Cryptocurrency in an Estate: Inheritance Tax, Valuation and Wallet Access for Heirs in Germany

Published on 20.09.2026

Valuing Crypto Assets in an Estate

Scope of this article: This article deals only with the succession event itself, that is, the tax and practical questions that arise once crypto assets have already been inherited. Anyone who plans to move their residence abroad while holding crypto assets faces a different set of questions, namely exit taxation. The two topics overlap, but they are treated differently in law and should not be conflated.

More and more estates contain Bitcoin, Ethereum or other crypto assets alongside real estate, securities and bank balances. For heirs, this means a double challenge. First, they have to get hold of the assets at all, and without the right private key that is sometimes technically impossible. Second, cryptocurrencies are subject to inheritance tax like any other asset, valued as at the date of death, and given the high volatility of digital assets this can produce substantial and sometimes surprising tax bills. This article places both problem areas, technical access and tax valuation, in their legal context and shows what heirs and testators alike should pay attention to.

Crypto Assets Form Part of the Estate: The Legal Starting Point

Under Section 1922 (1) BGB (German Civil Code), on a person’s death their entire estate passes as a whole to the heirs (universal succession). In principle, this covers every asset, whether it is a physical object, a claim or a digital value. The BGH (Federal Court of Justice) has expressly confirmed this principle for digital assets. In the so-called Facebook inheritance case (BGH, judgment of 12 July 2018 – III ZR 183/17), the court held that contracts with online services also pass to the heirs by universal succession, and that succession law does not require a distinction between digital content of a financial nature and highly personal digital content. Applied to crypto assets, this means that Bitcoin, Ethereum and comparable assets are other assets forming part of the estate and pass to the heirs automatically as a matter of law, regardless of whether the heirs know that the assets exist or actually gain access to them.

It is precisely in this gap between the legal transfer and actual access that the practical core difficulty of crypto inheritances lies, and it is fundamentally different from conventional assets such as bank balances or real estate.

The Core Problem: No Private Key, No Access

Technically, access to crypto assets does not run through an account in the conventional sense but through a private key, or a recovery phrase derived from it (seed phrase, usually 12 or 24 words). Whoever holds the private key can dispose of the associated assets, whether or not they are the rightful heir. Whoever does not know the key has legally inherited an asset but cannot in practice dispose of it. This separation between legal ownership and technical control is the decisive difference from conventional estate assets and must be taken into account in every estate arrangement.

Custodial Wallets: Access via the Trading Platform

Where crypto assets are held with a central trading platform (exchange) such as a crypto exchange, this is called a custodial wallet. The provider holds the private key in trust for the user. If the account holder dies, the heirs enter into the contract with the platform by way of universal succession. Access then runs, unlike with self-custodied assets, not through a technical key but through legal proof of the heirs’ status vis-à-vis the platform.

Non-Custodial Wallets: A Real Risk of Total Loss

With a non-custodial wallet, such as a hardware wallet, a paper wallet or a self-managed software wallet, the private key lies solely with the holder. There is no bank, no helpline and no central body that could help in the event of loss. If the key or seed phrase cannot be found after the testator’s death, the assets remain visible on the blockchain and are legally attributed to the estate, but they are technically and permanently inaccessible. A “forgot password” mechanism does not exist for decentralised cryptocurrencies, by design. In practice, this risk is by no means theoretical. Market observers assume that a considerable share of the Bitcoin in circulation has become permanently unreachable because access credentials were lost, often precisely as a result of poorly documented inheritance cases.

Valuing Cryptocurrency for Inheritance Tax: The Date of Death Counts

Regardless of whether actual access succeeds, the acquisition of crypto assets on death is in principle subject to inheritance tax under Section 1 (1) No. 1 and Section 3 (1) ErbStG (German Inheritance and Gift Tax Act). The valuation follows the same principles as for other unlisted assets for which the Valuation Act (Bewertungsgesetz, BewG) contains no special provision.

The Valuation Date under Sections 9 and 11 ErbStG

For an acquisition on death, the relevant point in time for the tax to arise is in principle the testator’s date of death (Section 9 (1) No. 1 lit. a ErbStG). Under Section 11 ErbStG, this same date of tax liability also serves as the basis for valuation, so the date of death is at the same time the relevant valuation date. For crypto assets, this means that it is the value on the date of death that counts, not the value at the time the heirs actually learn of the assets or gain access to them. For crypto assets, months or even years may lie between these two points in time, with corresponding valuation risks.

Fair Market Value under Section 12 ErbStG in Conjunction with Section 9 BewG

The valuation itself is governed by Section 12 (1) ErbStG, which refers to the general valuation rules of the Valuation Act. Since the Valuation Act contains no valuation rule of its own for crypto assets, the fair market value (gemeiner Wert) under Section 9 BewG applies, that is, the price that could be obtained on a sale in the ordinary course of business. In the tax literature, by analogy with Section 11 (1) sentence 1 BewG, which prescribes the lowest quoted price on the valuation date for listed securities, the view is taken that for liquid cryptocurrencies such as Bitcoin or Ethereum the lowest price quoted on the date of death on a recognised trading platform may be used. There is as yet no binding methodology settled by the highest courts. In any event, what matters is a traceable, documented determination stating the source, the date and, for crypto assets that trade around the clock, the time and time zone.

