Here’s something that should keep you up at night if you hold any meaningful amount of crypto: if you died tomorrow, could your family actually access it?
Most people’s honest answer is no. Maybe you told your spouse the hardware wallet is in the desk drawer. Maybe you wrote down a seed phrase somewhere. You might even have a will that says “all my property goes to my wife” and figured that covers it.
It doesn’t.
The Problem with Crypto Holdings in an Estate
Traditional estate planning was built for a world where assets live in institutions. Your bank account, your house, your brokerage statement. These things have customer service numbers. There are procedures. Courts know how to handle them.
Crypto doesn’t work that way.
When you hold crypto, you’re not really holding anything a court can see or touch. You’re holding knowledge. The knowledge of a private key or a seed phrase. That knowledge is what gives you control over value stored on a blockchain. Transfer that knowledge and you’ve transferred the asset. Lose that knowledge and the asset might as well not exist.
This creates a massive problem. You can’t get a court order forcing a blockchain to transfer crypto from a wallet nobody can access, there’s no customer service and you can’t transfer ownership without the private keys, no matter how many documents you file.
I’ve seen what happens when someone dies with crypto and no real plan. The spouse finds the hardware wallet but can’t figure out the PIN. Exchange accounts get locked pending “verification” that drags on for months. Families spend six figures on lawyers trying to recover funds that are technically still there but practically gone.
What a Living Trust Actually Does
A living trust is basically a legal container. You create it while you’re alive, transfer your assets into it, and serve as trustee with complete control. Nothing changes day to day. You still manage your crypto exactly like you did before.
But when you die, the trust continues to exist. Your successor trustee takes over. The assets transfer privately according to your instructions. No probate, no court, no public records, no waiting for approvals while your DeFi positions get liquidated.
That privacy piece matters more than people realize.
Probate filings become public record. The probate petition lists the deceased person’s assets and their estimated values. Anyone can go to the courthouse or search online and see what was in the estate. For traditional assets, this is uncomfortable but not catastrophic. People can see you had a house and a brokerage account.
For crypto, listing wallet addresses in a public document exposes everything. With a wallet address, anyone can see your exact balance. Your complete transaction history. What protocols you’ve used. What other addresses you’ve transacted with. This information is valuable to criminals, researchers, competitors, and anyone else interested in your financial affairs.
A living trust solves this because the transfer happens privately. Your trustee can access everything immediately using the detailed technical procedures you’ve documented. No court involvement needed.
Let’s look at a general comparison of a living trust vs a last will:
Feature
- Revocable Living Trust
- Last Will & Testament
Avoids Probate?
- Yes. Assets transfer directly to beneficiaries.
- No. Must go through probate court.
Privacy
- 100% Private. Your estate details remain confidential.
- Public Record. Once filed, anyone can read it.
Incapacity Protection
- Yes. Trustees can manage assets if you fall ill.
- No. Only effective after death.
Time to Distribute
- Weeks or Months.
- 9 Months to 2 Years (average).
Control
- You keep full control while alive.
- You only control distribution after death.
Why Wyoming Stands out for Crypto Holdings
If you’re going to hold crypto through an LLC (and you probably should), the state where you form that LLC matters a lot.
Wyoming has built the most crypto-friendly legal framework in the country. This isn’t about finding a loophole. Wyoming genuinely wants crypto businesses and investors. They’ve passed legislation specifically designed for digital assets, created legal categories that recognize how crypto actually works, and built a regulatory environment that treats digital asset holders fairly.
Three things make Wyoming stand out.
First, no state income tax. None. When you realize gains on cryptocurrency held through a Wyoming LLC, you pay federal taxes but zero state income tax on those gains. Compare this to California, where state income tax on crypto gains can exceed 13 percent. For a portfolio that has appreciated significantly, these state taxes add up to real money.
The math becomes compelling quickly. If you have $500,000 in unrealized crypto gains and you live in California, you’re looking at roughly $65,000 in state taxes when you sell. If those same assets are held through a Wyoming LLC, the state tax is zero. This applies regardless of where you personally live.
Second, asset protection through charging order provisions. If someone sues you personally and wins a judgment, they become your creditor. That creditor wants to collect from your assets. If you own crypto directly, the creditor can potentially force you to hand it over.
But if your crypto sits inside a Wyoming LLC, the creditor’s options become limited. Wyoming law says that a creditor’s only remedy against your LLC interest is a charging order. They can intercept any distributions the LLC makes to you, but they can’t force the LLC to make distributions, but they can’t seize the LLC’s assets and can’t force a sale.
So you, as the manager of the LLC, simply decide not to make any distributions. The creditor sits there with a charging order that entitles them to nothing.
Third, privacy. Wyoming doesn’t require public disclosure of LLC member names. When you form a Wyoming LLC, the articles of organization list the registered agent and the organizer, but not the actual owners. Someone searching public databases can’t easily link you to your crypto holdings.
How They Work Together
Here’s where it gets interesting. Your living trust is the estate planning vehicle. Your Wyoming LLC is the asset protection and tax planning vehicle. Combined, they create layers of protection that neither structure provides alone.
The basic structure: You form a Wyoming LLC. The LLC holds your cryptocurrency. You create your living trust. Your membership interest in the LLC transfers into the trust. You serve as both the manager of the LLC and the trustee of the trust, maintaining complete control during your lifetime.
When you die, your successor trustee takes over the trust, which owns the LLC, which holds the crypto. The transfer happens privately, without probate, and without your wallet addresses becoming public record.
A revocable living trust by itself provides no protection from your creditors during your lifetime. But the Wyoming LLC inside the trust does provide protection through charging order limitations. The trust handles the estate planning. The LLC handles the asset protection.
The Real Question
Most people reading this know they should do something about their crypto estate planning. They’ve been meaning to write everything down. They mentioned it to their spouse once after reading about someone who lost their keys.
Then life happens and they forget.
You might not have as much time as you think. None of us do.
The work you do now, even imperfect work, protects your family better than the perfect plan you never get around to creating. Start with documenting what you own and where it lives. Then talk to someone who actually understands both estate planning and crypto. The combination of a living trust and a Wyoming LLC isn’t the only way to protect your digital assets, but it’s one of the most effective structures available.
Your future self, and your family, will thank you for figuring this out while you still can.
