Succession planning with cryptocurrencies: guide for the Spanish investor

Cryptocurrencies are digital assets that, without proper planning, can be lost forever upon the death of the holder. Unlike bank accounts or stocks, no one can "recover" a Bitcoin wallet if they don't have the private keys.

The root problem: access vs. property

With a bank wallet, your heirs can prove the death to the bank and recover the funds. With crypto:

• If the asset is on a centralized exchange (Binance, Kraken): similar to a bank, heirs can claim with documentation.
• If the asset is in a self-custody wallet (Ledger, MetaMask): without the seed phrase (12-24 words), access is impossible and the money is lost forever.

The Inheritance and Donation Tax (ISD)

When inheriting cryptocurrencies, the heir pays Inheritance and Donation Tax:

• The rate varies enormously by autonomous community (from 0% in Andalusia and Madrid to 34% in some Autonomous Communities).
• Taxable base: market value of the cryptocurrencies on the day of death.
• It is added to the rest of the inheritance to calculate the applicable rate.

Valuation: The market quote price on the day of death (price in EUR on the main reference stock exchange).

Personal income tax of the heir: the increase in cost

A key tax advantage: when the heir receives crypto and then sells it:

• Acquisition cost = value declared in the ISD (not the cost that the deceased had).
• This eliminates the deceased's latent capital gains.

Example: The father bought 1 BTC for €5,000. When he dies he is worth €80,000. The heir pays ISD on €80,000. When the heir sells that BTC for €90,000, he only pays tax on the gain of €10,000 (90,000 − 80,000).

Personal income tax of the deceased upon death

The deceased (the deceased) does NOT pay taxes on the latent capital gains in crypto. Death is not a transfer for personal income tax purposes. Their latent capital gains disappear ("extinct").

Problematic situations

Crypto on exchanges that require KYC

Major exchanges require identity verification of heirs before transferring. Documents generally required:

• Death certificate.
• Will or declaration of heirs.
• Notarial inheritance acceptance deed.
• Accreditation of the degree of relationship.

Crypto in self-custody wallets

If the deceased did not leave instructions:

• The seed phrase is inaccessible → funds are lost.
• Recommendation: store the seed in a safe place known only to trusted people or under double lock.

Estate Planning Strategies for Crypto

1. Will with specific mentions of cryptocurrencies

The will must explicitly mention:

• The cryptocurrencies held (not the exact amounts, which change).
• The access mechanism (who has the seed, where it is).
• What exchanges, wallets or services are used.

2. Legacy of instructions in the notary

Deposit a sealed envelope at the notary with access instructions. The notary delivers it to the heirs after death.

3. Multi-sig testamentary wallets

Use a multisig wallet (e.g.: 2-of-3) where:

• Signer 1: the holder in life.
• Signer 2: designated heir.
• Signer 3: trusted notary or lawyer.
  Upon death, signer 2 + 3 can move the funds.

4. Living donation with bonuses

Some CCAA have bonuses of up to 99% on donations between immediate family members. In communities like Madrid or Andalusia, donating crypto to your children can be almost tax free.

Income tax of the donor: The donation of crypto is a transmission → capital gain/loss for the donor.
ISD of the donee: The donation received is taxed by ISD (with possible bonuses).

5. Life insurance to cover ISD

If the ISD is high, life insurance can provide liquidity to heirs to pay the tax without having to sell the cryptos.

The "digital will" in Spain

Spanish law does not currently recognize a "digital will" as a special category. However:

• The notarial will may include clauses on digital assets.
• The digital executor (figure in the draft of the future law on digital wills) could manage them.

Summary table of tax events in crypto succession

Updated: April 2026 | Fiscal year: 2025