As digital assets like Bitcoin and Ethereum become more common, many residents of Connecticut are wondering what happens to their cryptocurrencies when they pass away. Unlike traditional bank accounts and real estate, cryptocurrencies exist in a decentralized and password-protected digital space, making it challenging to include them in an estate plan. 

At Darius Law Group, LLC, we understand the unique challenges associated with including digital assets in an estate and help clients navigate the evolving legal landscape. We ensure that their digital assets are protected, accessible, and distributed in accordance with their wishes.

Cryptocurrency Is Property Under Connecticut Law

Connecticut recognizes cryptocurrency as personal property, rather than currency. This distinction is significant because it means that crypto assets are subject to the same estate planning and inheritance laws as stocks, jewelry, and artwork. 

Under the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA), which is codified in Connecticut’s General Statutes, sections 45a-570 through 45a-582, fiduciaries, including executors and trustees, can only access a deceased person’s digital assets if they have granted explicit permission to do so.

Without such authorization, your executor may not be able to legally access your crypto wallets, which could potentially cause your digital assets to be permanently lost.

The Risk of “Lost” Crypto in Probate

Cryptocurrency is accessed using private keys, which are long alphanumeric codes similar to digital passwords. These keys must be securely documented and shared with a trusted personal representative in order to ensure that your heirs can access your assets in the event of your passing. If your keys are not properly managed, your heirs may not be able to access your cryptocurrency, even if they are aware of its existence.

Unlike banks, blockchain networks do not have a customer service department that can help reset passwords or verify identities. If a private key is lost, the corresponding cryptocurrency is essentially gone forever. According to the U.S. Treasury, 20% of all Bitcoin has already been lost due to lost keys or deceased owners.

This highlights why simply including “Bitcoin” in your will is not sufficient – you must also provide a secure means for your executor to access it.

How to Legally Include Cryptocurrency in Your Estate Plan

Connecticut law allows you to plan for digital assets, but it requires taking proactive and precise steps:

1. Inventory Your Digital Assets

Create a detailed list of all your cryptocurrency holdings, including the types of wallets you use (hardware, software, or exchange-based) and the associated platforms (for example, Coinbase or Ledger). Also, include an approximate value for each holding. Please note that you should not include your private keys in this list, as they will become public during the probate process.

2. Use a Revocable Living Trust or Digital Asset Directive

Under § 45a-574, you can use an online tool, such as a platform’s built-in contact feature, or a written directive to grant fiduciary access. A revocable living trust is often the safest option, as it avoids probate proceedings and keeps sensitive information private.

3. Appoint a Tech-Savvy Fiduciary

Choose an executor or trustee who has experience with digital assets or who is willing to work with a professional to help manage them. You can also consider appointing a separate digital executor in your estate planning to handle your online and cryptocurrency assets specifically.

4. Store Access Instructions Securely

Use a secure password manager or a physical safe (with clear instructions for your trusted person) to store your private keys and recovery phrases. Make sure your estate planning attorney knows how to access this information if necessary.

What Happens If You Don’t Plan?

If you die without a will (intestate), your cryptocurrency will be distributed according to Connecticut’s intestate laws, typically to your spouse or children. However, without access instructions, your heirs may have difficulty claiming it. Even if you have a will, if RUFAA compliance is not in place, your executor may not be able to legally access your exchange accounts or wallets due to federal privacy laws such as the Stored Communications Act.

Protect Your Digital Legacy with Darius Law Group

At  Darius Law Group, LLC, we understand that today’s estates include not only real estate and bank accounts, but also digital identities, non-fungible tokens (NFTs), and cryptocurrency. Our estate planning services take into account both traditional and digital assets, ensuring nothing is overlooked.
Don’t let your hard-earned cryptocurrency disappear into the digital world. Secure your financial future by contacting  Darius Law Group, LLC for a consultation on estate planning. With careful planning, your digital assets can be protected and passed on to your loved ones just as you intend.