Volatility: Tax Payable Despite a Later Price Collapse

The high price volatility of crypto assets creates a particularly unpleasant situation for heirs. The value on the date of death remains decisive even if the price has fallen considerably by the time the assets become available or are sold. Heirs may therefore owe inheritance tax on an asset that is economically worth much less when the tax falls due, and in the worst case even where access to the assets fails altogether for lack of the private key. In such hardship cases, a deferral of inheritance tax can at most be considered under Section 222 AO (German Fiscal Code). However, it lies within the discretion of the tax authority and is not an automatic compensation mechanism.

NFTs and Illiquid Tokens

For non-fungible tokens (NFTs) and other illiquid crypto assets for which there is no liquid market with continuous price formation, the fair market value cannot readily be derived from a stock market quotation. Here, prices actually achieved for comparable assets, the so-called floor price within a collection, and the actual market depth must be used. A mere asking price is not automatically equivalent to the fair market value. In practice, a reasoned estimate is regularly required, which should be documented and substantiated to the tax office in case of doubt.

Whether crypto assets held as business assets, for example in commercial mining or regular trading, are to be treated differently for tax purposes in the estate must be examined in each individual case. Specific inheritance tax reliefs such as those for qualifying business assets do not, under the current legal position, regularly apply to crypto assets.

Allowances and Tax Classes for Inherited Crypto Assets

For the acquisition of crypto assets on death, the same personal allowances under Section 16 ErbStG and the same tax rates under Section 19 ErbStG apply as for any other acquisition of assets. The law provides no separate tax exemption for crypto assets, comparable for example to the exemption for an owner-occupied family home.

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The tax rate applicable to the amount exceeding the allowances is determined by Section 19 ErbStG and, graduated by the size of the taxable acquisition, ranges from 7 to 30 percent in tax class I, from 15 to 43 percent in tax class II and from 30 to 50 percent in tax class III. Because all taxable assets of the recipient, not just the crypto assets viewed in isolation, enter into the calculation, even a moderate crypto holding combined with other estate assets can lead to a noticeable jump in progression. Which planning options for legally reducing inheritance tax may be considered in an individual case is covered in our article Avoiding Inheritance Tax Legally: Strategies for Passing On Wealth (German).

The Problem of Proof: When Access Is Missing

One of the most practically significant and legally least settled questions in crypto inheritances concerns cases in which heirs learn that a crypto position exists, for example through a hardware wallet they have found, notes, or account statements showing payments to a trading platform, but cannot find the private key or the seed phrase.

Legally, under the principle of universal succession set out above, the asset forms part of the estate and is therefore in principle subject to inheritance tax. Whether, and to what extent, a lack of actual access is to be taken into account as reducing the value is not expressly regulated by statute and has not yet been decided by the highest courts. In practice, it is therefore strongly advisable to document carefully all efforts to regain access, such as the time at which the hardware was found, the technical recovery attempts made and their outcome, so that a proper valuation, or at least consideration of the obstacles to access, can be substantiated to the tax office in case of doubt.

The same issue arises in mirror image in compulsory share law: under Section 2311 (1) sentence 1 BGB, the value of the estate at the time of death is decisive for calculating the compulsory share (Pflichtteil). If a crypto position has value at that time, this in principle also affects the compulsory share claims of entitled relatives, regardless of whether the heir ever gains access to the assets. For heirs, this can lead to the economically unfortunate situation of having to satisfy a compulsory share on an asset to which they themselves have no access.

A further practical mistake that is often seen in this situation is uncoordinated access attempts. Repeated incorrect PIN entries can cause a hardware wallet to lock permanently or reset itself automatically. Before any attempt to unlock a device on one’s own initiative, advice should therefore be taken from a lawyer familiar with the subject or from a specialised technical service provider.

Certificate of Inheritance and Death Certificate: The Route to Crypto Assets on Central Platforms

Unlike self-custodied assets, crypto exchanges and other central trading platforms regularly require formal proof of the heirs’ status before releasing an account to them. In practice, platforms typically ask for the account holder’s death certificate together with a certificate of inheritance (Erbschein) or an opened notarial will with the record of its opening as proof of succession, supplemented by the usual identity check under anti-money-laundering due diligence obligations (know-your-customer procedure). This requirement applies regardless of whether the heirs have already become holders of the claims against the platform as a matter of law upon the succession. Without the formal proof, access is in practice refused.

