How to Transfer Cryptocurrency to Heirs in Arizona

 

By Arizona attorneys Richard Keyt (480-664-7478 & rk@keytlaw.com) and his son Richard C. Keyt (480-664-7472 & rck@keytlaw.com).  We have 432 five-star reviews on Google, Facebook & Birdeye.  Book a free office, phone or Zoom consultation.

Arizona cryptocurrency estate planning requires more than simply naming who inherits your Bitcoin or other digital assets. Your estate plan must address both legal ownership and physical access to your cryptocurrency. This article explains how Arizona residents can transfer crypto held on exchanges or in self-custody wallets, use a revocable living trust to avoid probate, give trustees authority over digital assets, securely transfer private keys and seed phrases, preserve tax information, and avoid common mistakes that can cause cryptocurrency to become inaccessible or permanently lost after death.

How to Protect Crypto

How Arizona Residents Can Transfer Cryptocurrency to Heirs | KEYTLaw

How to protect Bitcoin, Ethereum and other digital assets from being lost, trapped in probate or made inaccessible after death.

This article is written exclusively for residents of Arizona.

Cryptocurrency creates an estate-planning problem that traditional financial assets usually do not.

If you die owning a bank account, stock brokerage account or house, the asset normally can be located and transferred once the proper legal documents are produced. Cryptocurrency can be different. A person can legally own valuable cryptocurrency while the only practical means of controlling it is a private key, recovery phrase, hardware wallet, passphrase or account that nobody else knows exists.

If the legal documents are wrong, your cryptocurrency may end up in probate or pass to the wrong people.

If the technical access plan is wrong, the cryptocurrency may become permanently inaccessible even though your estate-planning documents are perfect.

The three problems every crypto estate plan must solve
#ProblemThe question it answers
1OwnershipWho legally owns the cryptocurrency now, and who should own it after your death?
2AuthorityWho has legal authority to manage or transfer the cryptocurrency if you become incapacitated or die?
3AccessCan that person actually obtain the information, device, private key, recovery phrase or exchange cooperation needed to control the cryptocurrency?

Most cryptocurrency estate-planning failures happen because the owner solved only one or two of these three problems.

This article explains how Arizona residents can solve all three.

Why Cryptocurrency Is Different from Traditional Assets

Cryptocurrency generally falls into two very different categories, and you need a separate plan for each.

Cryptocurrency Held by an ExchangeSelf-Custodied Cryptocurrency
Who controls the private keys?The exchange or custodianYou
Is there a company to contact?YesUsually no
Can access potentially be restored without your seed phrase?Yes, through the custodian's proceduresUsually no
Primary estate-planning riskNobody knows the account exists, or nobody has legal authority to claim itPermanent loss of the keys or recovery information
Primary planning solutionInventory, proper ownership and fiduciary authorityInventory, legal authority and a secure key-transfer plan

Many cryptocurrency owners have both types.

A substantial amount of Bitcoin is believed to be permanently inaccessible, but nobody can know exactly how much. A dormant blockchain address does not tell us whether the owner lost the keys, died without leaving instructions or is simply holding the Bitcoin indefinitely.

The important estate-planning point is not the precise percentage. It is that self-custodied cryptocurrency can become permanently inaccessible if the information needed to control it disappears with its owner.

Arizona's Digital-Asset Law: What It Does and What It Does Not Do

Arizona adopted the Revised Uniform Fiduciary Access to Digital Assets Act, commonly called RUFADAA. It appears at A.R.S. §§ 14-13101 through 14-13118.

The law is extremely useful, but it is important to understand what it actually does.

Cryptocurrency is a digital asset

A.R.S. § 14-13102 defines a "digital asset" as an electronic record in which an individual has a right or interest.

Cryptocurrency and rights associated with cryptocurrency accounts can fall within Arizona's digital-asset statute.

Arizona's online-tool rule concerns disclosure, not necessarily ownership

A.R.S. § 14-13104 allows a user to use an online tool provided by a custodian to direct whether the custodian should disclose digital assets to a designated recipient.

If the online tool permits the user to modify or delete that direction at all times, the disclosure direction made through the online tool overrides a contrary disclosure direction contained in a will, trust, power of attorney or other record.

The distinction that trips people up

A disclosure direction is not necessarily a beneficiary designation. Naming somebody as a person who may obtain information about or access to a digital account does not automatically make that person the legal owner of the cryptocurrency.

Ownership at death depends on the applicable contract, form of ownership, trust, valid beneficiary arrangement, will, Arizona succession law and other applicable law.

Whenever a cryptocurrency platform offers a "legacy contact," "beneficiary," "designated recipient" or similar feature, determine exactly what the feature does. Do not assume that a disclosure feature transfers ownership.

A personal representative can request digital assets from a custodian

A.R.S. § 14-13108 provides a procedure for a personal representative of a deceased user's estate to request disclosure of digital assets other than the contents of electronic communications.

