Estate planning and legacy · Topic hub

Estate planning.
For the people left behind.

UPDATED·APPLIES TOUnited States
For anyone starting estate planning from scratch. Sources are listed at the bottom of the page; check their dates before acting.

Estate planning helps you pass wealth to the people you choose and reduce the administrative burden on them. The non-Bitcoin arrangements include wills, trusts, beneficiarybeneficiaryThe person or entity you name to receive an account or insurance policy when you die. designations, power of attorney, and the stepped-up basisStepped-up basisThe tax rule that resets an inherited asset's cost basis to its market value on the date the owner died. If Bitcoin bought for $5,000 is worth $100,000 at death, the heir's basis is $100,000, so the lifetime gain is never taxed as a capital gain. Traditional IRAs and 401(k)s get no step-up.Full definition loophole. For Bitcoin-specific inheritance, see the dedicated guide.

This page covers US estate law, which varies by state, and US federal tax law. Outside the US? The documents, probate rules and tax at death differ.

Short answer

Three sets of documents do almost all the work: a will (plus a revocable trust if your situation needs one), beneficiary designations on every account that has one, and durable powers of attorney. Stepped-up basis is the loophole that makes holding appreciated assets until death wildly tax-efficient. If you own Bitcoin, none of the standard tools reach your coins without a separate access plan. That is what the inheritance guide is for.

Not an attorney. This is education, not legal advice. Estate law varies by state and every family situation has its own wrinkles. Specific figures should be confirmed against current state and federal law. For anything material, hire an estate attorney.

The four pieces

Each card is its own deep-dive. Read them in order if you are starting from nothing. Jump to whichever you need if you are plugging a specific hole.

DOCUMENT 1
Wills & Trusts
The will names where assets go and who executes it. A revocable trust holds assets during life and after, avoids probateprobateThe court-supervised process of validating a will, paying debts, and distributing assets after death. Slow, costly, and public.Full definition, and stays private. Most people need a will. Some need both.
DOCUMENT 2
Beneficiary Designations
These override your will. A 401k, IRAIndividual Retirement Account (IRA)A retirement account with tax advantages and eligibility rules. Traditional IRA contributions may be deductible; taxable withdrawals generally enter income. Roth contributions use after-tax money, and qualified Roth withdrawals are tax-free.Full definition, or life insurance beneficiary form is a contract. Whoever is named on the form gets the money, no matter what the will says. Most people have stale designations.
DOCUMENT 3
Power of Attorney
Two documents. Financial POA lets someone manage your money if you can't. Healthcare POA lets someone make medical decisions. Without them, your family goes to court.
LEVER 4
Stepped-Up Basis
Die holding appreciated assets and your heirs inherit them at current market value. The embedded capital gainscapital gainsThe profit from selling an asset for more than you paid for it. Taxed differently depending on how long you held the asset. are wiped out. For long-term Bitcoin holders, this is the single largest tax lever in the code.

Giving and special structures. Each has its own page: Bitcoin donor-advised funds, qualified charitable distributions from an IRA, special needs trusts, and 1031 exchanges for investment real estate. For medical wishes, pair the healthcare POA with a living will.

Where to start if you have nothing

You do not need an attorney-drafted estate plan to avoid the worst outcomes. You need these five things in order.

1
Write a basic will.

Name an executor, name guardians for minor children, say who gets what. DIY tools (Nolo, LegalZoom, Trust & Will) cost $100-500. An attorney-drafted will runs $500-1,500. Either beats dying intestate, where state law decides.

2
Name beneficiaries on every account.

401k, IRA, Roth, HSAHealth Savings Account (HSA)A health savings account available only when eligibility requirements are met. Federal tax benefits depend on contribution limits and qualified medical expenses. Health coverage, other coverage and Medicare enrollment can affect eligibility; state tax treatment can differ.Full definition, life insurance, pension. Add TODTransfer on Death (TOD)A name you write on a brokerage account that says: when I die, this person gets these investments directly. The account skips the slow court process for sorting out assets after death.Full definition or PODPayable on Death (POD)A name you write on a bank account that says: when I die, this person gets the money directly. The account skips the slow court process for sorting out a dead person's assets.Full definition designations to checking, savings, and brokerage. Primary beneficiary and contingent beneficiary on every one. Thirty minutes of work.

