Crypto & Digital Asset Estate Planning in Washington State

Bellevue has one of the highest concentrations of cryptocurrency holders in the Pacific Northwest. Tech workers at Microsoft, Amazon, Meta's Redmond office, and the dozens of blockchain startups between Kirkland and Issaquah frequently hold substantial positions in Bitcoin, Ethereum, and tokens — often acquired through RSUs, employer equity, or direct investment. Yet most estate plans drafted in Washington treat digital assets as an afterthought or omit them entirely. The result: when the holder dies or becomes incapacitated, the assets are frequently lost permanently because no one can access the private keys.

Why Standard Estate Plans Fail for Crypto

A typical Washington will or revocable living trust lists "all my personal property" or references bank and brokerage accounts. It does not list a Bitcoin wallet address, a hardware wallet serial number, or the location of a seed phrase. Worse, self-custodied cryptocurrency is not held by a custodian — there is no customer-service number to call, no beneficiary designation form, and no account statement. If the executor does not have the private key, the assets are unrecoverable, regardless of what the will says.

Exchange-held crypto (Coinbase, Kraken, Gemini) is different — there is a custodian — but access still requires legal authority and the exchange's own verification process, which can take months during probate.

Washington's Digital Asset Law: RCW 11.02

Washington adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), codified at RCW 11.02, effective 2017. The statute gives executors, trustees, and agents under a power of attorney legal authority to access a decedent's or principal's digital assets, but only when the account holder has authorized access.

RUFADAA establishes a hierarchy of authority:

• Online tool: If a custodian offers an online tool (like Google's Inactive Account Manager or Facebook's Legacy Contact), the user's election controls.
• Will, trust, or power of attorney: If no online tool election exists, the user's estate planning document controls. The document must specifically grant authority over digital assets and the content of electronic communications.
• Terms of service: If neither is present, the custodian's terms of service govern — which often deny access.

Critically, access to the content of electronic communications (email, messages) requires an explicit opt-in in the estate planning document (RCW 11.02.140). Access to a "catalog" of digital assets (transaction records, account balances) is the default (RCW 11.02.135). A Bellevue estate plan should include a dedicated digital asset authorization provision that satisfies both tiers.

Passing Crypto Through a Washington Trust

The cleanest way to pass cryptocurrency to heirs is through a revocable living trust. The trust owns the assets during life, and the successor trustee steps in at death without probate. For crypto, this means:

• The trust agreement includes a digital asset section granting the trustee authority to access, manage, sell, and transfer digital assets under RCW 11.02.
• Self-custodied wallets are transferred to the trust's name (the trust itself controls the wallet, or the trustee holds the keys on behalf of the trust).
• Exchange accounts are updated to reflect the trust as owner, with the trustee listed as the authorized party.
• A separate letter of instruction or memorandum identifies the wallets, exchanges, hardware devices, and the location of seed phrases — kept outside the trust document itself for security.

A pour-over will should also include a digital asset clause so that any crypto discovered after death is poured into the trust and managed under the same terms.

Private Key Management in Estate Planning

Private key management is the hardest part of crypto estate planning. Common approaches:

• Hardware wallet + safe deposit box: Ledger or Trezor device stored in a bank safe deposit box; trustee has box access and the PIN is in a sealed envelope held by the estate planning attorney.
• Multi-signature (multisig) wallet: Require 2-of-3 signatures — the holder, the trustee (or attorney), and a backup key held by a trusted third party. Services like Unchained or Casa provide institutional multisig with estate features.
• Shamir's Secret Sharing: Split the seed phrase into multiple shares, any 3-of-5 of which reconstitute the key. Each share is held by a different trusted party.
• Metal seed storage: Steel or titanium plates that survive fire and flood (Cryptosteel, Billfodl) — far more durable than paper for long-term estate planning.

Never put the seed phrase directly inside a will. Wills become public record once filed with King County Superior Court, which would expose the keys to anyone who reads the probate file.

Exchange Accounts and Custodial Crypto

For crypto held on exchanges, the planning is simpler but still requires action. Most major U.S. exchanges have a probate or beneficiary process, but each has its own requirements — typically a death certificate, letters testamentary or a small estate affidavit, and identity verification. Transfer to a trust during life is cleaner: the account is retitled in the trust's name, and the successor trustee can act immediately at death without court involvement. For Bellevue residents, retitling a Coinbase or Kraken account to a trust is straightforward and should be part of trust funding.

Tax Implications of Crypto in Washington Estates

The IRS treats cryptocurrency as property (Notice 2014-21, Rev. Rul. 2019-24), not currency. This has several estate planning consequences:

• Stepped-up basis: Heirs receive a basis equal to fair market value at the date of death (or the alternative valuation date six months later), eliminating capital gains tax on appreciation during the holder's lifetime. This is a significant benefit for long-held Bitcoin positions.
• Estate inclusion: Crypto is included in the gross estate at fair market value on the date of death for federal estate tax purposes.
• Washington estate tax: Crypto is also included for Washington estate tax (RCW 83.100), which applies to estates above $2.193 million in 2026 at 10-20%. Bellevue homeowners with crypto holdings can easily cross this threshold.
• Income tax on sales by estate/trust: If the executor or trustee sells crypto to pay debts or distribute cash, the estate or trust recognizes capital gain (with the stepped-up basis), reported on Form 1041.

Washington has no state-level capital gains tax on the sale of crypto by an individual (the 7% capital gains tax under RCW 82.87 applies to long-term gains of intangible assets, but there are exemptions and nuances — consult a tax professional). The federal long-term capital gains rate still applies to sales by heirs after they receive the stepped-up basis.

NFTs and Digital Collectibles

NFTs present the same access issues as crypto but add valuation complexity. An NFT's fair market value at death must be determined for estate tax purposes, which can be difficult for illiquid or unique assets. The executor should document the valuation method (comparable sales, expert appraisal) to support the estate tax return.

Bellevue Tech Workers: A Common Scenario

A typical Bellevue client may hold $200,000 in Bitcoin on a Ledger, $50,000 in Ethereum on Coinbase, and an NFT collection worth $30,000 — alongside a $1.2M home and $800,000 in Microsoft RSUs. Without a crypto-aware estate plan, the Ledger is a paperweight to heirs, the Coinbase account is frozen during probate, and the NFTs are unrecoverable. With a properly drafted trust, RCW 11.02 authorization, and a secure letter of instruction, the entire portfolio passes cleanly to named beneficiaries.

Frequently Asked Questions