The personal representative generally must provide:

  • A written request.
  • A certified copy of the death certificate.
  • A certified copy of letters testamentary, a small-estate affidavit or an appropriate court order.
  • Additional account-identification or necessity information if requested by the custodian.

The statutory requirements overlap substantially with the documentation requested by major cryptocurrency exchanges, although each exchange may impose its own additional identification, compliance and transfer requirements.

Arizona law does not necessarily require the custodian to give the fiduciary the password

A.R.S. § 14-13106 gives a custodian discretion in how it complies with a proper disclosure request. The custodian may:

  • Give the fiduciary full access to the user's account.
  • Give the fiduciary partial access sufficient to perform the fiduciary's duties.
  • Provide a copy of the digital asset or information the user could have accessed.

The statute therefore should not be described as automatically requiring an exchange to hand over a password or turn complete account control over to a fiduciary.

The exchange's deceased-customer procedures remain important.

The custodian generally has 60 days to comply

A.R.S. § 14-13116 generally requires a custodian to comply with a legally sufficient request under the digital-assets chapter within 60 days after receiving the required information.

If the custodian does not comply, the fiduciary or designated recipient can seek an appropriate court order.

Fiduciaries have legal duties when handling cryptocurrency

A.R.S. § 14-13115 applies fiduciary duties such as care, loyalty and confidentiality to digital assets.

The statute also provides that a fiduciary acting within the scope of the fiduciary's duties is an authorized user for purposes of applicable computer-fraud and unauthorized-computer-access laws.

That does not mean a fiduciary should impersonate the deceased owner. The statute expressly limits fiduciary authority and provides that it may not be used to impersonate the user.

For an exchange account, the fiduciary normally should use the exchange's deceased-customer or fiduciary procedure rather than simply logging in and pretending to be the deceased customer.

Disclosure, Authority and Ownership Are Different

This distinction deserves emphasis because it is the source of considerable confusion.

Suppose Dad dies owning $500,000 of Bitcoin on an exchange. His daughter might have:

  • Legal authority as personal representative.
  • A statutory right to obtain disclosure from the exchange.
  • A copy of the death certificate.
  • Knowledge of Dad's username.

None of those facts necessarily means that the daughter owns the Bitcoin.

She may merely have authority to collect it for Dad's estate and ultimately distribute it to the person entitled to receive it under Dad's trust, will or Arizona intestacy law.

Conversely, a beneficiary may be legally entitled to receive the Bitcoin but have no ability whatsoever to access a self-custodied wallet.

A proper crypto estate plan answers three questions separately
QuestionWhat answers it
Who owns it?The trust, the account agreement, a valid beneficiary arrangement, the will or Arizona succession law
Who can legally act?The successor trustee, agent under a power of attorney or personal representative
Who can technically access it?The person who can obtain the device, keys, recovery material or custodian cooperation

Cryptocurrency Held on Coinbase, Kraken or Another Centralized Exchange

Cryptocurrency held on a centralized exchange is usually easier to administer after death than self-custodied cryptocurrency because the exchange controls the private keys.

The family generally does not need the decedent's recovery phrase. Instead, the fiduciary needs to establish legal authority and comply with the exchange's deceased-customer procedure.

Typical documents include:

  • A certified death certificate.
  • Letters testamentary, letters of administration, a small-estate affidavit or other evidence of legal authority.
  • Government-issued identification of the fiduciary.
  • Information identifying the deceased customer's account.
  • Transfer instructions.
  • Additional documents requested by the exchange's compliance department.

As of September 2026, Coinbase says individual Coinbase accounts do not support naming a beneficiary, and it directs a person handling a deceased customer's account through its Executor Services procedure. Kraken likewise states that it does not currently offer beneficiary designations and has a deceased-client claim process.

These policies can change, so check the current rules of every platform you use.

Tell your successor which exchanges you use

This may be the highest-value action you can take today.

Your successor does not need your password while you are alive. Your successor does need to know that the account exists.

Create a confidential inventory identifying information such as:

  • Coinbase account.
  • Kraken account.
  • Other exchange or custodian.
  • Email address associated with the account.
  • Approximate holdings.
  • Account identifier if available.
  • Location of statements and tax records.
Critical rule

Do not put passwords, seed phrases or private keys on the ordinary inventory. The inventory is a map, not the key to the vault.

Can You Put an Exchange Account in Your Revocable Living Trust?

Sometimes. The correct answer depends on the platform.

Do not assume that signing a general assignment automatically causes an individually titled exchange account to become a trust account.

For example, Coinbase currently states that ordinary Coinbase.com accounts cannot be opened in the name of trusts or similar entities. Coinbase supports trust accounts through Coinbase Prime.

