If you own Bitcoin, Ethereum, or any other cryptocurrency, here is what you need to know: your digital assets can vanish permanently if your estate plan does not account for them. Unlike a bank account or brokerage portfolio, no institution will contact your family after your death to say, “Here are the crypto holdings you’re entitled to.” Without the right private keys, seed phrases, and legal documents in place, your heirs may never access your digital wealth — no matter how much it is worth.

This is not a hypothetical risk. An estimated 21% of American adults now own cryptocurrency, and many hold significant value in digital wallets that their families know nothing about. Yet most estate plans in Michigan — even recently updated ones — contain no provisions for digital asset access, transfer, or management.

Michigan law does provide a framework for fiduciary access to digital assets, but the law alone is not enough. Cryptocurrency estate planning in Michigan requires deliberate steps that go beyond traditional planning: documenting wallet locations, securing private keys, structuring trust provisions for digital assets, and navigating the IRS’s rapidly changing reporting requirements — including the new Form 1099-DA and mandatory cost basis reporting that takes effect in 2026.

Whether you hold a few thousand dollars in crypto or a portfolio worth millions, this guide explains how to protect your digital assets, what Michigan law requires, and how to ensure your cryptocurrency reaches the people you intend — not a digital void.

Why Cryptocurrency Requires Specialized Estate Planning

Cryptocurrency is not like any other asset in your estate. Traditional assets — real estate, bank accounts, retirement funds, investment portfolios — are held by institutions that can locate account holders, respond to court orders, and facilitate transfers to beneficiaries. Cryptocurrency works differently. It operates on decentralized blockchain technology, which means there is no central authority, no customer service line, and no institutional safety net.

This creates three estate planning challenges that Michigan families must address:

1. Access Depends Entirely on Private Keys

Every cryptocurrency wallet is secured by a private key — a unique string of characters that functions as the only password to your holdings. Many wallets also use a seed phrase (sometimes called a recovery phrase), which is a series of 12 to 24 random words that can restore access to a wallet. If your personal representative, trustee, or heirs do not have these credentials, your cryptocurrency is permanently inaccessible. No court order, no probate proceeding, and no legal authority can override blockchain encryption.

2. Most Exchanges Do Not Allow Beneficiary Designations

Unlike retirement accounts or life insurance policies, most major cryptocurrency exchanges — including Coinbase, Kraken, and Gemini — do not allow users to name a payable-on-death beneficiary directly on the account. This means cryptocurrency held on an exchange will typically need to go through probate unless you have structured your estate plan to avoid it.

3. Heirs May Not Know Crypto Exists

Because cryptocurrency exists only in digital form, there is no paper trail unless the owner creates one. No monthly statements arrive in the mail. No financial advisor holds a record. If your family does not know you own cryptocurrency — and millions of holders have never told anyone — your digital assets may simply be lost.

Many Michigan residents don’t realize that a comprehensive estate plan must now include a digital asset inventory with specific instructions for accessing cryptocurrency wallets, exchange accounts, and hardware storage devices. Without these provisions, even a well-drafted trust or will may leave significant wealth permanently locked away.

Michigan’s Legal Framework for Digital Asset Inheritance

Michigan adopted the Fiduciary Access to Digital Assets Act (FADAA) in 2016, codified at MCL 700.1001–700.1018. This law provides a legal framework for fiduciaries — including personal representatives, trustees, conservators, and agents under a power of attorney — to access and manage digital assets, including cryptocurrency.

Here is how FADAA works in practice for cryptocurrency estate planning in Michigan:

Fiduciary authority. Under MCL 700.1015, a fiduciary with authority over the property of a decedent has the right to access any digital asset in which the decedent had a right or interest. This includes cryptocurrency held on exchanges and in digital wallets. The fiduciary is treated as an authorized user for purposes of Michigan’s computer fraud laws, which means they can access crypto accounts without violating state unauthorized access statutes.

