Cryptocurrency presents unique challenges for estate planning, as crypto has little to no central oversight. If heirs cannot find a way to access their crypto, there is possibly no recovery. That risk alone makes proper planning essential.
Granting legal authority for exchange-held and custodial cryptocurrency
California follows the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA). This law governs how custodians must release digital assets. Custodians are companies that hold and control access to digital-asset accounts, such as cryptocurrency exchanges and hosted wallet providers.
A fiduciary does not get automatic access to these accounts. They need authority granted through a will, trust, power of attorney, court order, or an online tool. RUFADAA has a three-tier hierarchy of access that works as follows:
- Directions left in a custodian’s online tool come first, as long as the user can change or delete them at any time. These directions override any conflicting language in a will or trust.
- If no online tool exists or the user did not use one, clear instructions in a will, trust, or power of attorney take over. They legally override the platform’s standard terms of service.
- If neither exists, the platform’s standard terms of service control access by default.
To make a claim, the trustee must show legal papers and follow the custodian’s estate claim process. Each custodian then decides how to share the assets under its own systems and policies. RUFADAA sets time limits for custodians to respond, and a court can order disclosure if a custodian refuses without a valid reason.
Accessing self-custodied cryptocurrency
Self-custodied cryptocurrency works differently. The owner controls the private keys directly, often through a hardware wallet, so no third-party custodian exists for RUFADAA to compel.
The hardware wallet itself is tangible property the fiduciary can legally possess as part of the estate. However, the wallet is merely a key storage device. The cryptocurrency itself exists on the blockchain and is intangible property accessed through those keys.
Real access depends on having the private key or seed phrase. RUFADAA does not require custodians to bypass security measures or decrypt devices. For self-custodied crypto, this means heirs need both the physical wallet device and the private key or seed phrase to access the funds.
A proper estate plan ensures digital wealth can be safely passed to the next generation. Taking proactive steps helps prevent the danger of losing these assets forever.