That means you should distinguish between two issues:

IssueWhy it matters
1Who has the beneficial interest under your estate plan?Your trust and applicable property law govern who is entitled to the value of the asset
2Whom does the exchange recognize as its customer?The exchange agreement governs who the platform will deal with and what it will transfer

A private assignment may have significance under your trust and applicable property law, but you should not assume that an exchange will recognize the assignment as changing the registered owner of an individual account, or that the assignment by itself eliminates probate.

If you want an exchange account owned by your revocable trust:

  1. Determine whether the exchange permits trust ownership.
  2. Follow the exchange's procedures for establishing the correct trust or institutional account.
  3. Confirm how the exchange will recognize a successor trustee after your death or incapacity.
  4. Keep copies of the account agreement and trust-account documentation with your estate-planning records.

If your platform will not permit trust ownership, discuss alternatives with your estate-planning attorney. Depending on the circumstances, those alternatives may include moving the assets to a custodian that accepts trusts, using an entity account, or moving appropriate assets to a properly documented self-custody arrangement.

Plan for Two-Factor Authentication

Two-factor authentication can become a serious obstacle after death or incapacity.

If authentication codes are sent to your phone and the phone number is canceled shortly after death, the fiduciary may have an additional problem to solve.

Your confidential inventory should identify:

  • Which phone number is associated with the account.
  • Which email account is used.
  • Whether authentication is through SMS, an authenticator application, a hardware security key or another method.
  • Where the device or security key is located.
  • Who controls the cellular account.

Do not instruct your fiduciary to circumvent an exchange's deceased-user procedures. The purpose of documenting this information is to prevent important information from disappearing and to help the legally authorized person complete the custodian's process.

Self-Custodied Cryptocurrency Requires a Completely Different Plan

If you hold cryptocurrency in a hardware wallet, software wallet or other self-custody arrangement, there may be no company capable of restoring access.

There may be:

  • No customer service department.
  • No password-reset procedure.
  • No court order that can regenerate your private key.
  • No bank employee who can unlock the account.
  • No exchange compliance department that can transfer the assets.

If the information required to control the cryptocurrency is permanently lost, the cryptocurrency may be permanently inaccessible.

Every self-custody plan needs three layers

LayerWhat it solvesWhat it requires
1DiscoveryYour successor must know the cryptocurrency exists: the type of cryptocurrency, the wallet or device, the approximate amount, the public wallet address when appropriate, and the location of additional instructions. The ordinary inventory should not contain the recovery phrase or private key.
2AccessYour successor must eventually be able to obtain whatever is necessary to control the cryptocurrency: hardware wallet, recovery phrase, private key, PIN, additional passphrase, multisignature key, authentication device and instructions describing the wallet software.
3Legal authorityThe person who can technically control the wallet should also have legal authority to do so under your trust, power of attorney or appointment as personal representative.

Your trust should authorize the trustee, as appropriate, to hold digital assets, transfer them, sell them, exchange them, stake them, unstake them, participate in protocol changes when appropriate, secure them, use custodians, hire technical advisors, pay transaction fees, create replacement wallets, convert cryptocurrency to dollars and distribute cryptocurrency in kind.

Access without legal authority is dangerous. Legal authority without access may be useless.

Never Put Your Seed Phrase or Private Key in Your Will

Do not put a recovery phrase, private key, password or similar secret in your will.

A will admitted to probate can become part of the court record. Do not publish the equivalent of the key to your vault.

For the same reason, use extreme caution before putting cryptocurrency secrets in:

  • The body of your trust.
  • An unencrypted email.
  • A text message.
  • A photograph stored automatically in the cloud.
  • An ordinary cloud-storage folder.
  • A document given to multiple professional advisors.
  • A password-manager note unless you fully understand the security and successor-access features.

Your estate plan should tell the fiduciary where and how to obtain the secret without unnecessarily reproducing the secret itself.

Do Not Unnecessarily Publish Your Wallet Addresses Either

A public cryptocurrency address is not the same thing as a private key. Someone generally cannot spend your cryptocurrency merely because the person knows your public address.

But identifying a wallet address as yours can reveal substantial information. Depending on the blockchain, anyone may be able to see:

  • Current holdings.
  • Historical balances.
  • Incoming transactions.
  • Outgoing transactions.
  • Related wallet activity.

Do not unnecessarily put wallet addresses in a publicly filed will, probate pleading or other document likely to become public.

A better practice is to maintain a separate confidential digital-asset inventory.

Ways to Transfer Access to Self-Custodied Cryptocurrency

There is no single best system for everybody. The appropriate method depends on the value involved, the technical sophistication of the successor, family circumstances and the owner's tolerance for complexity.

MethodHow It WorksAdvantageRisk
Secure written instructionsRecovery information is stored securely apart from the trustSimpleSingle point of failure
Separate device and access informationHardware wallet and recovery information are stored separatelyOne stolen item may not be enoughSuccessor must locate both
Split-secret arrangementRecovery information is divided so multiple pieces are requiredReduces single-person riskMore complicated
Multisignature walletMultiple independent keys are required to transfer assetsStrong protection against one compromised keyRequires careful maintenance
Institutional or collaborative custodyA professional custodian participates in securing or recovering assetsUseful for large holdings and nontechnical familiesFees and reliance on provider
Dead-man-switch serviceInformation is released after specified conditions are metCan supplement another planVendor or false-trigger risk

A safe-deposit box requires special planning

A safe-deposit box may be useful, but do not assume your successor will automatically have immediate access merely because your trust refers to the box.

