Can you designate a beneficiary for Cryptocurrencies?



Unlike traditional financial institutions (e.g. banks, investment brokerage accounts, and retirement accounts), most - if not all - cryptocurrency exchanges do not have a mechanism for designating a "pay on death" beneficiary. There is no automatic transfer of digital currency. In fact, the biggest challenge for cryptocurrency is the owner's reliance on the private key to conduct transactions. But this "private key" is a string of letters and numbers too long for anybody to bother memorizing or writing down and it is easily lost or forgotten.

As more and more clients are starting to invest in cryptocurrency, it becomes important for estate planners to better understand this unique class of assets. Gold coins and valuable metals can be physically handed over to the intended recipient. Oil and gas have deeds and public ledgers that identify extraction rights. Even works of art have certificates of authenticity or certificates of insurance. So how do you transfer something as ephemeral as digital currency?


With more exchanges and brokerage accounts going mainstream, we can expect some degree of an industry standard. Coinbase is an exchange platform with the look and feel of a typical brokerage firm. There's even a support center for account holders to call when they need help. But Coinbase does not allow account holders to name a P.O.D. beneficiary for their account. Luckily, the company's website includes transfer procedures that indicate the company will recognize certain estate planning documents. In other words, Coinbase will securely store the account holders' "private keys" and either transfer the private key itself or the cryptocurrency associated with the private key. As of this writing, Coinbase simply requires a death certificate and probate documents (e.g. Letters Testamentary or Letters of Administration) along with a photo ID of the person requesting. The company also hints that it may accept Wills not admitted into probate on a case-by-case situation.

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