access problem and the practical-access problem. A personal representative may have complete legal authority over an asset and still be unable to access it. Conversely, giving someone access information without providing appropriate legal authority can create an entirely different set of problems.
Maryland has specifically addressed fiduciary access to digital assets through the Maryland Uniform Fiduciary Access to Digital Assets Act, codified at Maryland Code, Estates and Trusts § 15-601 et seq.
The law addresses the circumstances under which fiduciaries—including personal representatives, trustees, and agents acting under Powers of Attorney—may obtain access to a person’s digital assets and electronic communications.
This is important because the authority of a personal representative or trustee to access digital property should not simply be assumed. A properly prepared Maryland estate plan should specifically address digital assets. Depending upon the client’s circumstances, appropriate authority should be included in the Will, Revocable Living Trust, and Financial Power of Attorney so that the person selected to act has clear authority to identify, access, manage, transfer, or dispose of digital assets.
The issue also extends beyond the cryptocurrency itself. Information necessary to locate or recover cryptocurrency may be contained in an email account, password manager, cloud storage account, electronic record, or other digital service. Maryland law distinguishes in certain circumstances between access to a digital asset and access to the content of electronic communications, making clear authorization in the estate-planning documents particularly important.
For cryptocurrency held through an exchange or other custodian, clients should also determine whether the provider offers its own beneficiary, legacy, or account-access designation. Those designations should be coordinated with the overall estate plan just as life insurance and retirement account beneficiary designations should be coordinated with a Will or Trust.
Digital assets should not be treated as an isolated category. They should be incorporated into the client’s overall estate plan.
Even perfectly drafted estate-planning documents cannot recover a private key or seed phrase that has been permanently lost.
This is one of the most important differences between cryptocurrency and traditional financial assets. An attorney can make sure that the appropriate fiduciary has legal authority to deal with the asset, but the client must also establish a secure method by which that fiduciary can ultimately obtain the information necessary to access it.
That does not mean private keys or seed phrases should be written into a Will. In fact, doing so can create a serious security problem.
When a Will is admitted to probate in Maryland, it becomes part of the probate proceeding through the Register of Wills. Confidential cryptocurrency credentials should therefore not be included in the Will itself. Estate-planning documents should provide the necessary legal authority, while the confidential information required to access the cryptocurrency should be maintained separately and securely.
A good cryptocurrency estate plan must accomplish both objectives without sacrificing security during the owner’s lifetime.
A practical cryptocurrency estate plan should allow the appropriate fiduciary to determine that the assets exist, identify generally where they are maintained, and locate the information necessary to access them without unnecessarily exposing private keys or seed phrases.
One approach is to maintain a separate digital-asset inventory or memorandum with the estate-planning records. The memorandum can identify the existence of cryptocurrency, the exchanges or types of wallets being used, and the location of the confidential access information without necessarily containing the private keys or seed phrases themselves.
For example, the estate records might indicate that the client maintains cryptocurrency in a particular exchange account and owns a hardware wallet, while separately identifying where the confidential recovery information for that wallet has been securely stored.
Keeping this information separate from the Will also makes the plan easier to maintain. Cryptocurrency holdings can change much more frequently than an estate plan. A client may acquire a new wallet, move assets from an exchange into self-custody, change exchanges, or adopt a different method for securing recovery information. A separate inventory can be updated as those circumstances change without requiring the client to execute a new Will every time a digital account changes.
The appropriate security arrangement depends upon the amount involved and the client’s particular circumstances. A relatively small exchange account may require a much simpler plan than substantial cryptocurrency maintained in private wallets. For significant holdings, more sophisticated security and access arrangements may be appropriate.
Whatever method is selected, it also needs to be realistic for the people who will eventually be responsible for carrying it out. A technically sophisticated arrangement is of little value if the successor trustee or personal representative has no realistic ability to understand or implement it. Choosing the right fiduciary can therefore be especially important when cryptocurrency represents a significant portion of the estate.
For some Maryland clients, a Revocable Living Trust can provide significant advantages for cryptocurrency. Simply signing a Trust, however, does not solve the problem. The cryptocurrency must actually be coordinated with and, where appropriate, transferred to the Trust.
One potential advantage is privacy. Probate administration involves filings with the Maryland Register of Wills, while the administration of a Revocable Living Trust generally occurs outside the probate process. For clients who do not want the nature and value of their cryptocurrency holdings unnecessarily disclosed through probate records, this can be an important consideration.
A Trust may also provide greater continuity at incapacity or death. A successor trustee can generally assume responsibility for properly funded trust assets without first obtaining appointment as personal representative through the probate process. Cryptocurrency can fluctuate substantially in value, and the ability to secure and manage an asset promptly may therefore be particularly important.
Incapacity should also be considered. Estate planning is not only about what happens after death. If a cryptocurrency owner becomes seriously ill or incapacitated, someone may need authority to protect or manage the digital assets while the owner is still alive. A properly drafted Revocable Living Trust and Financial Power of Attorney can address that possibility.