Arizona law limits what can be removed when the last lessee of a safe-deposit box dies. Testamentary documents and certain insurance policies receive special treatment, while other property is generally retained until delivered to the person legally entitled to it.

If you use a safe-deposit box for cryptocurrency recovery materials, confirm:

  • Who is a lessee.
  • Who can enter after incapacity.
  • Who can enter after death.
  • What the bank's lease agreement provides.
  • What legal documentation will be required.

Do not build a cryptocurrency access plan around a box that your successor cannot promptly open.

Test the Recovery Plan

A recovery plan that has never been tested is an assumption.

Consider creating a test wallet containing a small amount of cryptocurrency. Then have the person who will eventually need to recover the assets attempt to access the test wallet using only the instructions and materials you have created.

Do not coach the person through the process.

If your successor cannot follow the instructions while you are alive, the instructions probably will not work after your death.

Retest periodically because devices change, wallet software changes, exchanges change procedures, authentication methods change, people forget and service providers disappear.

Write Instructions for a Person Who Knows Nothing About Cryptocurrency

Do not write your recovery instructions for yourself. Write them for an intelligent person who has never owned cryptocurrency.

Depending on your setup, the instructions may need to identify:

  • Hardware-wallet manufacturer and model.
  • Wallet software.
  • Where the device is located.
  • Where the recovery material is located.
  • Whether an additional passphrase exists.
  • Whether the wallet is multisignature.
  • Who holds the other signing keys.
  • Whether assets are staked or locked.
  • Whether a special derivation path or other technical configuration is involved.
  • Which professional should be contacted before attempting a transfer.
Include this warning in your instructions

Never type the recovery phrase into a website merely because someone claiming to be a recovery expert tells you to do so.

How Legal Ownership Can Pass at Death

Technical access is only half the problem. The other question is who legally receives the cryptocurrency.

Transfer methodWhat it doesProbate?
1Revocable living trust that actually owns the cryptoSuccessor trustee administers and distributes the trust property under the trust agreementGenerally avoided for that asset
2Valid contractual beneficiary or transfer arrangementOwnership passes by contract if the platform and applicable law make it legally effectiveGenerally avoided if effective
3WillTells the probate court who should receive probate propertyProbate required
4Arizona small-estate affidavit for personal property under $200,000Simplified collection of personal property within statutory limitsFormal probate often avoided
5IntestacyArizona statutes pick the heirs because nothing else governsProbate required

1. Cryptocurrency properly owned by a revocable living trust

If the trust actually owns the cryptocurrency, or the applicable custodial account recognizes the trust as owner, the successor trustee generally can administer the trust property without opening a probate merely to transfer that trust-owned asset.

That is one of the principal advantages of properly funding a revocable living trust.

But signing a trust does not automatically retitle every asset you own.

For self-custodied cryptocurrency, document the trust's ownership of the digital assets with an appropriate assignment, schedule or other records without placing private keys in the trust.

For exchange-held cryptocurrency, comply with the exchange's requirements for a trust-owned account if the exchange permits one.

2. A valid contractual beneficiary or transfer arrangement

Some custodians or financial products may permit a legally effective beneficiary, transfer-on-death or similar contractual arrangement.

If one exists, determine whether the feature actually transfers ownership or merely grants access or disclosure rights.

The online-tool priority in A.R.S. § 14-13104 concerns directions about disclosure. It should not be relied on as the statute that creates ownership rights in cryptocurrency after death.

A contractual beneficiary arrangement may control ownership if the platform and applicable law make it legally effective, but that is a separate legal question.

3. A will and probate

A will does not avoid probate.

If cryptocurrency remains individually owned at death and there is no effective nonprobate transfer mechanism, the personal representative may need probate authority to administer the asset.

A will tells the probate court who should receive property governed by the will. It does not itself eliminate the probate process.

4. Arizona's small-estate procedure

Arizona provides a simplified procedure for certain small estates.

Under A.R.S. § 14-3971, a successor may use the personal-property affidavit procedure after 30 days if the statutory requirements are satisfied and the value of the decedent's personal property subject to the statute does not exceed $200,000, less applicable liens and encumbrances.

For the ordinary procedure when no personal representative has been appointed, the $200,000 value is determined as of the date of death.

That means a cryptocurrency price change after death ordinarily does not retroactively move the estate above or below the initial date-of-death limit.

Price volatility immediately before death, however, can make an enormous difference.

5. Intestacy

If cryptocurrency is probate property and the owner dies without a valid will governing the property, Arizona's intestacy statutes determine who inherits it.

