As cryptocurrency ownership grows in Canada, estate planners and legal professionals are facing a new frontier: how to account for digital assets in succession planning. Unlike traditional financial instruments, cryptocurrencies are decentralized, password-protected, and often pseudonymous. That combination of features creates unique challenges when the time comes to pass them on. Failing to plan adequately can result in lost wealth, probate delays, or unintended beneficiaries. If you hold digital assets, it’s no longer enough to plan for your bank accounts, property, and RRSPs; you need a strategy for your crypto, too.
Why Digital Assets Need Special Consideration
The biggest hurdle with cryptocurrency in estate planning is accessibility. Without the proper credentials, even sophisticated heirs or executors cannot retrieve funds from wallets or exchanges. There is no “forgot password” feature in most crypto environments. Once lost, access is often gone for good.
Crypto also exists outside of conventional custodial institutions. Your lawyer can contact your bank after your passing, but they can’t call a blockchain. If your coins are in self-custodied wallets like cold storage devices, seed phrases written on paper, or mobile wallet apps, then your estate will need highly specific information to retrieve those assets.
Digital asset value can also fluctuate significantly. This creates the need for up-to-date valuations and an understanding of capital gains tax on deemed dispositions upon death. From both a technical and tax standpoint, crypto doesn’t fit neatly into legacy estate models.
Key Steps to Include Crypto in Your Estate Plan
Inventory Your Digital Assets
Start by documenting everything: the types of assets you hold, the platforms you use (e.g., exchanges like NDAX, Bitbuy, or self-hosted wallets), and the estimated value. This list should also note whether your crypto is staked, loaned, or otherwise encumbered.
Securely Store Access Information
Create a method for passing on credentials securely. This might include hardware wallets with PINs, seed phrases stored in physical vaults, or encrypted documents. Avoid including this information directly in your will, as it becomes part of the public probate record in many provinces. Instead, use a memorandum referred to in the will, and ensure your executor knows where and how to access it.
Appoint a Knowledgeable Executor or Advisor
Not every executor understands the mechanics of crypto. Consider appointing a co-executor or digital asset advisor who has the technical proficiency to manage or transfer these assets without error.
Work with Professionals Who Understand Crypto
A specialized Crypto Tax Lawyer can help ensure your plan meets legal requirements, minimizes tax liability, and anticipates future issues. For example, planning around capital gains at death may involve gifting strategies or setting up a trust that holds crypto.
Overview and Update Regularly
The crypto space evolves rapidly, and so do your holdings. An annual review of your digital asset plan is a best practice, especially if you’ve added new assets, changed wallet providers, or moved funds between custodians.
Tax Considerations at Death
In Canada, there is no inheritance tax, but there is a deemed disposition of assets at fair market value upon death. For crypto, this means your estate may face capital gains taxes based on the appreciated value of the assets at the time of death. Proper planning can help reduce the tax burden on heirs, such as crystallizing gains during your lifetime or holding assets in certain trust structures.
Digital Legacy Is Becoming the New Normal
Estate planning now goes beyond paper trails and real property. If you’ve invested in crypto, be it a small holding or a diversified digital portfolio, it’s essential to treat it with the same legal and tax rigour as any other asset class.
Your loved ones can’t inherit what they can’t access. The sooner you begin preparing a plan, the more likely it is that your digital wealth will be preserved and properly transferred when the time comes.
