California Can Now Seize Your Dead Relative's Crypto. Here's How to Stop It.
California Senate Bill 822 quietly did something extraordinary: it gave the state the legal authority to seize "abandoned" cryptocurrency. If your crypto sits dormant long enough — and nobody claims it — California can take it.
That's not a dystopian hypothetical. It's current law. And it has massive implications for anyone who holds crypto and hasn't planned for what happens to it after they die.
What SB 822 Does
California's Revised Uniform Unclaimed Property Act (SB 822) updated the state's escheatment laws to explicitly include digital assets and cryptocurrency. Here's how it works:
Dormancy period. If a financial asset — including crypto held on a custodial exchange — has no activity for a specified period (typically 3-5 years), it's considered "abandoned."
Holder reporting. The exchange or custodian must report the dormant account to the state.
State seizure. California can then claim the assets. The original owner (or their heirs) can petition to get them back, but the process is bureaucratic, slow, and not guaranteed.
Crypto-specific provisions. SB 822 specifically addresses how digital currencies should be valued, reported, and transferred to the state.
Key Takeaway
California's SB 822 proves that governments will eventually regulate what happens to your crypto when you're gone. Australia hasn't started. The gap between regulation and reality is where families lose assets — and where a Digital Directive bridges the gap before the law catches up.
Why This Matters for Estate Planning
The intersection of crypto, death, and escheatment creates a perfect storm:
Scenario 1: You Die, Nobody Knows About Your Crypto
Your crypto sits on an exchange. Your family doesn't know it exists. After 3-5 years of inactivity, the exchange reports it as abandoned. California seizes it. Your heirs never knew they had a claim.
Scenario 2: You Die, Your Family Knows But Can't Access It
Your family knows you had crypto, but doesn't have the credentials to access it. They can't prove ownership to the exchange. The dormancy clock ticks. Eventually, the state steps in.
Scenario 3: Self-Custody Crypto
If your crypto is in a hardware wallet or self-custody solution, exchanges aren't involved. But without the private key or seed phrase, the crypto is effectively destroyed — no state seizure, just permanent loss.
In all three scenarios, the outcome for your family is the same: they lose the crypto. The only difference is who ends up with it — the state, or nobody.
Australia Hasn't Started
Australia has unclaimed money laws (administered by ASIC and state revenue offices), but they were designed for bank accounts and superannuation — not cryptocurrency.
There is currently no Australian legislation that:
- Explicitly defines crypto as unclaimed property
- Requires exchanges to report dormant crypto holdings
- Gives a government agency the authority to seize abandoned crypto
- Provides a framework for heirs to claim deceased individuals' crypto
That doesn't mean it won't happen. California's approach is a template. Australia will eventually follow — the question is when, and whether your family is prepared when it does.
The Self-Custody Problem
California's law primarily affects custodial exchanges (Coinbase, Kraken, etc.). But the bigger problem for estate planning is self-custody:
- Hardware wallets (Ledger, Trezor) require a PIN and recovery seed phrase
- Software wallets require passwords and sometimes biometric authentication
- DeFi protocols may require specific wallet connections and knowledge of platforms
- Multi-sig wallets may require multiple keys held by different people
Without documentation, self-custody crypto dies with its owner. Not seized by the state — just gone forever. The estimated $140 billion in lost Bitcoin includes crypto belonging to people who died without sharing their keys.
What a Digital Directive Solves
A Digital Directive documents your complete crypto holdings:
- Exchange accounts — which platforms, what's held, how to access
- Self-custody wallets — device locations, PINs, seed phrase storage
- DeFi positions — which protocols, which wallets are connected
- Instructions — what your executor should do with each holding
It doesn't matter whether California, Australia, or any government changes its laws. What matters is that your family has the information they need to act before dormancy clocks start ticking.
Sources: California SB 822 — Revised Uniform Unclaimed Property Act
Take Control of Your Digital Legacy
Your passwords, crypto, cloud accounts, and digital subscriptions don't disappear when you do — but without a plan, your family can't access them either.