Arizona residents: Learn Who Inherits Your Assets if You Die without a Will or Trust — a detailed article explaining Arizona’s intestacy laws and who is legally entitled to your estate if you die without a plan.

That result may be very different from what the owner intended, particularly in a blended family.

The simple rule is: do not leave the ownership of valuable cryptocurrency to chance.

Why a Revocable Living Trust Can Be Especially Useful for Cryptocurrency

A properly drafted and properly funded revocable living trust can solve several cryptocurrency problems at once.

BenefitWhat it means for your cryptocurrency
Probate avoidanceTrust-owned assets generally can be administered by the successor trustee without opening probate merely to transfer those assets
Incapacity planningA successor trustee may be able to manage trust-owned cryptocurrency if the settlor becomes incapacitated, which can be just as important as planning for death
Detailed fiduciary powersThe trust can expressly authorize the trustee to hold, secure, transfer, stake, exchange and sell digital assets and hire appropriate technical help
Controlled inheritanceThe trust decides whether a beneficiary receives cryptocurrency directly, receives sale proceeds, receives distributions over time, receives property in a continuing beneficiary trust, must reach a specified age first, or receives assets subject to asset-protection provisions
PrivacyTrust administration usually provides greater privacy than probate administration

But remember: putting secrets directly in the trust document can defeat that privacy and create an unnecessary security risk.

Plan for Incapacity, Not Just Death

A cryptocurrency owner can lose the ability to manage assets years before death because of a stroke, dementia, a serious accident, a coma or other physical or mental incapacity.

Your financial power of attorney should address digital assets.

Arizona law distinguishes between ordinary digital assets and the content of electronic communications.

Under A.R.S. § 14-13110, an agent with specific digital-asset authority or general authority to act for the principal can, subject to the statute, obtain certain digital assets other than the content of electronic communications.

A.R.S. § 14-13109 requires the power of attorney to expressly grant authority over the content of electronic communications before a custodian is required to disclose that content to the agent.

The better drafting practice is therefore to address digital assets and electronic communications expressly.

That can matter because the information needed to locate cryptocurrency may be contained in email confirmations, exchange notices, account statements, wallet-service emails, tax documents and authentication messages.

Consider an Arizona LLC for Significant Cryptocurrency Holdings

For some people with substantial cryptocurrency holdings, an Arizona limited liability company can provide a useful additional layer.

One possible structure

You create a revocable living trust → the trustee holds the LLC membership interest as trust property → the LLC owns the cryptocurrency.

Do not say that you "own the trust." Technically, the trustee holds trust property for the beneficiaries according to the terms of the trust.

Written governance rules

A well-drafted operating agreement can specify:

  • Who manages the cryptocurrency.
  • Who has transaction authority.
  • Whether multiple approvals are required.
  • Who becomes manager after incapacity or death.
  • Whether cryptocurrency can be staked.
  • Whether leverage or borrowing is permitted.
  • Whether assets can be moved into self-custody.
  • How new wallets are approved.
  • How records must be maintained.

Continuity

The LLC can continue to own the wallet or custodial account even when the membership interest changes because of death or trust administration.

That may reduce the need to move cryptocurrency merely because an individual owner dies.

Creditor-law considerations

A.R.S. § 29-3503 provides a charging-order remedy against a member's transferable LLC interest and states that the charging-order provision is the exclusive remedy by which a judgment creditor seeking to enforce a judgment against a member or transferee may satisfy the judgment from that transferable interest.

Whether and how that protection helps in a particular case depends on the facts, ownership structure and nature of the claim.

Do not expect anonymity

An Arizona LLC does not automatically hide its owners from public filings.

A.R.S. § 29-3201 requires a member-managed Arizona LLC's Articles of Organization to state the name and address of every member.

For a manager-managed LLC, the Articles must state the name and address of every manager and each member who owns 20 percent or more of the capital or profits.

If the trust is the sole owner and manager of the LLC, then only the trust's name will appear on the records of the LLC on file with the Arizona Corporation Commission. The trust should have a P.O. box for its address so the address of a person is not on the LLC's public records.

An LLC therefore may provide organizational or operational privacy in some respects, but it should not be described as automatically making the cryptocurrency owner's identity anonymous.

An LLC is not necessary for everybody

A person who owns $5,000 of cryptocurrency probably does not need an LLC solely for the cryptocurrency.

A person whose cryptocurrency represents a substantial percentage of net worth, involves multiple participants, uses multisignature custody or requires detailed governance should at least consider whether an entity adds value.

See the Arizona LLC Center for how Arizona LLCs work, and a detailed description of the 8 Bronze LLC services, 16 Silver LLC services & 23 Gold LLC services we provide when we are hired to form an LLC or PLLC.

Federal Income Tax: Cryptocurrency Is Property

The IRS treats cryptocurrency and other virtual currency as property for federal income-tax purposes.

