Bitcoin Boom: Does Your Estate Plan Include Your Cryptocurrency?

May 18, 2021


Bitcoin led the way as the trendsetter of the cryptocurrency world. But this year, it has jumped into the mainstream as the superstar of decentralized peer to peer cryptocurrency network.

Cryptocurrencies are just one type of digital assets, like Bitcoin. Digital assets and accounts by definition include all electronic records in which an individual has a right or interest.

So, for those investing in bitcoin or other cryptocurrencies, or those with digital accounts with monetary value (or sentimental value), it is imperative to protect your digital wealth. Do this by incorporating a digital estate plan into your traditional estate plan.

In 2016, California enacted the Revised Uniform Fiduciary Access to Digital Assets Act, which introduces a three tier system for California residents which addresses how to handle cryptocurrency and digital assets. It also determines who can access them when a user has passed away.

Let’s jump in and use John as an example to illustrate how the law would play out.

According to this law, a “user” is the person who held the account, and a “custodian” is the service provider. For example, at his passing, John, had a Google account. He also had some Bitcoins and LiTeum held in his Coinbase account. He held most of his digital wealth in cryptocurrency in his Coinbase account. His Google account has no monetary value. But he stores his personal files in Gsuite, family photographs in Google Photos and videos on YouTube. This gives his Google account informational as well as sentimental value.

Tier 1: User’s Intent Without an Estate Plan 

According to the law, here we ask the question, “Did the user, John, utilize an online tool provided by the custodian (Google and Coinbase, in this case)?”  If the custodian offered an online tool where John can list out his instructions or wishes with respect to his accounts, the custodian must follow those expressed instructions. For example, if John has used Google’s Inactive Account Manager, then by law Google must follow those instructions left. John’s intent is clear, and he has used an online tool. The custodian will follow these instructions. John decides whether the account can be deleted, saved, or emailed to someone else. Most service providers are slowly rolling out their own ‘Online Tools’ for users users. At the moment, Google’s Inactive Account Manager is the most robust tool. It allows a user to designate time periods of non use, set rules for when Google can reach out to named persons, leave instructions for transfer as well as deletion.

Tier 2: User’s Intent in an Estate Plan

At the second tier, if there was no use or availability of an online tool, the custodian must follow the user’s estate plan. If the user has made his intent clear in his estate plan the custodian will look to those instructions instead. So, for example, if John has named a Digital Executor and Trustee to manage his digital assets and accounts, like Google and Coinbase, the Digital Executor or Trustee will take over after his death. Google and Coinbase must follow the estate planning instructions. If there aren’t specific instructions for those accounts, the Digital Executor or Trustee will dictate what happens to those accounts, just like a General Trustee would do with traditional accounts.

Tier 3: User’s Absence of Instructions

But, what if the user has not left instructions in an online tool and does not have a digital estate plan? At the third tier, the custodians Terms of Use will dictate what will be done.  Absent a digital estate plan or User Tool, their terms of service will provide the next steps. Some custodians will require a court order in order to transfer the accounts or allow access, but some, like Yahoo! will delete account. Yahoo!’s Terms of Use, state that “neither the account nor any of the content therein are transferable, even when the account owner is deceased.” This would mean losing access to valuable accounts for family members.


So, what can be done? Well, there are only a handful of service providers that have incorporated online tools addressing death on their websites. So it’s up to the user to make proper estate plans address their digital assets and accounts. If you have not done any digital planning and you have a lifestyle dependent on your online digital accounts, it is imperative that you update your estate plan to include digital assets and accounts.

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