People have been using trusts to pass wealth to their kids for generations. But most trusts were written before Bitcoin existed, before anyone owned NFTs, before digital assets became a real part of family wealth.
Standard trust language doesn’t handle crypto wallets or private keys. It doesn’t address what happens if your beneficiaries can’t access your hardware Wallet, or if you die and nobody knows the Seed Phrase. These aren’t theoretical problems. Families lose access to digital assets all the time because the Estate Planning documents don’t account for how these assets actually work.
What Counts as a Digital Asset #
When people hear “digital assets,” they usually think crypto. That’s part of it, but there’s more.
You’ve got Bitcoin, Ethereum, and whatever other cryptocurrencies you hold. You’ve got NFTs, whether they’re art, collectibles, or something else. You might have domain names worth money, intellectual property stored digitally, or online accounts with actual financial value.
All of these need to be included in your trust documentation. The problem is that most attorneys who draft trusts don’t deal with digital assets regularly. They know how to handle Real Estate and brokerage accounts. They don’t necessarily know how to write trust language that covers a hardware Wallet sitting in your safe or a Seed Phrase stored somewhere.
Why Standard Trust Language Doesn’t Work #
Traditional trusts assume your assets are held by institutions (banks, brokerages, title companies). Someone dies, the trustee contacts the institution, provides a death certificate and trust documents, and the institution transfers the assets.
Digital assets don’t work like that.
If you die and your crypto is on a hardware Wallet, there’s no institution to call. Your trustee needs the physical device and the PIN. If your crypto is on an Exchange, your trustee needs login credentials and two-factor Authentication access. If it’s in a self-Custody Wallet, they need the Seed Phrase.
Without specific instructions in the trust about how to access these things, and without someone who actually knows where they are, the assets are effectively lost.
What Your Trust Needs to Cover #
Define what digital assets you’re including. List specific wallets, Exchange accounts, NFT marketplaces, and any other platforms where you hold value. Be specific. “All my Cryptocurrency holdings” is too vague if you have assets Spread across multiple wallets and exchanges.
Explain how to access them. Your trustee needs to know where you keep hardware wallets, where seed phrases are stored, and how to access Exchange accounts. This doesn’t mean writing your Seed Phrase directly in the trust (don’t do that), but it means documenting a secure process for your trustee to follow.
Address security. You want your trustee to be able to access your assets, but you don’t want to create security vulnerabilities while you’re alive. This usually means using a secure system where access information is stored separately from the trust document itself, and your trustee only gets access under specific conditions (typically your death or incapacity).
Handle tax reporting. Digital assets have tax implications. Your trust needs provisions for handling Capital Gains tax, estate tax reporting, and ongoing tax Compliance for any assets that generate income (like Staking rewards).
Plan for technology changes. The platforms and wallets you use today might not exist in 20 years. Your trust should include language that gives your trustee flexibility to move assets to new platforms or technologies as needed.
Who Should Be Your Trustee #
You need someone who understands digital assets or who’s willing to learn. Naming your 75-year-old uncle who’s never used a computer as your trustee probably isn’t going to work if most of your wealth is in crypto.
Some families use a professional trustee (a trust company or bank) for traditional assets and add a co-trustee who handles digital assets. This can work, but you need to make sure the professional trustee is comfortable with this arrangement. Many institutional trustees don’t want to deal with crypto because they don’t understand the liability.
Another option is naming a tech-savvy family member as trustee with instructions to hire specialists when needed. Digital Ascension Group coordinates with professional trustees and provides technical support for families in this situation.
How to Store Access Information Securely #
This is where most people get stuck. You need your trustee to be able to access your digital assets, but you can’t just leave your seed phrases sitting in a file cabinet.
Some families use a multi-signature setup where multiple people need to approve transactions. Others store encrypted information with instructions for the trustee to access it. Some use commercial services that specialize in Digital Asset inheritance.
The specific approach depends on how much you’re holding, how tech-savvy your trustee is, and what level of security you need. For someone holding $50,000 in crypto, a relatively simple solution works. For someone holding $5 million, you want multiple layers of security and backup systems.
Updating Your Trust as Things Change #
You buy new crypto, you sell some, you move assets to a different Wallet. Your trust needs to keep up with these changes.
Most people don’t want to amend their trust every time they make a transaction. Instead, the trust can reference a separate document (sometimes called a Digital Asset inventory or memorandum) that you update as needed. This document isn’t part of the trust itself, but the trust incorporates it by reference.
The memorandum lists your current holdings, where they’re located, and how to access them. You update this document regularly (ideally quarterly or whenever you make significant changes), and your trustee uses it to know what assets exist and where to find them.