General federal tax principles applicable to property therefore apply to cryptocurrency. That has major estate-planning consequences.

Inherited cryptocurrency generally receives a date-of-death basis adjustment

Property acquired from a decedent generally receives a basis equal to its fair market value on the date of death, subject to applicable exceptions and alternate-valuation rules.

That means inherited cryptocurrency may receive a basis increase or decrease, depending on its value when the owner dies.

FactsDad's basisValue at deathBeneficiary's basis
Bitcoin appreciated during Dad's life$10,000$200,000Approximately $200,000, so an immediate sale at about that value produces little or no gain attributable to Dad's lifetime appreciation
Bitcoin declined during Dad's life$200,000$100,000Approximately $100,000, a downward adjustment

That is why basis adjustment is a more accurate term than always calling the rule a "step-up."

Be careful before gifting appreciated cryptocurrency during life

Lifetime gifts and transfers at death have different basis consequences.

For appreciated property, a lifetime gift generally carries the donor's basis to the donee for purposes of determining gain. Property acquired from a decedent generally receives the date-of-death basis described above.

That can make retaining highly appreciated cryptocurrency until death attractive from an income-tax standpoint.

But do not turn that into an absolute rule that cryptocurrency should never be gifted during life. Lifetime gifts may make sense because of federal estate-tax planning, generation-skipping planning, charitable planning, asset-protection planning, family circumstances or other tax considerations.

The correct answer depends on the entire estate and the owner's objectives.

Arizona community property can produce a full basis adjustment

Arizona is a community-property state.

A.R.S. § 25-211 generally provides that property acquired by either spouse during marriage is community property except for specified categories such as property acquired by gift, devise or descent.

For federal tax purposes, when the requirements of IRC § 1014(b)(6) are satisfied, both halves of community property generally receive a new basis when the first spouse dies.

IRS Publication 551 confirms that in community-property states such as Arizona, the total community property generally receives a new basis when one spouse dies if the applicable requirements are satisfied.

Why this matters in Arizona

Suppose an Arizona married couple acquired cryptocurrency for $100,000 as community property and it is worth $2 million when the first spouse dies. If the requirements for the community-property basis rule are satisfied, the basis of the entire community-property position may adjust to approximately $2 million.

Whether cryptocurrency is community property, separate property or partly both should be documented rather than left for the surviving spouse to reconstruct years later.

Federal estate tax and Arizona estate tax

For a U.S. citizen or resident dying in 2026, the federal basic exclusion amount is $15 million.

See the current federal estate tax exemption amount.

A married couple may potentially preserve two exclusions, but do not assume that portability happens automatically. Preserving the deceased spouse's unused exclusion generally requires a proper portability election on a timely filed federal estate-tax return, subject to applicable filing rules and relief provisions.

Arizona does not currently impose its own estate tax or inheritance tax on estates of people dying under current law.

For most Arizona families, income-tax basis planning will matter long before federal estate tax becomes an issue.

New Form 1099-DA Reporting Makes Cryptocurrency Records More Important

Digital-asset tax reporting has changed.

Brokers generally began reporting gross proceeds from covered digital-asset transactions occurring on or after January 1, 2025 on Form 1099-DA.

For certain transactions after 2025, brokers also must report basis information for digital assets that qualify as covered securities.

Do not assume the exchange will possess all of the records your heirs need. Cryptocurrency transferred into an exchange from another exchange, a self-custody wallet, an older account or another person may create basis-record problems.

Keep records showing:

  • Date acquired.
  • Amount acquired.
  • Purchase price.
  • Transaction fees.
  • Transfers between your own wallets.
  • Transfers between exchanges.
  • Gifts received or made.
  • Mining or staking income when relevant.
  • Historical tax returns.
  • Annual transaction-history exports.
  • Date-of-death values.

Your heirs can recover a forgotten password from some custodians. They cannot manufacture twenty years of missing tax records.

Your Cryptocurrency Estate-Planning Checklist

ActionWhy
1Inventory every digital assetList exchanges, wallets, hardware devices, NFTs, staked positions and DeFi positions
2Tell a trusted person that the inventory existsA wallet nobody knows about may never be found
3Keep secrets off the ordinary inventoryDo not put private keys or recovery phrases on the discovery list
4Create or update your revocable living trustGive the trustee appropriate digital-asset authority
5Determine how each asset is legally ownedDo not assume an exchange account became trust property merely because you signed a general assignment
6Update your financial power of attorneyInclude appropriate digital-asset and electronic-communications authority
7Create a secure access plan for self-custodied cryptoDevice, recovery material, passphrase and instructions must reach the right person
8Document two-factor authenticationPhone numbers, authenticator apps and security keys disappear
9Review every platform's current rulesDeath, beneficiary, legacy-contact and trust-account policies change
10Preserve transaction and basis recordsHeirs cannot reconstruct what was never kept
11Test the recovery procedureAn untested plan is an assumption
12Review at least annually and after major changesCrypto estate planning is not something you sign once and forget

Review immediately after you open a new wallet, change exchanges, replace a hardware wallet, change your recovery phrase or passphrase, move substantial cryptocurrency, marry, divorce, lose a trustee to death, change trustees or experience significant changes in value.

