Crypto inheritance in the United States

Crypto is property

For US tax purposes, “digital assets are considered property, not currency” (IRS). That principle goes back to IRS Notice 2014-21 and still stands. For inheritance it means crypto is treated like shares or other investments.

The step-up in basis

Property “acquired from a decedent” generally gets a new tax basis equal to its fair market value on the date of death (Internal Revenue Code section 1014). In plain terms: if your father bought bitcoin for $5,000 and it was worth $80,000 when he died, your starting point is $80,000. If you sell it later for $85,000, the taxable gain is $5,000, not $80,000.

Exception to know about: assets in certain irrevocable trusts that aren’t part of the taxable estate don’t get the step-up. The IRS confirmed this in Revenue Ruling 2023-2 (IRS Bulletin 2023-16). If crypto was held in a trust, ask the estate’s adviser.

This makes a record of the value at the date of death important. Exchanges can provide a statement; for self-held crypto, note the price from a reliable source for that date and keep it with the estate papers.

Federal estate tax

• For people who die in 2026, the federal estate tax exclusion is $15 million per person (IRS). Estates below that owe no federal estate tax.
• The 2025 tax law set this amount with no expiry date, indexed for inflation from 2027. Congress can of course still change it.
• A surviving spouse can take over the unused exclusion (called portability), but only if the executor files an estate tax return, Form 706. That’s due nine months after death, though estates too small to need a return can still elect portability for up to five years under Rev. Proc. 2022-32 (IRS estate tax FAQ). Even estates that owe nothing sometimes file for this reason.

Several states have their own estate or inheritance tax, with much lower thresholds. Check the state where the person lived.

Probate and privacy

Probate is the court process that confirms the will and appoints the executor. The court’s appointment papers, usually called letters testamentary (with a will) or letters of administration (without), are what exchanges ask for. Many states have a simpler small-estate affidavit for modest estates.

In most states a will filed for probate becomes a public court record. That’s why seed phrases and PINs never belong in a will. See What to put in your will.

Assets held in a living trust, or passed through a transfer-on-death arrangement, can skip probate. Some crypto custodians offer transfer-on-death beneficiaries; the big exchanges we checked don’t.

RUFADAA: access to online accounts

The Revised Uniform Fiduciary Access to Digital Assets Act, adopted in the large majority of states, sets out when an executor may access a deceased person’s online accounts. In short:

1. A direction given through a company’s own “online tool” comes first.
2. Next, directions in a will, trust or power of attorney.
3. Otherwise, the company’s terms of service apply.

Companies may ask for a court order, and the content of messages is only disclosed if the person consented. RUFADAA helps with email and exchange accounts. It can’t help with a wallet where the person held the keys; there’s no company to ask.

Tax forms that help heirs find crypto

Brokers must report crypto sales on Form 1099-DA for transactions from 1 January 2025, with cost basis reporting for certain transactions from 2026 (IRS). A 1099-DA among the person’s papers tells you which platforms they used. Form 1040 also asks every year whether the taxpayer received or disposed of digital assets.

Checklist for US executors

• List every exchange account and wallet, using Finding crypto.
• Record values on the date of death.
• Get letters testamentary or administration (or a small-estate affidavit) for exchange claims.
• Ask the estate attorney about Form 706, state estate tax, and any trusts.
• Keep records of the stepped-up basis for each heir.

Not tax or legal advice. Figures are for 2026; check the linked IRS pages for updates.