Hierarchy of instructions. Michigan law establishes a priority system for who controls access to digital assets:

• First: Directions the user set through an online tool provided by the digital custodian (for example, a legacy contact on an exchange platform)
• Second: Directions provided in a will, trust, or power of attorney
• Third: The terms of the digital custodian’s service agreement

This hierarchy matters because if a crypto exchange’s terms of service restrict third-party access, and the account holder did not provide specific instructions through the exchange’s own tools or their estate plan, the fiduciary may face significant obstacles — even with court authority.

Practical takeaway. Michigan’s FADAA gives your fiduciary legal standing to access crypto, but legal standing alone does not provide the private keys or seed phrases needed to actually move cryptocurrency. The law opens the door; your estate plan must provide the keys.

How to Include Cryptocurrency in Your Michigan Estate Plan

Effective cryptocurrency estate planning in Michigan involves four critical steps that go beyond what traditional estate documents typically address.

Step 1: Create a Comprehensive Digital Asset Inventory

Document every cryptocurrency holding you own. Your inventory should include:

• The name of each cryptocurrency (Bitcoin, Ethereum, Solana, etc.) and approximate quantities
• Where each asset is held — exchange name, wallet type (hardware wallet, software wallet, or paper wallet), or custodial service
• Wallet addresses for each holding
• The location of your private keys and seed phrases — which safe, which safety deposit box, which encrypted device
• Login credentials for exchange accounts, including two-factor authentication details
• Contact information for any custodial services you use

Critical: Do not include private keys or seed phrases in your will. Wills become public documents through probate. Recording your crypto access credentials in a will exposes them to anyone who reviews the court file. Instead, use a separate, secure letter of instruction or digital asset memorandum stored in a fireproof safe, an encrypted digital vault, or with your estate planning attorney.

Step 2: Structure Your Estate Plan for Digital Assets

For most Michigan residents holding cryptocurrency, a trust-based estate plan offers significant advantages over a will-only approach:

• Avoids probate. Cryptocurrency held in a properly funded trust passes to beneficiaries without going through Michigan’s probate process — keeping your holdings private and accessible more quickly.
• Provides management continuity. A successor trustee can manage crypto assets immediately upon your incapacity or death, without waiting for court appointment.
• Allows specific instructions. Trust provisions can include detailed guidance on how cryptocurrency should be held, transferred, sold, or distributed — including whether to liquidate immediately or hold long-term.

Your estate planning documents — whether a will, trust, or power of attorney — should also include explicit digital asset provisions that grant your fiduciary authority to access, manage, transfer, and sell cryptocurrency. Michigan’s FADAA (MCL 700.1015) supports this authority, but specific language in your documents strengthens it.

At Boroja, Bernier & Associates, we draft estate plans that include provisions addressing digital assets, including cryptocurrency and other blockchain-based holdings. A comprehensive trust-based estate plan — which includes powers of attorney, trust documents, wills, and advance directives — typically ranges from $2,500 to $5,500 depending on complexity.

Step 3: Choose the Right Fiduciary

Your personal representative or successor trustee needs to be someone who either understands cryptocurrency or is willing to work with professionals who do. A fiduciary who does not know what a seed phrase is, or who cannot navigate a hardware wallet, may inadvertently lock your family out of significant assets.

If no family member or trusted individual has the technical knowledge, consider:

• Naming a tech-savvy co-trustee alongside a primary trustee
• Including trust provisions that authorize the trustee to hire cryptocurrency consultants or custodial services
• Providing step-by-step written instructions for accessing each wallet or exchange

Step 4: Secure Your Private Keys and Seed Phrases

The security of your cryptocurrency during your lifetime must be balanced against accessibility for your heirs after your death. Common approaches include:

• Hardware wallets (like Ledger or Trezor) stored in a fireproof safe, with the seed phrase stored separately in a second secure location
• Encrypted USB drives with access instructions provided to a trusted fiduciary
• Multi-signature (“multi-sig”) wallets that require multiple keys to authorize transactions — useful for added security but requiring careful succession planning so heirs can assemble the required signatures
• Professional digital asset custodians that offer institutional-grade storage with built-in succession and inheritance protocols

“In our experience serving Michigan families, the most common estate planning mistake with cryptocurrency is not a legal error — it is a practical one. Families discover the crypto exists but cannot access it because private keys were stored on a single device that was lost, damaged, or encrypted without a recovery plan.”