3
Set up durable powers of attorney.

Financial POA and healthcare POA. State-specific forms. Notarize. Give copies to the named agents. Without these, a simple hospital stay can turn into a court-supervised conservatorship.

4
Build a digital asset inventory.

A list of every account, every service, every password manager location. For Bitcoin, a letter of instructions pointing to your seed recovery setup. Do not put seed phrases in the inventory itself. See Inheritance.

5
Review every 3 years.

Marriages, divorces, deaths, moves, new kids, new accounts. Every three years, sit down and re-verify every beneficiary, every executor, every POA agent. Ten minutes per document. This is the step that catches ex-spouses still listed on 401ks.

On the receiving end instead? Read what to do when you inherit money and the first 90 days after losing a spouse.

The Bitcoin angle

None of the standard estate-planning tools reach self-custodied Bitcoin on their own. A will can say "my BTCBitcoin (BTC)The ticker symbol for Bitcoin, used on exchanges and in price quotes.Full definition goes to my daughter" all day. If nobody has the seed phraseSeed phraseA wallet backup written as a list of words, usually 12 or 24, that can recreate the wallet's private keys. In a single-signature wallet, anyone who sees it can take the bitcoin unless a separate passphrase also protects it. Keep it offline and private; recovery may also need the passphrase and wallet setup details.Full definition, the BTC is lost. A trust can legally own Bitcoin. If the trustee cannot sign a transaction, the trust owns nothing usable.

Estate planning for Bitcoin is a two-layer problem. Layer one is legal: who inherits. Layer two is technical: who can access. The legal layer lives in the documents on this hub. The technical layer lives in the inheritance guide.

Two layers: who inherits, who can access
Legal layer only
Legal layerWillLeaves the BTC to a daughter
No linkNo letter of instructionsNothing points to an access setup
No technical layerThe BTC is lostNobody has the seed phrase
Both layers
Legal layerWillLeaves the BTC to a daughter
Link between layersLetter of instructionsSays where the access setup is
Technical layerAccess setup moves the coinsMultisig service, Shamir shares, hardware wallet location
A will alone can name an heir, but if nobody has the seed phrase the BTC is lost. With both layers, the will points to a letter of instructions, the letter points to the access setup, and the access setup moves the coins.

If you self-custody any meaningful amount of Bitcoin, you need both layers. Write a will that points to a letter of instructions. The letter points to your access setup (multisig service, Shamir shares, hardware wallet location). The access setup is what moves the coins. Keep the will, the letter and the access setup separate. The will and the letter say who inherits and where to look, but neither one can move the coins.

Start with the Inheritance guide before you draft the documents. The documents should reflect the access plan, not the other way around. To compare holding Bitcoin until death with selling or giving it away first, run the Bitcoin inheritance calculator, and read gifting Bitcoin for the annual exclusion and Form 709.

A word on "not advice"

Everything here is general education. Estate law is state-specific. Two households with identical assets can have completely different optimal plans based on state residency, marriage status, business ownership, minor children, special-needs dependents, blended family structure, and creditor exposure.

For anything material, hire an estate attorney. Expect $500 to $3,000 for a full plan depending on complexity. It is cheaper than probate and infinitely cheaper than family litigation.

Where to go from here

Do next

Will vs Trust

The first document most people need before the others.

Read next

Stepped-Up Basis

Why heirs inherit appreciated assets at market value, not your original cost.

Explore further

Sources

Figures, rates and rules change: check each source’s date before acting on it.

  1. American Bar Association - Estate Planning FAQs - americanbar.org
  2. AARP - State intestacy rules and probate overview - aarp.org
  3. IRS Publication 559 - Survivors, Executors, and Administrators - irs.gov
  4. Uniform Probate Code overview (state-by-state variation) - uniformlaws.org
  5. Nolo Press - plain-language estate planning reference - nolo.com

Last updated . Not legal advice. For anything material, consult an estate attorney. Disclosures · How pages are reviewed

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