How to Include Cryptocurrency and Digital Wallets in a California Living Trust
Putting crypto in your trust, without losing it
Almost every asset you own can be recovered if your family has to go looking. A house has a deed on file at the county. A bank account has a bank behind it. Lose the paperwork and it's a hassle, but the asset is still there.
Cryptocurrency in a self-custody wallet doesn't work that way. The key is the asset. If nobody can find your recovery phrase, the coins stay where they are and nobody can reach them. Not your trustee, not your children, not a judge. There is no support line and no court order that fixes it.
So the job here has two parts: your trustee needs the legal right to handle your crypto, and your trustee needs the practical ability to open it. Those are separate problems and most plans only solve one.
Photo by Art Rachen on Unsplash
Where your crypto lives changes the plan
Side by side
Crypto on an exchange, or in your own wallet?
| Feature | On an exchange | In your own wallet |
|---|---|---|
| Someone to call | Yes, the exchange | No one |
| Can the account be titled to your trust | Sometimes. Ask yours | No, wallets are not registered to anyone |
| If the access information is lost | Recoverable through the company | Gone permanently |
| What your trustee needs | Authority plus login credentials | The recovery phrase, or nothing works |
| Needs digital asset language in your trust | Yes | Yes |
| Stepped-up basis at your death | Yes | Yes |
| Taxable when sold | Yes | Yes |
The last three rows are the same either way. Everything above them is not.
If you hold crypto on an exchange, ask whether they support trust accounts before you assume it. Some do and have a process. Some don't. You'll usually need a certification of trust, which proves your trust exists and names the trustee without requiring that you hand over the whole document.
If you hold it yourself, there's nothing to retitle. A wallet isn't registered to a person. What you do instead is name the wallet in a schedule attached to your trust, and make sure your trustee can get the recovery phrase when the time comes.
What California law actually gives you
California adopted the Revised Uniform Fiduciary Access to Digital Assets Act in 2016. It's at Probate Code sections 870 through 884, and it took effect January 1, 2017. It applies to trustees, executors, agents under a power of attorney, and conservators.
Here's the useful part and the limit: RUFADAA gives your fiduciary the legal standing to ask a company for access to your digital assets. It does not give anyone your password.
That distinction is incredibly important. Against an exchange, legal authority gets you somewhere, because there's a company on the other end that has to respond. Against a wallet sitting on a hardware device in a drawer, legal authority gets you nothing at all.
Your trust has to say the right words
Generic trust language written ten years ago probably doesn't mention digital assets. Your trust should specifically give your successor trustee the power to access digital accounts and wallets, use passwords and recovery phrases, move crypto between wallets, convert it to dollars, and hire someone who knows what they're doing.
Two things that don't belong in the documents themselves:
Never put a recovery phrase or private key in your will. A will filed with the court is a public record. You'd be publishing the keys.
Keep the credentials out of the trust document too, and out of the schedule. List what you own and where it lives. Store how to open it somewhere else.
One correction worth making, because a lot of writing on this gets it backwards. Your revocable trust isn't a document that switches on when you die. It works from the day you sign and fund it, and your successor trustee can step in if you're incapacitated, not just after death. You still want a power of attorney, but it's for the assets outside the trust, not for filling a gap inside it.
The access plan
Your trustee needs written instructions they can actually follow. For each account or wallet: what it is, where it is, whether two-factor is turned on, and where the backup codes or recovery phrase are kept.
Keep that document separate from your trust, keep it current, and never send any of it by email.
Then tell your trustee it exists. This sounds obvious, but it's the step most people skip. A perfect set of instructions in a place nobody knows to look is the same as no instructions. Have the conversation while you can, and say what you'd want done with the holdings. Sell them, hold them, split them, whatever it is.
If your trustee doesn't know anything about crypto, that's fine. They don't need to. They need to be trustworthy and willing to hire help, and your trust should let them pay for that help out of the estate.
Taxes
Crypto gets a stepped-up basis like anything else. If you bought Bitcoin at $10,000 and it's worth $50,000 the day you die, your beneficiary's basis is $50,000. The gain from your lifetime disappears.
That happens whether or not the crypto was in your trust. It's a real benefit, but it isn't a reason to choose one setup over the other. The reason to use the trust is that your family doesn't go to court.
A few reporting details worth knowing, since older articles have them wrong:
Exchanges now issue Form 1099-DA, not Form 1099-B. It covers digital asset sales starting with the 2025 tax year. For 2025 sales, they reported gross proceeds only. Starting with 2026 transactions, they also report cost basis for assets bought and held in the same account.
Your trustee reports sales on Form 8949 and Schedule D, filed with the estate or trust return.
The federal return is Form 1041. The California return is Form 541, not Form 540. Form 540 is the individual return.
Keep your own cost basis records anyway. Anything you bought before 2026, or moved in from another wallet, won't have basis reported for it.
Four things to do
Write down what you own and where it lives. Type, amount, wallet or exchange, and roughly what you paid.
Ask your exchange whether it allows trust accounts, and start the paperwork if it does.
Read your trust and look for the words "digital assets." If they aren't there, that's the amendment to ask about.
Tell your successor trustee that crypto exists and where the instructions are.
Crypto is the one asset your family can lose completely by not knowing about it. That's worth an afternoon.
If you want someone to look at what your current trust says, we have offices in Studio City and Mission Viejo.