IRS Reporting and Tax Implications for Inherited Cryptocurrency in 2026

The tax landscape for cryptocurrency changed significantly in 2025 and 2026, and Michigan families inheriting digital assets need to understand the current rules.

The New Form 1099-DA

The IRS introduced Form 1099-DA (Digital Asset Proceeds from Broker Transactions) for cryptocurrency reporting. Here is what this means in 2026:

• For 2025 transactions (reported in early 2026), brokers must report gross proceeds on Form 1099‑DA and may voluntarily report cost basis for digital assets.
• For later years, IRS regulations require brokers to report both gross proceeds and, for “covered” digital assets, adjusted basis and holding period, with “covered” status depending on acquisition date and where the asset is held.
• Noncovered assets — including crypto acquired before 2026 or transferred between wallets — may still require taxpayers to track and report their own cost basis.

Stepped-Up Basis on Inherited Crypto

When you inherit cryptocurrency, the IRS treats it as property — not currency. This means inherited crypto receives a stepped-up cost basis equal to the fair market value on the date of the decedent’s death. If your parent bought Bitcoin at $500 and it was worth $95,000 on the date of their death, your cost basis is $95,000 — not $500. If you sell it for $96,000, you owe capital gains tax on only $1,000.

This stepped-up basis is one of the most valuable tax benefits in estate planning, and it applies to cryptocurrency just as it does to real estate or stocks. However, the benefit only works if the executor or trustee properly documents the fair market value of each cryptocurrency holding on the date of death. Given crypto’s volatility, this requires capturing values at a specific point in time — and maintaining records that can withstand IRS scrutiny.

Federal Estate Tax Considerations

Under the One Big Beautiful Bill Act, signed into law on July 4, 2025, the federal estate and gift tax exemption increased to $15 million per individual ($30 million for married couples) beginning January 1, 2026, with future annual inflation adjustments, and is not scheduled to sunset under current law. The 40% federal estate tax rate still applies to amounts above the exemption. Michigan does not impose a separate state estate tax or inheritance tax.

For Michigan residents with substantial cryptocurrency holdings, the combination of volatile asset values and a high exemption threshold creates both opportunity and risk. Crypto portfolios can fluctuate dramatically — what was below the exemption threshold one month may exceed it the next. Proactive estate tax planning, including gifting strategies and trust structures, can help manage this exposure.

Security Best Practices for Metro Detroit Crypto Holders

Michigan residents — particularly those in Metro Detroit, Macomb County, Oakland County, and Wayne County — face the same cybersecurity risks as crypto holders everywhere, but local planning considerations add another layer.

• Protect against physical theft. If you store seed phrases or hardware wallets at home, invest in a high-quality fireproof safe. For higher-value holdings, consider splitting your recovery information between a home safe and a bank safety deposit box in a separate location.

• Guard against digital threats. Phishing attacks, SIM-swapping, and social engineering are the most common ways crypto holders lose assets during their lifetime. Use hardware-based two-factor authentication (not SMS-based), keep firmware on hardware wallets updated, and never share private keys digitally.

• Coordinate with your estate plan. Your security measures should not be so robust that they lock out your own fiduciary. If you use multi-sig wallets, ensure your trust or letter of instruction identifies every key holder and provides a clear process for your successor trustee to assemble the necessary signatures.

• Tell someone. At minimum, your estate planning attorney, successor trustee, or personal representative should know that you hold cryptocurrency and where to find your digital asset memorandum. They do not need to know the details during your lifetime — but they need to know where to look.

Frequently Asked Questions About Cryptocurrency Estate Planning in Michigan

What happens to my cryptocurrency if I die without an estate plan in Michigan?