Trusts may also be useful when cryptocurrency is being left to younger beneficiaries. Rather than transferring a substantial digital asset outright to a young beneficiary, a Trust can allow the cryptocurrency or its proceeds to be managed and distributed according to terms established by the client.
Whether cryptocurrency should be held in a Trust depends upon the client’s overall estate plan, the type and value of the holdings, how the cryptocurrency is currently maintained, and what the client wants to accomplish. The important point is that the Trust must actually be coordinated with the assets it is intended to control. An unfunded Revocable Living Trust does not avoid probate or provide continuity for an asset merely because the Trust document exists.
Cryptocurrency should not be treated separately from the rest of a client’s wealth when evaluating potential estate taxes. Its value may increase the overall size of the estate and therefore affect both federal and Maryland estate tax planning.
For 2026, the federal estate and gift tax exemption is $15 million per person. Maryland’s estate tax exemption is considerably lower at $5 million per person. This means that a Maryland resident may have no federal estate tax liability and nevertheless have Maryland estate tax exposure.
For married couples, each spouse has a $5 million Maryland estate tax exemption, potentially providing up to $10 million between the spouses. As with other significant assets, substantial cryptocurrency holdings should therefore be considered when evaluating whether a client is approaching Maryland’s estate tax thresholds.
Maryland also imposes a separate inheritance tax on property passing to certain beneficiaries. Many close family members, including spouses, children and other lineal descendants, parents, grandparents, siblings, stepchildren, and certain other relatives, are exempt. Transfers to certain other beneficiaries may be subject to Maryland’s 10 percent inheritance tax.
Cryptocurrency is not excluded merely because it is digital property. If cryptocurrency represents a significant portion of a Maryland resident’s wealth, its value and the identity of the people who will inherit it should be considered as part of the overall estate and tax plan.
Cryptocurrency’s volatility creates additional issues when an estate is administered. The personal representative or trustee may need to determine the value of the cryptocurrency as of the date of death while also deciding whether and when the holdings should be retained, secured, transferred, or liquidated.
A significant change in value between the date of death and the eventual distribution can also affect beneficiaries. This makes it particularly important to select a fiduciary capable of handling the asset and to consider whether the estate-planning documents should provide appropriate authority and guidance concerning digital investments.
Cryptocurrency can also receive a new income-tax basis at death under the general rules applicable to inherited appreciated property. By contrast, cryptocurrency transferred as a lifetime gift generally carries the donor’s existing basis. For someone who purchased cryptocurrency years ago at a relatively low price, that distinction can have substantial income-tax consequences.
This is why a decision to give away cryptocurrency during life should not be based solely upon a desire to reduce the size of the Maryland taxable estate. Estate tax, capital gains tax, the client’s continued need for the assets, and the overall family plan should be considered together.
A Maryland cryptocurrency owner should be able to determine whether the existing estate plan addresses several important issues. Someone responsible for administering the estate should know that the cryptocurrency exists, even if that person does not currently have access to it. The Will, Trust, and Power of Attorney should be reviewed to determine whether the fiduciaries have appropriate authority over digital assets. There should also be a secure method for the fiduciary eventually to locate the information necessary to access the cryptocurrency without placing private keys or seed phrases in documents that may become public.
The plan should also account for changes in the client’s digital holdings. A Will drafted ten years ago may remain legally valid, but if the client subsequently accumulated substantial cryptocurrency and the documents contain no meaningful digital-asset provisions, the estate plan may not adequately address the client’s current assets.
This does not necessarily mean that every cryptocurrency owner needs a complicated Trust structure. A client with a modest exchange account has different planning needs from a client holding substantial cryptocurrency through several self-custodied wallets. The estate plan should reflect the actual nature and value of the assets involved.
Effective cryptocurrency estate planning is about more than making sure someone knows a password. It requires coordination among ownership, legal authority, practical access, security, incapacity planning, beneficiary designations, taxes, and the client’s wishes for the people who will ultimately inherit the property.
For some Maryland clients, the appropriate solution may be relatively straightforward: adding appropriate digital-asset provisions to the Will and Power of Attorney and establishing a secure digital-asset inventory. For others, particularly clients with significant self-custodied cryptocurrency, a Revocable Living Trust and more detailed access arrangements may be appropriate.
The right approach depends upon the amount and type of cryptocurrency involved, how it is held, the client’s family circumstances, and the client’s broader estate-planning goals.
At C&O Law Group, LLC, we work with Maryland individuals and families to develop estate plans that address both traditional property and digital assets. If cryptocurrency represents a meaningful part of your wealth, it should be addressed deliberately as part of your estate plan rather than left for your family to figure out after your death.
The time to determine whether your personal representative or trustee will be able to identify, access, and properly administer your cryptocurrency is while you are available to create a secure and legally appropriate plan.
This article provides general information about digital asset and cryptocurrency estate planning under Maryland law and is not legal advice. Fiduciary access rules, tax thresholds, and exchange policies change, and the right structure depends heavily on your specific holdings and family situation. For advice on your situation, consult a licensed attorney in your jurisdiction.
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