Quick answer
Crypto held at death can trigger inheritance or estate tax, and heirs may inherit a new cost basis — with significant implications.
Tax Filing
Australia
Germany
United Kingdom
United States
Inheritance Tax on Crypto
Tax obligations that arise when cryptocurrency is passed to heirs upon the death of the owner.
AustraliaGermanyUnited KingdomUnited StatesUnderstanding Inheritance Tax on Crypto on crypto
When a cryptocurrency holder dies, their digital assets form part of their estate and may be subject to inheritance or estate tax depending on the jurisdiction and the total estate value. The rules governing how the cost basis is treated upon inheritance also vary significantly. In the US, heirs benefit from a 'step-up in basis' — the inherited crypto's cost basis is reset to its market value on the date of death, eliminating any accumulated capital gains. In the UK, inherited crypto is subject to Inheritance Tax if the estate exceeds the nil-rate band, and there is no equivalent step-up in basis.
When a cryptocurrency holder dies, their digital assets form part of their estate and may be subject to inheritance or estate tax depending on the jurisdiction and the total estate value. The rules governing how the cost basis is treated upon inheritance also vary significantly. In the US, heirs benefit from a 'step-up in basis' — the inherited crypto's cost basis is reset to its market value on the date of death, eliminating any accumulated capital gains. In the UK, inherited crypto is subject to Inheritance Tax if the estate exceeds the nil-rate band, and there is no equivalent step-up in basis.
What this means for your crypto activity
US step-up in basis
In the US, inherited crypto receives a step-up in basis to market value at death, eliminating pre-death capital gains.
UK Inheritance Tax
In the UK, estates over £325,000 (nil-rate band) are subject to 40% Inheritance Tax — crypto is included in the estate value.
Lost key risk
Crypto wallets with lost or inaccessible private keys create serious estate planning problems.
Documentation essential
Without proper documentation (wallet addresses, seed phrases), heirs may be unable to access or value inherited crypto.
Estate planning required
Estate planning — including wills, secure key storage, and trust arrangements — is essential for significant crypto holdings.
- In the US, inherited crypto receives a step-up in basis to market value at death, eliminating pre-death capital gains.
- In the UK, estates over £325,000 (nil-rate band) are subject to 40% Inheritance Tax — crypto is included in the estate value.
- Crypto wallets with lost or inaccessible private keys create serious estate planning problems.
- Without proper documentation (wallet addresses, seed phrases), heirs may be unable to access or value inherited crypto.
- Estate planning — including wills, secure key storage, and trust arrangements — is essential for significant crypto holdings.
Seeing it in action
Example scenario
Robert dies holding 2 BTC that he bought for $5,000 each (cost basis: $10,000). At death, BTC is worth $60,000 per coin ($120,000 total). In the US, his heirs receive the BTC with a new cost basis of $120,000 — if they sell immediately, they owe zero CGT. In the UK, the $120,000 value is included in Robert's estate for Inheritance Tax purposes.
How this works across jurisdictions
- Australia
No federal inheritance tax exists in Australia. However, the passing of crypto to a beneficiary or legal personal representative does not trigger an immediate CGT event. Instead, the cost base is transferred cleanly to the heir; if the deceased acquired the crypto after September 20, 1985, the heir inherits the deceased's original cost base and holding period for the 50% CGT discount calculations.
- Germany
Inheritance tax applies at graduated rates depending on the familial relationship and estate value; allowances range from €20,000 to €500,000. Under ErbStG guidelines, crypto is valued strictly using its market price at the exact date of death. Crucially, the heir also steps into the holding period of the deceased; if the deceased held the crypto for more than 1 year, the heir can sell it immediately tax-free under § 23 EStG.
- United Kingdom
Crypto forms part of the estate; 40% Inheritance Tax applies on estates above the £325,000 nil-rate band. For future capital gains purposes, heirs receive an automatic step-up in basis to the fair market value at the exact date of death; the deceased's original historic cost basis is extinguished, and the heirs' holding period resets at receipt.
- United States
Inherited crypto receives a step-up in basis to fair market value at the date of death. Following the sunset of the Tax Cuts and Jobs Act (TCJA) provisions on January 1, 2026, the federal estate tax exemption has dropped significantly from its historic highs down to a base of approximately $7 million per individual (adjusted for 2026 inflation), exposing significantly more crypto estates to federal taxation.
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