If you die without a will or trust in Michigan, your cryptocurrency passes through intestate succession under Michigan probate law — the same as any other asset. However, if no one knows you held crypto, or if your private keys are inaccessible, the assets may be permanently lost regardless of what the law says about who should inherit them. Michigan’s FADAA (MCL 700.1001) gives fiduciaries legal authority to access digital assets, but without private keys or seed phrases, legal authority alone cannot unlock a blockchain wallet.

Can I put cryptocurrency in a trust in Michigan?

Yes. Holding cryptocurrency in a revocable living trust is one of the most effective estate planning strategies for digital assets. A trust avoids probate (keeping your crypto holdings private), allows a successor trustee to manage assets immediately upon incapacity or death, and provides a vehicle for detailed instructions on how crypto should be handled. Your trust should include specific provisions authorizing the trustee to hold, manage, transfer, and sell digital assets under Michigan’s FADAA.

What if my heirs lose the private keys to my cryptocurrency?

Lost private keys generally mean permanently lost cryptocurrency. Unlike a forgotten bank password, blockchain private keys cannot be reset or recovered by a third party. This is why estate planning for cryptocurrency must include redundant storage of private keys and seed phrases in multiple secure locations. At Boroja, Bernier & Associates, we help Michigan families develop access protocols that balance security during your lifetime with accessibility for your heirs after your death.

How is inherited cryptocurrency taxed in Michigan?

Inherited cryptocurrency receives a stepped-up cost basis equal to the fair market value on the date of death. This means your heirs only pay capital gains tax on appreciation that occurs after they inherit the asset — not on gains accumulated during your lifetime. Michigan does not impose a state estate tax or inheritance tax, so federal rules primarily govern. However, the executor or trustee must document the crypto’s value on the date of death and report it accurately using IRS Form 8949 and Schedule D.

Do I need to report cryptocurrency on my estate tax return?

Yes. Cryptocurrency is treated as property by the IRS and must be reported as part of your gross estate. For 2026, estates valued above the $15 million federal exemption ($30 million for married couples) are subject to the 40% federal estate tax. Given crypto’s price volatility, an estate that appears below the threshold during planning may exceed it at the time of death. Regular estate plan reviews and valuation strategies are essential for significant crypto holdings.

Should I use a custodial service or self-custody for estate planning purposes?

Both approaches work, but each requires different planning. Custodial services (like regulated exchanges) offer institutional security and may have their own inheritance processes, but they also introduce counterparty risk and may restrict fiduciary access under their terms of service. Self-custody (hardware wallets, paper wallets) gives you full control but places the entire burden of succession planning on your estate documents and key storage protocols. Many crypto holders use a combination of both, with the estate plan addressing each method specifically.

How often should I update my estate plan if I hold cryptocurrency?

Review your estate plan at least annually if you hold significant cryptocurrency. Crypto markets are volatile, IRS reporting rules are still evolving, and your own holdings may change frequently through purchases, sales, or transfers. Any time you open a new wallet, move assets to a new exchange, or significantly change your portfolio, update your digital asset inventory and verify that your fiduciary still has the information they need.

Take the Next Step: Protect Your Cryptocurrency and Your Family’s Future

Cryptocurrency is valuable, volatile, and — without the right planning — vulnerable to permanent loss. A comprehensive estate plan that accounts for digital assets protects not just your wealth, but your family’s ability to access it when it matters most.

At Boroja, Bernier & Associates, we help Michigan families throughout the state build estate plans that address the realities of digital wealth — from documenting wallet access and structuring trust provisions to navigating the IRS’s evolving reporting requirements. With offices conveniently located in Shelby Township, Troy, Ann Arbor, and Lansing, we provide statewide estate planning services designed to protect your family, your life, and your legacy.

To schedule a consultation with the Michigan estate planning attorneys at Boroja, Bernier & Associates, call our law offices at (586) 991-7611. Your digital assets deserve the same level of protection as everything else you have worked to build.