A standard will and trust, drafted for a world of stocks and real estate, is dangerously insufficient for the realities of crypto, NFTs, and decentralized finance. Traditional estate planning documents lack the specific language and authority needed to give your fiduciaries control over your digital wealth. The result is often catastrophic: assets are lost forever, families face immense tax burdens, and wishes go unfulfilled.

An effective digital asset estate plan is built upon a foundation of five core legal documents, working together in an integrated system. Each component serves a distinct purpose, yet they work together to create a resilient structure that protects assets, promotes tax efficiency, and facilitates succession. 

1. The Digital Asset Revocable Trust (DART™)

The centerpiece of most modern estate plans is the revocable living trust. Its primary function is to hold your assets and allow them to pass to your heirs outside the slow, public, and expensive process of probate court. During your lifetime, you retain complete control. Upon your death, your chosen successor trustee steps in to manage and distribute the assets according to your instructions.

A standard trust, however, fails spectacularly when it comes to digital assets. It does not grant a trustee the explicit power to manage private keys, interact with decentralized protocols, stake assets, vote in a DAO, or even properly account for the unique income streams that crypto can generate.

This is why we developed the Digital Asset Revocable Trust or DART™. We draft a DART™ with specific provisions that grant your trustee the authority to:

• Manage custody of assets held in software wallets, hardware wallets, and on exchanges.
• Participate in decentralized finance (DeFi) protocols, including liquidity pools and lending platforms.
• Exercise governance rights associated with DAO tokens.
• Track and document asset cost basis for accurate capital gains tax management.
• Allocate principal and income flexibly, categorizing complex revenue streams such as staking rewards or airdrops to ensure fairness among beneficiaries and optimize tax outcomes.

Without these explicit powers, your fiduciary is navigating a minefield with a blindfold. The DART™ provides the map and the tools they need to protect and manage your digital legacy.

2. The Digital Asset Protection Trust (DAPT)

While a revocable trust handles succession, an irrevocable trust can provide a powerful shield against creditors. For holders of volatile and high-value digital assets, who can be targets for litigation, asset protection is a critical concern. The Digital Asset Protection Trust, or DAPT, is an advanced tool designed for this purpose.

A DAPT is an irrevocable trust established in a jurisdiction with favorable asset protection laws, such as Wyoming or Nevada. By transferring assets to the DAPT and relinquishing direct control, you can place them beyond the reach of future personal creditors after a waiting period defined by state law. The trust is managed by an independent trustee who makes distributions according to the terms you establish.

For maximum effect, we often use it in tandem with an LLC. The digital assets are held inside a Crypto LLC, and the ownership of that LLC is then transferred to the DAPT. This layering strategy creates a digital fortress that is exceedingly difficult for a legal adversary to penetrate.

DAPTs offer strong asset protection by allowing individuals to make completed gifts that remove assets from their personal estate, shielding them from future creditors. However, once a gift is completed, the asset is no longer part of the grantor’s estate for tax purposes—which means it won’t receive a step-up in basis at the grantor’s death. This can lead to significant capital gains tax consequences for beneficiaries if they sell the asset. As a result, clients must weigh the creditor protection benefits of completed gifts against the potential tax cost of foregoing the step-up in basis. 

3. The Crypto LLC

The Crypto LLC is the vault where you store the assets. Its primary purpose within the estate plan is segregation and liability protection.

By holding different classes of digital assets in one or more LLCs, you compartmentalize risk. A catastrophic loss or legal issue related to a speculative DeFi position held in one LLC will not threaten your long-term Bitcoin holdings in another. This structure is essential for responsible risk management.

When your DART™ or DAPT owns the Crypto LLC, it becomes a seamless part of your succession plan. The trust document controls who inherits the LLC and its assets, avoiding the need to retitle individual wallets or accounts. Your trustee simply takes control of the LLC, which in turn holds all the underlying digital property. Lost keys mean lost assets. Period. This approach simplifies administration and maintains the protective shield around your wealth.

4. The Crypto Will

Even with a meticulously funded trust, a will remains an important safety net. Its job in a trust-based plan is to “pour over” any assets that were accidentally left out or improperly titled into the trust at your death.

A standard will is not sufficient for managing digital assets. An executor armed with a generic will would likely fail to locate, access, or transfer a forgotten wallet or exchange account. A crypto will grants your executor specific, explicit authority to deal with digital assets. It gives them the legal standing to access online accounts, manage keys, and consolidate any stray digital assets into the trust where they belong. 

Relying on a will as the primary means of transfer is a mistake. It subjects your assets to the probate court, a public process that is often ill-equipped to handle the technical nuances of cryptocurrency. The will’s function is purely as a backup, ensuring nothing falls through the cracks.

5. The Digital Asset Power of Attorney (Crypto POA)

Estate planning is not just about what happens after you die. It is also about preparing for potential incapacity. A Power of Attorney (POA) is the document that appoints an agent to manage your financial affairs if you become unable to do so yourself.

Generic POAs are useless for digital assets. An agent presenting a standard POA to a cryptocurrency exchange will be turned away. The document lacks the specific language required to grant access. Similarly, it provides no guidance for managing self-custody wallets or interacting with DeFi protocols. Handing someone a generic POA for crypto is like giving them a map with no roads.

A Crypto POA is drafted with these challenges in mind. We grant your agent precise and detailed authority to:

• Access and transact on named exchanges and platforms.
• Manage private keys and recovery phrases.
• Execute trades and rebalance portfolios.
• Interact with smart contracts and claim staking rewards.
• Gather the necessary information to make crucial tax decisions, such as documenting the basis of assets that must be sold.

This document, combined with a secure credential memorandum, ensures that someone you trust can step in to manage your digital life seamlessly when you cannot, preventing loss and ensuring your financial affairs remain in order. Together, these five documents form a comprehensive legal framework that can withstand the unique pressures digital assets place on traditional estate planning.

Disclaimer: This guide provides educational information only and does not constitute legal or tax advice. Please consult with qualified professionals regarding your specific situation before implementing any strategies discussed.