Common Cryptocurrency Estate-Planning Mistakes

MistakeConsequence
1Keeping everything in your headIf you are the only person who knows the passphrase and you die, the passphrase may die with you
2Putting the seed phrase in the willA probate document is the wrong place for a secret capable of transferring cryptocurrency
3Nobody knows the cryptocurrency existsAn undiscovered account is effectively lost even when the exchange could legally transfer it
4Assuming a revocable trust automatically owns every accountThe trust must actually be funded, and exchange-held assets must be coordinated with the platform's account rules
5Confusing disclosure rights with ownership rightsRUFADAA may give a fiduciary access or disclosure rights without making that person the beneficiary
6Giving one person unrestricted access too earlyA successor trustee may need access after incapacity or death without unrestricted ability to take the crypto today
7Ignoring incapacityYour cryptocurrency plan should work if you are alive but unable to act
8Ignoring two-factor authenticationThe account may survive while the phone number, authentication app or security key disappears
9Failing to preserve tax recordsAccess to the coins does not tell the beneficiary what the tax basis is
10Never testing the recovery planInstructions that look obvious to an experienced owner may be incomprehensible to a grieving successor
11Allowing the plan to become obsoleteA five-year-old inventory may be worse than no inventory because it creates false confidence

Warn Your Family About Cryptocurrency Recovery Scams

A family trying to recover cryptocurrency after somebody dies is an attractive target for criminals.

Tell your successors:

  • Do not post the wallet details online.
  • Do not disclose a recovery phrase to someone claiming to be support.
  • Do not install software at a stranger's direction.
  • Do not pay someone who promises that a lost seed phrase can magically be recovered.
  • Contact the estate attorney and, when needed, a reputable cryptocurrency professional before moving substantial assets.

If the recovery phrase truly has been lost and no other valid access method exists, nobody can persuade the blockchain to recreate it.

Frequently Asked Questions

Will my will alone get my cryptocurrency to my children?

A will can determine who receives probate property, but it does not avoid probate and does not solve the technical-access problem.

If cryptocurrency is self-custodied, the personal representative still needs access to the wallet. If cryptocurrency is held at an exchange, the personal representative still must satisfy the exchange's deceased-customer requirements.

For many Arizona cryptocurrency owners, a funded revocable living trust combined with a secure access plan is a better solution.

Does Arizona law force an exchange to give my cryptocurrency to my family?

Not exactly.

Arizona law gives qualified fiduciaries important disclosure and access rights and provides procedures for obtaining digital assets from custodians.

But A.R.S. § 14-13106 gives the custodian discretion to provide full access, partial access or a copy of the digital asset. The statute does not itself decide who inherits the cryptocurrency or dictate every mechanical step an exchange must use to transfer it.

The exchange's contract and deceased-customer procedures still matter.

Can I name my child as beneficiary of my Coinbase account?

As of September 2026, Coinbase states that it does not support naming a beneficiary on an individual Coinbase account. Coinbase directs estates through its deceased-customer process.

Check Coinbase's current rules because platform features can change.

Can I just add my child as co-owner of my cryptocurrency account?

Do not assume you can. Some major exchanges do not permit joint individual accounts.

Even where some form of shared ownership is available, changing ownership can have gift-tax, basis, creditor, divorce and control consequences.

Use an estate-planning structure designed for the result you actually want.

Does my cryptocurrency avoid probate merely because I have a revocable living trust?

No. Creating a trust and funding a trust are different things.

Self-custodied cryptocurrency should be appropriately documented as trust property. Exchange accounts require special attention because the platform may restrict trust accounts or require a separate account type.

If an asset remains individually owned and no valid nonprobate mechanism applies, probate or Arizona's small-estate procedure may still be necessary.

Can Arizona law recover cryptocurrency from a lost hardware wallet?

No law can recreate a private key or recovery phrase that no longer exists.

Arizona law can regulate fiduciary authority and can compel certain disclosures from custodians. It cannot cause a decentralized blockchain to generate a lost key.

Where should I store my recovery phrase?

Use a method that is physically secure, durable and accessible to the appropriate person after your incapacity or death. Possible arrangements include a secure home safe, a carefully structured safe-deposit arrangement, an attorney or professional vault arrangement, a durable metal backup, a split-secret arrangement or a multisignature system.

The important question is not merely "Is it safe?" The correct question is: is it safe from thieves while I am alive and still recoverable by the right person after I cannot act?

Should I give my successor trustee my seed phrase today?

Usually the better plan is to give the successor a reliable method of obtaining access when legally authorized, rather than unnecessary unilateral access while you remain capable.