What Happens to Assets Held on Exchanges #
If your crypto is on Coinbase, Kraken, or another Exchange, the process is more straightforward than self-Custody but still has complications.
Most exchanges have policies for handling deceased users’ accounts, but these policies vary. Some require probate proceedings even if you have a trust. Some will work directly with your trustee. Some freeze the account pending extensive documentation.
Your trust should specifically list Exchange accounts and provide authorization for your trustee to access them. Some people also keep a small amount on exchanges and move the bulk to self-Custody specifically to make estate administration easier.
Teaching Your Heirs About Digital Assets #
Your kids or other beneficiaries need to understand what they’re inheriting and how it works.
If you’re leaving someone $500,000 in Bitcoin and they’ve never owned crypto before, they need education before they inherit it. They need to understand basic security practices, how to avoid scams, what their tax obligations are, and how to make decisions about holding versus selling.
Some families do this gradually while the parents are still alive. Others include provisions in the trust for education and professional support. Digital Ascension Group coordinates with families to provide this education and ongoing support for beneficiaries who inherit digital assets.
Tax Considerations You Can’t Ignore #
Digital assets get a step-up in basis when you die, just like traditional assets. If you bought Bitcoin at $10,000 and it’s worth $60,000 when you die, your beneficiaries inherit it with a $60,000 basis. If they sell immediately, there’s no Capital Gains tax.
But if they hold it and it goes to $80,000, they owe tax on the $20,000 gain. Your trust should address whether beneficiaries should sell immediately, hold long-term, or something in between. This is where Digital Wealth Partners, our affiliated RIA, coordinates with tax professionals to help families make these decisions.
Estate tax is a separate issue. If your estate is large enough to trigger federal estate tax (over $13.61 million for individuals in 2024), your digital assets are included in that calculation just like everything else.
When to Use a Trust vs. Other Structures #
Not everyone needs a trust for their digital assets. If you’re holding $10,000 in crypto, a simple will with clear instructions might be sufficient.
Trusts make sense when you’re holding significant value, when you want to avoid probate, when you have minor children, or when you want ongoing management of assets rather than immediate distribution.
Some people use trusts for privacy. Wills go through probate and become public record. Trusts don’t. If you don’t want your crypto holdings to be public information, a trust handles that.
Digital Ascension Group coordinates with Estate Planning attorneys to help you figure out which structure makes sense for your situation. We don’t draft the legal documents (that’s what attorneys do), but we help you understand your Options and connect you with attorneys who know how to handle digital assets.
Common Mistakes Families Make #
Writing digital assets into the trust but not explaining how to access them. The trust says “all my Cryptocurrency holdings,” but there’s no information about where the wallets are or how to access them.
Storing seed phrases in the same place as the trust document. If someone can read your trust, they can access your crypto. These need to be stored separately.
Never tell the trustee about the digital assets. You’ve done all the planning, but your trustee has no idea you own crypto until after you die.
Forgetting to update the trust when you change wallets or platforms. Your trust references a hardware Wallet you stopped using three years ago.
Not coordinating with the people who need to execute the plan. Your trustee doesn’t know how to use a hardware Wallet. Your attorney doesn’t understand multi-sig. Your beneficiaries don’t know what Bitcoin is.
Getting This Set Up #
Start by taking inventory of what you actually own. List every Wallet, every Exchange account, every NFT marketplace, every place you hold digital value.
Document how to access each one. Where’s the hardware Wallet physically located? Where are seed phrases stored? What are the login procedures for Exchange accounts?
Find an attorney who understands digital assets. Not every Estate Planning attorney does. You want someone who’s dealt with this before, not someone who’s going to learn on your dime.
Work with someone technical who can help implement secure access systems. This is where Digital Ascension Group comes in. We coordinate between your attorney, your technical needs, and your family to make sure the plan actually works.
If you need investment advice about your digital assets (allocation decisions, Risk Management, when to sell), Digital Wealth Partners coordinates with licensed professionals to assist with that.
Test the plan while you’re alive. Have your trustee go through the process of accessing a Wallet (not moving anything, just accessing) to make sure they can actually do it when needed.
Bottom Line #
Most family wealth planning assumes assets are held by institutions that can be contacted when someone dies. Digital assets don’t work that way. You need different planning, different documentation, and different systems.
The families that get this right are the ones who plan specifically for digital assets, not the ones who try to force digital assets into traditional planning structures. If you’re holding significant value in crypto or other digital assets, you need a trust that actually addresses how these things work.