Where the trading platform is based abroad, which is the rule rather than the exception for crypto exchanges, this process often takes considerably longer. Foreign providers sometimes require certified translations of the German estate documents or an apostille, and processing times can stretch over months. Where the crypto assets are held on a platform based abroad, the question may additionally arise whether, and to what extent, double taxation of the acquisition is a risk if the foreign state also claims a right to tax the estate. Details on this, in particular on the significance of double taxation treaties for foreign assets in an inheritance, are covered in our article Inheritance Tax and Double Taxation Treaties: When Foreign Assets Are Taxed Twice.

Income Tax on a Later Sale by the Heirs

Alongside inheritance tax, a second, independent tax layer has to be considered. If the heirs later sell the inherited crypto assets, that sale may be subject to income tax as a private sales transaction under Section 23 (1) sentence 1 No. 2 EStG (German Income Tax Act). What matters here is the so-called step-in-the-shoes principle. Because an acquisition on death is gratuitous, the heir steps into the testator’s tax position for the purpose of calculating the one-year holding period. The original acquisition date of the testator counts, not the date of death. If the testator had already acquired the crypto assets more than a year before death, a later sale by the heirs is regularly exempt from income tax. If, on the other hand, the testator’s acquisition was less than a year earlier, a gain on disposal is in principle subject to income tax in the heir’s hands at their personal rate.

The Federal Ministry of Finance most recently updated this income tax treatment of crypto assets in a circular dated 6 March 2025, which develops the earlier principles from the circular of 10 May 2022 and specifies the taxpayers’ duties to cooperate and to keep records, for example regarding transaction overviews, wallet addresses and conversion rates. For heirs, this means in practice that they can regularly not rely on a blockchain address alone vis-à-vis the tax office. They need a traceable record of the testator’s acquisition history in order to present the income tax treatment of a later sale correctly.

Notification Duty to the Tax Office

Like any other acquisition on death, the acquisition of crypto assets must be notified in writing to the competent inheritance tax office under Section 30 (1) ErbStG within three months of gaining knowledge that the inheritance has been received. This notification duty exists regardless of whether inheritance tax is ultimately due, and regardless of whether access to the crypto assets has already been achieved. If a crypto position is discovered only later, for example when going through the testator’s papers months after the succession, the notification period begins only when the heirs actually gain knowledge, but the notification should then be made without delay. A missing or incomplete notification can carry tax-criminal risks, in particular because transactions on public blockchains remain permanently traceable, so it is by no means ruled out that undeclared crypto assets will come to light later.

Planning During Your Lifetime: How to Avoid the Access Problem

Because the access problems described are regularly the cause of a total economic loss, and not any lack of a legal basis for succession, the most effective protection lies in forward-looking estate planning during the crypto holder’s lifetime:

• Keep a digital estate register. A complete, regularly updated overview of all existing wallets, the respective platform or wallet type, public wallet addresses and the place where the private keys or seed phrases are kept makes it considerably easier for the heirs to find everything.
• Never state private keys and seed phrases directly in the will. A will is opened at the probate court and is therefore accessible to several people. Whoever knows the key can dispose of the assets, even during the testator’s lifetime if the will becomes known prematurely or someone has access to it. A combined solution makes more sense: the will merely refers to the existence of crypto assets and to the place where the access credentials are deposited, such as a bank safe-deposit box, a sealed envelope with a notary or a password manager with an emergency-access function. The access credentials themselves are kept separately.
• Consider appointing an executor. For larger or technically more complex crypto holdings, appointing an executor (Testamentsvollstrecker) can be sensible, either someone with the necessary technical understanding or someone demonstrably able to draw on expert support.
• Consider technical safeguards such as multi-signature wallets. In such set-ups, several keys are required for a transaction (for example two of three), which can be distributed among different persons or institutions, such as the holder and a lawyer or notary acting as trustee. On death, access can then be released jointly in a controlled and documented manner.
• Expressly inform the heirs that crypto assets exist at all. The most common reason for a permanent loss is not the lack of a legal basis but simply the heirs’ ignorance of the existence of the assets.

Anyone who wants to structure such estate planning for digital assets in a legally sound way should do so with legal support in succession law, in particular because questions of formal validity of dispositions on death, executorship and inheritance tax valuation are closely intertwined here.

Checklist: Crypto Assets in an Estate

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Conclusion

Cryptocurrency in an estate raises two legally separate but in practice closely interwoven questions: actual technical access via the private key, and the inheritance tax valuation as at the date of death under Sections 9, 11 and 12 ErbStG in conjunction with Section 9 BewG. A testator who makes no provision risks leaving lawfully inherited assets effectively out of the heirs’ reach, while inheritance tax on the date-of-death value may nevertheless be due. An heir confronted with such a situation should keep both the technical securing of the access credentials and the tax notification and valuation duties in view from the outset.

Attorney Dr. Johannes Fiala and the law firm, with a focus on international tax, succession and asset protection law in Munich, advise testators on legally sound estate planning for digital assets, and heirs on enforcing claims against trading platforms and on the inheritance tax valuation of crypto assets. Further information on the firm’s succession law practice can be found on our page Inheritance Law Attorney Munich. Please get in touch without obligation to discuss your individual case in an initial consultation.