In short
A trust can pass crypto to heirs without probate and with rules attached, but it only works if the trust actually controls the keys. In the US a revocable living trust keeps the step-up in basis; an irrevocable trust that takes assets out of your estate loses it. In the UK, putting assets above the nil-rate band into most trusts costs inheritance tax up front. Either way, pick a trustee who can hold a key, or a custodian that can hold it for them.
What a trust is for
A trust is a legal arrangement in which a trustee holds assets for beneficiaries under rules you write. For crypto the attractions are the usual ones: assets in a trust don’t go through probate, you can say when and how much a beneficiary receives, and a successor trustee can take over if you become incapacitated. Trusts are common in the US and the UK and rare in most of continental Europe, where civil-law countries use foundations or simply don’t offer the equivalent.
This isn’t legal advice, and trust law is local. What follows is enough to ask the right questions.
United States
- Revocable living trust. The most common choice. You’re the trustee while you live, you can change it, and assets in it skip probate because the trust, not you, owns them. The trust has to be funded: assets are retitled “into your name as trustee of the revocable trust” (ACTEC Foundation). For tax the trust is ignored while you’re alive, and because the assets are still in your estate at death, your heirs get the step-up in basis in the normal way; the tax code says so explicitly for property in a revocable trust whose income is payable to you (26 U.S.C. §1014(b)(2)).
- Irrevocable trust. Used to move assets out of your taxable estate. The price is the step-up: the IRS ruled in 2023 that assets in an irrevocable grantor trust that aren’t part of the estate keep their original basis, because they weren’t “acquired or passed from a decedent” (Rev. Rul. 2023-2). For crypto bought cheaply years ago, that can mean a large capital gains bill for the beneficiary that an inheritance would have wiped out. Only worth it for estates near the $15 million exemption.
United Kingdom
Putting assets into most trusts is a chargeable lifetime transfer: above the nil-rate band, inheritance tax of 20% is due at the time (if the trustees pay it), and the trust then pays a charge of up to 6% every ten years and when assets leave it (GOV.UK). Capital gains on the transfer can usually be held over rather than paid, so the trust takes your original cost (HS295). A bare trust, where the beneficiary has an absolute right to the assets, is treated as a gift to them instead: normally no tax if you survive seven years (GOV.UK). UK trusts are a tool for specific situations, not a default; take advice before moving crypto into one.
The question every trust has to answer: who holds the keys
A deed can say the trust owns 2 bitcoin. It can’t make the trustee able to move them. Three ways to line the two up:
- The trustee holds the keys. Simple if you’re your own trustee. The successor trustee then needs to find and use them after your death, which brings you back to the letter of instruction and where the secrets are.
- A multisig in which the trustee holds one key. The trust’s wallet needs two of three keys; you hold one, the trustee or a professional holds another, a custodian holds the third. Nobody can act alone, and a successor trustee can be given the trustee key. Unchained offers trust accounts built this way, and says it lets you “properly title bitcoin to your trust” so that legal title and possession of the keys are addressed together (Unchained). Casa supports trusts and trustees in the same spirit, with a trustee contacting Casa to recover (Casa).
- An exchange account in the trust’s name. Some exchanges open accounts for trusts, usually through their institutional channel with the trust deed, trustee identification and signatory list (Coinbase). The keys are the exchange’s problem; the trustee’s job becomes paperwork.
For self-custodied coins, lawyers typically use a written assignment or declaration that the specified wallets are held on the trust’s terms, kept with the trust papers next to an inventory of addresses. Ask yours how they do it.
Trustees who don’t understand crypto
A trustee has a duty to look after the assets, and crypto is easy to lose. UK trust lawyers warn that the private key, seed phrase or exchange credentials that control a cryptoasset “must be safeguarded and protected”, and that a trustee without the skills should take specialist advice before doing anything (Kingsley Napley). Check too that the trust deed’s investment powers allow crypto at all; older deeds limited to “securities” may not (Farrer & Co). A trust with a trustee who can’t operate a wallet has solved the legal problem and created a practical one.
Who should consider it
- Estates large enough to pay estate or inheritance tax, where a trust is part of a wider plan.
- People who want control after death: staged payments to a young heir, a spouse provided for with the remainder to children.
- Anyone who wants a successor trustee to manage the crypto during incapacity, not only after death.
For most people with a hardware wallet and a will, a trust adds cost without adding much. A clear letter, a sealed seed and a named helper do the same job for free.
Next: Give it now or leave it.