The exact method depends on your family, the amount involved and your custody system.

What if my successor trustee knows nothing about cryptocurrency?

Your trust can authorize the trustee to retain qualified technical advisors, institutional custodians, tax professionals and other specialists.

You also can direct the trustee to sell the cryptocurrency rather than requiring an inexperienced beneficiary to maintain it.

My spouse and I bought Bitcoin during our marriage. Is it community property?

Arizona generally treats property acquired during marriage as community property unless an exception applies.

But cryptocurrency ownership can become factually complicated when one spouse owned some cryptocurrency before marriage, separate and community cryptocurrency were commingled, purchases occurred through multiple accounts, records are incomplete, or cryptocurrency was received by gift or inheritance.

Document the characterization while the records and facts are available.

Do my heirs pay income tax merely because they inherit cryptocurrency?

Generally, receiving inherited property is not itself taxable income to the beneficiary merely because the beneficiary receives the inheritance.

The beneficiary's basis in property acquired from a decedent is generally determined under the federal inherited-property basis rules.

The beneficiary may later recognize gain or loss when the cryptocurrency is sold or otherwise disposed of.

Should I give appreciated cryptocurrency to my children while I am alive?

Maybe, but do not do it without considering basis.

For appreciated cryptocurrency, lifetime gifting can carry the donor's low basis to the recipient, while qualifying property acquired at death generally receives a date-of-death basis adjustment.

There may nevertheless be compelling estate-tax, charitable, family or asset-protection reasons for lifetime gifts. Coordinate large cryptocurrency gifts with your estate-planning attorney and tax advisor.

What about NFTs, staking and DeFi?

Include all of them in the inventory. They can create additional issues such as smart-contract risk, lockup periods, unstaking periods, validator obligations, governance rights, difficult valuation, thin markets, unknown tax basis and no identifiable customer-service department.

Your instructions should identify the protocol and explain what a successor needs to know to manage or unwind the position.

What if my cryptocurrency is on an offshore exchange?

An Arizona court order is much more useful when dealing with a company subject to U.S. jurisdiction than with an overseas platform that may have no meaningful connection to Arizona.

If a substantial amount of cryptocurrency is maintained offshore, investigate the platform's death and succession rules while you are alive.

Do not assume your Arizona trust or probate order will automatically solve the problem in another country.

How often should I update my cryptocurrency estate plan?

Review the inventory at least annually. Update it immediately whenever you open or close an exchange account, create a new wallet, replace a hardware device, change trustees, change your custody method, make a major purchase or sale, marry, divorce or experience another significant estate-planning change.

Test the recovery process periodically.

The First Thing to Do Today

Create the inventory. Do not start with the seed phrase.

Start with a simple list showing:

  • What cryptocurrency you own.
  • Where it is held.
  • Which exchanges you use.
  • Which wallets exist.
  • Which devices are involved.
  • Where your successor can find further instructions.

That one document may prevent more cryptocurrency from being lost than an elaborate estate plan nobody can implement.

Then make sure your legal documents and access plan match the inventory.

Get Your Cryptocurrency Estate Plan Right

Cryptocurrency estate planning requires more than adding the word "Bitcoin" to a will. A complete plan coordinates:

  • Legal ownership.
  • A properly drafted and funded revocable living trust when appropriate.
  • A financial power of attorney with appropriate digital-asset authority.
  • Authority regarding electronic communications.
  • Exchange account rules.
  • Self-custody access.
  • Two-factor authentication.
  • Tax and basis records.
  • Incapacity planning.
  • A tested recovery procedure.
The objective is simple

The wrong person should not be able to access your cryptocurrency while you are alive, and the right person should be able to find, control and legally inherit it after you die.

Talk to an Arizona estate planning attorney

Richard Keyt has practiced law in Arizona since 1979. Richard and his son, Richard C. Keyt, attorney and former CPA, prepare Arizona revocable living trusts, wills, financial and health-care powers of attorney and related estate-planning documents, including estate plans that involve cryptocurrency and other digital assets.

Book a free office, phone or Zoom estate-planning consultation: keytlaw.com/calendar

Call Rick (the father) at 480-664-7478 or email rk@keytlaw.com.

Call Ricky (the son) at 480-664-7472 or email rck@keytlaw.com.

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See more of our estate-planning articles in the Arizona Wills, Trusts & Estate Planning library.

This article is general information about Arizona and federal law as of September 2026. It is not legal or tax advice for your situation, and reading it does not create an attorney-client relationship. Statutes, IRS rules and cryptocurrency platform policies change. Consult an Arizona estate planning attorney and your tax advisor about your own facts.

Updated September 22, 2026, by Richard Keyt, Arizona attorney

Call, email or text Richard Keyt, father

Direct phone: 480-664-7478

Email: rk@keytlaw.com

Call, email or text Richard C. Keyt, son

Direct phone: 480-664-7472

Email: rck@keytlaw.com